Structured finance

Structured finance is a sector of finance that was created to help transfer risk using complex legal and corporate entities. This transfer of risk, as applied to the securitization of various financial assets (mortgages, credit card receivables, auto loans, etc.), has helped provide increased liquidity or funding sources to markets like housing and to transfer risk to buyers of structured products; it also permits financial institutions to remove certain assets from their balance sheets as well as provides a means for investors to gain access to diversified asset classes. However, it arguably contributed to the degradation in underwriting standards for these financial assets, which helped give rise to both the inflationary credit bubble of the mid-2000s and the credit crash and Financial crisis of 2007–08.

Common examples of instruments created through securitization include collateralized debt obligations (CDOs) and asset-backed securities (ABS).

Structure

Securitization

Investment banking

An investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).

Unlike commercial banks and retail banks, investment banks do not take deposits. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999 by the Gramm–Leach–Bliley Act, the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G7 countries, have historically not maintained such a separation. As part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act of 2010), the Volcker Rule asserts full institutional separation of investment banking services from commercial banking.

Finance

Finance is a field that deals with the study of investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk. Finance can also be defined as the science of money management. A key point in finance is the time value of money, which states that purchasing power of one unit of currency can vary over time. Finance aims to price assets based on their risk level and their expected rate of return. Finance can be broken into three different sub-categories: public finance, corporate finance and personal finance.

Areas of finance

Wall Street, the center of American finance.

Wall Street, the center of American finance.

London Stock Exchange, global center of finance.

London Stock Exchange, global center of finance.

Personal finance

Questions in personal finance revolve around:

Structuring

Structuring, also known as smurfing in banking industry jargon, is the practice of executing financial transactions (such as the making of bank deposits) in a specific pattern calculated to avoid the creation of certain records and reports required by law, such as the United States' Bank Secrecy Act (BSA) and Internal Revenue Code section 6050I (relating to the requirement to file Form 8300).

Legal restrictions on structuring should not be confused with capital controls, which are statutory or regulatory limits on the money that one can take out of a nation, though they can have some of the same economic effects in some economies, as structuring controls effectively limit the flow of capital by magnitude and duration, and can apply equally to taking money out of a nation as well as putting money into its finance system.

Background

Structuring includes the act of parceling what would otherwise be a large financial transaction into a series of smaller transactions to avoid scrutiny by regulators or law enforcement. Structuring often appears in federal indictments related to money laundering, fraud, and other financial crimes.

The Course

The Course were a dance music act from the United Kingdom and the Netherlands. It consisted of DJ/producer Vincent Hendriks and vocalists Dewi Lopulalan and Irma Derby. They achieved their biggest commercial success in 1997.

Hendriks and Lopulalan first met in 1990 at a DJ "mix championship" in the Netherlands. They met again in 1996, at the same venue, and the two decided to collaborate on some music.

The group released their first single, "Ready or Not", a dance cover of the 1996 song by The Fugees, in early 1997, with echoes of other contemporary hits Ultra Flava by Farley & Heller and Hold That Sucker Down by The OT Quartet. It reached #5 in the UK Singles Chart in April, giving the band their first hit. The follow-up, a cover of Chaka Khan and Rufus' "Ain't Nobody" also fared well, reaching #8 in July. However, their third single, "Best Love", only made it to #51 in December. Subsequent singles failed to see chart action, proving The Course to be a "two-hit wonder". They broke up in the late 1990s because of the lack of commercial success after the first two singles.