Bilateral Credit Agreement

  

Categories: Regulations, Trading

A bilateral credit agreement refers to a situation where two entities agree not to ask for debts to be paid for a particular period of time. It is also used to describe the credit banks give each other to cover the period while checks are being cleared.

And it's also when a patient, after reaching up under his dentist's coat, says, "We agree not to hurt each other, right?"

Related or Semi-related Video

Finance: What is the Credit Rating Agenc...4 Views

00:00

Finance allah shmoop what is the credit rating agency reform

00:07

act of two thousand six otherwise known as crack are

00:12

out out something like that All right yeah that's How

00:16

the real pros said anyway this act was meant to

00:19

improve the quality of company credit ratings like a blindfold

00:24

and dartboard should not be involved in making up are

00:27

you know coming up with corporate credit ratings Well the

00:30

law was ironically enacted in the hope that we would

00:33

avoid nightmares like the subprime mortgage crisis that almost brought

00:37

down the finances of while the entire country in world

00:40

And yes it worked in the same way that a

00:43

scale works in an embarrassing episode of the biggest loser

00:47

The idea was that the big three agencies moody's s

00:50

and p and fitch were colluding with each other and

00:54

raiding every security as a okay sort of the same

00:58

way wall street cell site analysts were leaned upon in

01:01

the nineties by bankers who paid them to rate every

01:05

company of strong by so that the companies would favor

01:08

the investment banks when doing lucrative secondary offerings and other

01:13

personal wealth management services for the founders and senior executives

01:17

Newly ridge from you know aipo booty The big three

01:20

then produced a product that wasn't reflective of the real

01:24

risks inherent in the marketplace Basically they had been labeling

01:28

pink slime and hot dog meat as great a sirloin

01:32

Yeah well the act made it much easier for smaller

01:35

firms to compete for business by doing high quality research

01:39

and not being afraid to give bad ratings tow bad

01:42

money butchers will The credit rating agency reform act of

01:45

o sixth gives both businesses and the government the tools

01:49

they need to fight off the shady hucksters of the

01:51

world And make sure the pink slime never you know 00:01:55.443 --> [endTime] such a cz your plate financially

Up Next

Finance: What is Counterparty Risk?
9 Views

What is Counterparty Risk? Counterparty risk is the risk to either party within a transaction that the other will not or be unable to abide by the...

Finance: What is a Commitment Letter?
5 Views

What is a Commitment Letter? A commitment letter is a document that is issued by a lender to a borrower pursuant to a full fledged loan agreement c...

Finance: What is a Credit Limit?
39 Views

What is a Credit Limit? Financial institutions that lend money in the form of credit can do so in different facility configurations, usually with a...

Finance: What are Credit Scores and Worthiness?
21 Views

What are Credit Scores and Worthiness? One of the most ubiquitous ways that digital society now dictates our lives is with business and personal cr...

Find other enlightening terms in Shmoop Finance Genius Bar(f)