Evaluating Counterparty Risk: Whom Can You Trust?

The Credit Crisis

The credit crisis that has engulfed the world's financial markets for the past year has entered an historic phase. Financial institutions that have stood as symbols of strength for decades have disappeared overnight. Governments and central banks throughout the world have scrambled hastily to adopt emergency measures in an attempt to calm the financial markets and facilitate even a minimal level of lending activity. One of the most confounding problems facing those who are trying to resolve the credit crisis is that today's complex global financial markets have dispersed risk across the globe in so many different entities that it is almost impossible to identify all of them, let alone tailor assistance effectively to assist them. Credit risk is no longer limited to simple lending arrangements between banks and borrowers. Risk now appears in myriad financial products ranging from traditional lending facilities to swaps, repurchase agreements,