Boom Bust and Blame

Crisis A-Z


AAA Rating aka Triple A Rating:
The highest credit quality given by rating agencies which analyze bonds and long term debt of companies.

AIG American International Group:
Once the nation's largest insurance firm, AIG collapsed in September 2008 under the weight of its gamble to insure mortgage-backed securities. A federal government bailout was arranged and then increased as the giant conglomeration posted bigger losses. The bailout of the company drew nationwide outrage when it was learned AIG paid out hundreds of millions of dollars in executive bonuses.

Once the largest privately held retail mortgage lender in America and the largest subprime lender by volume. The company was headquartered in Orange County, California and in January 2006 Ameriquest reached a $325 million dollar settlement with prosecutors from 49 states and the District of Columbia over allegations of unfair and deceptive lending practices. Ameriquest denied all allegations. Citicorp purchased the remaining assets in September 2007.

Process by which the principal loan amount borrowed is paid off, commonly after 30 years.

AMRESCO Residential Credit:
Subprime lender, based in Dallas, Texas, that raised capital through investments in the equity market and securitization. AMRESCO filed for Chapter 11 bankruptcy protection in July 2001, citing "significantly reduced cash flows and deterioration in value due to continued increases in delinquencies and projected credit losses" which totalled $133 million.

ARM – Adjustable Rate Mortgage:
A variable loan with payments that fluctuate according to an index. There are two kinds: those with, and without, negative amortization.

ARM Resets:
Subprime lenders lured borrowers to take out adjustable rate mortgages with features called "teasers" that included making lower minimal payments for the first few years before the loan reset to a higher payment schedule.