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CHAPTER10
OFF-BALANCE-SHEETFINANCINGINBANKINGANDCREDITDERIVATIVES
KeyTermsPresentedinThisChapter
SecuritizationContingentobligation
CreditEnhancementIssuer
LoanSalesAccountparty
ServicingRightsBeneficiary
ParticipationLoansCreditderivatives
AssignmentsCreditswap
LoanstripCreditoption
FinancialguaranteesCreditdefaultswap
Standbyletterofcredit(SLC)
ChapterOutline
I.Introduction:SourcesofFundsShortagesandCreditRiskforBanks
II.SecuritizingBankLoansandOtherAssets
A.NatureofSecuritization
B.AdvantagesofSecuritization
C.TheRateStructureofSecuritization
D.BeginningsofSecuritization–TheHomeMortgageMarket
1.CollateralizedMortgageObligations–CMOs
2.SecuritizationofHomeEquityLoans
E.ExamplesofOtherAssetsThatHaveBeenSecuritized
F.SubordinatedSecuritizations
G.TrendsinSecuritizationsToday
H.ImpactofSecuritizationonBanks
Ill.SalesofLoanstoRaiseFunds
A.NatureofLoanSales
B.LoanParticipationsandLoanStrips
C.ReasonsBehindLoanSales
D.TheRisksinLoanSales
IV.StandbyCreditLetters
A.TheNatureofStandbyCredits(ContingentObligations)
B.TypesofStandbyCreditLetters
C.AdvantagesofStandbys
D.TheStructureofStandbyLettersofCredit
E.TheValueandPricingofStandbyLetters
F.SourcesofRiskwithStandbyCredit
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