Glossary
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A shorthand expression used by many bankers to refer to general
and administrative expenses. These are a subgrouping of a firm's
operating expenses. In most banks, the term refers to all operating
expenses excluding interest, depreciation, and amortization.
See generally accepted accounting principles.
The practice of purchasing securities and then selling those that
subsequently appreciate in value while retaining as investment portfolio
assets those that cannot be sold at a profit. Accounting and banking
regulators have repeatedly and strongly criticized this practice.
Rules related to the transfer of securities from trading portfolios
to available-for-sale (AFS) or held-to-maturity (HTM) portfolios
are specifically designed to prohibit gains trading.
The rate of change of an option’s delta for a small change
in the price of the option’s underlying. See delta.
(1) As a measurement of exposure to interest rate risk, the amount
of mismatch or imbalance between the quantity of an entity's assets
and the quantity of its liabilities that reprice in a defined or
selected time period. In a single time period, the net mismatch
or imbalance may be called the interval gap. Over a series of consecutive
time periods or buckets, the total net imbalance or mismatch may
be called the cumulative gap. See rate-sensitive assets and rate-sensitive
liabilities.
(2) One of the four components of interest rate
risk. The component of interest rate risk arising from the mismatch
defined above. Also called mismatch or repricing risk.
(3) As a measurement of liquidity risk, the amount
of mismatch between the quantities of cash provided from decreases
in liabilities and increases in assets and the quantities of cash
used by increases in assets and decreases in liabilities in a defined
or selected time period.
A technique or process for quantifying exposure to adverse consequences
from changes in interest rates. A comparison of the total quantity
of a financial institution's rate-sensitive assets (RSAs) and rate-sensitive
liabilities (RSLs) for each of a number of different future time
periods or buckets. Gap analysis is used to evaluate the potential
effect of rate shocks on income over these time periods. See gap,
rate-sensitive assets, and rate-sensitive liabilities.
Mismatching assets and liabilities, usually by borrowing short and
lending long.
See Government Accounting Standards Board.
In fund accounting, the fund used to account for all financial resources,
except those required to be accounted for in another fund. Often
used as and referred to as the operating fund.
A category of personal property defined by Article 9 of the UCC.
General intangibles is a catch-all term for intangibles other than
accounts such as copyrights, trademarks, patent rights, franchise
rights, good will, tax refunds, relocation claims, operating rights,
and legal claims.
A municipal obligation that is supported by the full faith and credit
— the full taxing authority — of the municipality (as
opposed to support from only the revenues from specific user fees).
A partnership in which every partner is fully liable to the full
extent of his, her, or its net worth for all the obligations of
the partnership.
Accounting treatments that fully conform to established rules from
the American Institute of Certified Public Accountants (AICPA).
For all nongovernment entities in the United States, GAAP is primarily
determined by the Financial Accounting Standards Board (FASB). For
state and local government entities in the United States, GAAP is
primarily determined by the Government Accounting Standards Board
(GASB). Both FASB and GASB function under the auspices of the Financial
Accounting Foundation (FAF), an independent, nonprofit foundation.
A type of systemic risk where deterioration in regional economic
conditions triggers liquidity crisis. Usually, such a crisis is
triggered by credit loss. See systemic liquidity risk.
FHLMC MBSs created when older pools that have been reduced to small
outstanding balances (i.e., low current face) as a result of cumulative
prepayments are combined to create new securities with larger remaining
balances. Giants may be either fixed- or adjustable-rate securities.
An informal name for the Government National Mortgage Association
(GNMA) or for securities issued by it.
See Gramm-Leach Bliley Act of 1999.
See Government National Mortgage Association.
Fifteen-year FHLMC MBS pool that is issued under the FHLMC fifteen-year
Cash Program. See nongnome.
See general obligation.
(1) Delivery of a security, from a seller to a buyer, that complies
with all terms of the contract of sale.
(2) For a new, to-be-announced MBS, good delivery is delivery by
the seller that conforms to rules published by the Bond Market Association
(BMA).
A document that lenders are required by regulation to provide all
applicants for covered real estate loans. This document discloses
the anticipated expenses that the applicant(s) will have to pay
if the covered transaction is approved and closed.
A category of personal property defined by Article 9 of the UCC.
Sometimes called tangible goods. Further divided into consumer goods,
equipment, farm products, and inventory.
An accounting industry organization; part of the Financial Accounting
Foundation. GASB issues Statements of Financial Accounting Standards
that define and govern GAAP for state and local government entities
in the United States.
A government-owned corporation that is part of the U.S. Department
of Housing and Urban Development. GNMA provides its guarantee, backed
by the full faith and credit of the United States Government, to
certain mortgage-related securities. Informally but widely known
as Ginnie Mae.
See graduated payment mortgage.
A mortgage in which the monthly payment of principal and interest
begins at a low amount and progressively increases to a predetermined
higher amount. Thereafter, the amount of the monthly payment remains
constant for the remaining life of the loan. The interest rate is
fixed for the entire period.
Major banking legislation designed to significantly enhance the
powers and authority of financial institutions by allowing the formation
of new financial holding companies. Financial holding companies
are authorized to engage in: underwriting and selling insurance
and securities, conducting both commercial and merchant banking,
investing in and developing real estate and other "complimentary
activities." The statute also restricts the disclosure of nonpublic
customer information by financial institutions and provides the
major financial regulators with increased authority.
A person, partnership or corporation that gives or conveys an interest
in property. Often used to identify the creator of a trust.
The total amount of direct debt of an issuer, represented by outstanding
bonds before deduction of any assets available and earmarked for
their retirement.
See margin.
A subtotal on a firm's statement of income that is net sales minus
cost of goods sold. Sometimes called gross profit on sales.
The total dollar value of all revenue derived by the firm from the
principal operations of its business during the period covered by
the income statement report.
A service enabling a collecting bank to deposit checks drawn on
a limited preselected group of payer institutions.
See guaranty.
A type of corporate bond for which a corporation other than the
issuing corporation guarantees the repayment of a bond issue. Usually,
the guarantee is provided by the parent firm of the issuing corporation.
An agreement by a person, partnership, or corporation (other than
the borrower) to repay a bank loan if the borrower does not pay.
A line of credit approved by the bank, but not disclosed to the
borrower until some specific event, usually a request for funding
from the borrower. Also called an unadvised line.
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