Liquidity Looked in the Mirror but Insolvency Stared Back

New data from the U.S. Education Department confirm that view.

In November, the House of Representatives amended legislation to renew the Higher Education Act with a provision that would extend to three years, from the current two, the "cohort default rate," which gauges the proportion of student loan borrowers who default within a certain time period after they leave college.

The change, proposed by Rep. Timothy Bishop (D-N.Y.) and Rep. Raul Grijalva (D-Ariz.), is designed to make the cohort default rate a more realistic assessment of how individual institutions (and lenders) are faring in keeping student borrowers on track to repayment, both to gauge students’ indebtedness and potential failure by colleges in ensuring that their students are getting an affordable and valuable education. read more

Unsecured Loans: asset-free opportunity for those in need

We cringe when we hear the guests on bubble TV claim that the credit crisis is almost over and that it has been exaggerated by fear-mongers. In reality the credit crisis is getting worse and spreading to as yet unknown areas. Each week seems to bring a new surprise that reveals an unexpected financial event and some new acronym for a security that few have ever heard of before. At first it was RMBS, CDO, CDO squared, SIV, ABCP and CLO. Now it's TOB, VRDO, ARS, LevX and LCDY. Each revelation leads to new concerns, exposes new victims, creates the potential of even more writedowns and leaves everyone wondering where the next surprise is coming from.

As it turns out this week's new problem are auction-rate securities (ARS), an obscure but important segment of the credit market. read more