Introduction
Since the landmark case of Enron Corporation controversy in 2001 involving the company’s bankruptcy, the public’s view of structured finance and derivatives has been tainted with suspicion of unethical exploitation. Although the legalities involving the abuse of structured finance by market participants for economic gains is still being explored, recommendations are necessary in order to minimize the impact of a market meltdown.
Defining Structured Finance and Derivatives
The term structured finance is rarely defined, but to give an example, a structured financial transaction often uses an SPE or a special purposes entity. A larger corporation uses an SPE as a subsidiary in ...
