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540 Appendix A: Glossary
Community Reinvestment Act federal law encouraging depository institutions to make
loans and provide services in the local communities in which they take deposits.
Consolidated Supervised Entities program A Securities and Exchange Commission program cre-
ated in and terminated in that provided voluntary supervision for the five largest in-
vestment bank conglomerates.
Counterparty A party to a contract.
CP see commercial paper.
CPP see Capital Purchase Program.
CRA see Community Reinvestment Act.
credit default swap A type of credit derivative allowing a purchaser of the swap to transfer loan
default risk to a seller of the swap. The seller agrees to pay the purchaser if a default event oc-
curs. The purchaser does not need to own the loan covered by the swap.
credit enhancement Insurance or other protection that may be purchased for a loan or pool of
loans to offset losses in the event of default.
credit loss Loss from delayed payments or defaults on loans.
credit rating agency Private company that evaluates the credit quality of securities and provides
ratings on those securities; the largest are Fitch Ratings, Moody’s Investors Service, and Stan-
dard & Poor’s.
credit risk Risk to a lender that a borrower will fail to repay the loan.
CSE Consolidated Supervised Entity (see Consolidated Supervised Entities program).
debt-to-income ratio One measure of a borrower’s ability to repay a loan, generally calculated by
dividing the borrower’s monthly debt payments by gross monthly income.
delinquency rate The number of loans for which borrowers fail to make timely loan payments di-
vided by total loans.
Department of Housing and Urban Development Cabinet-level federal department responsible
for housing policies and programs.
Department of Justice Cabinet-level federal department responsible for enforcement of laws and
administration of justice, led by the attorney general.
Department of Treasury Treasury of the federal government; prints and mints all currency and
coins, collects federal taxes, manages U.S. government debt instruments, supervises national
banks and thrifts, and advises on domestic and international fiscal policy. Its mission includes
protecting the integrity of the financial system.
depository institution Financial institution, such as a commercial bank, thrift (savings and loan),
or credit union, that accepts deposits, including deposits insured by the FDIC.
derivative Financial contract whose price is determined (derived) from the value of an underlying
asset, rate, index, or event.
Fannie Mae Nickname for the Federal National Mortgage Association (FNMA), a government-
sponsored enterprise providing financing for the home mortgage market.
FCIC Financial Crisis Inquiry Commission.
FDIC see Federal Deposit Insurance Corporation.
Federal Deposit Insurance Corporation Independent federal agency charged primarily with in-
suring deposits at financial institutions, examining and supervising some of those institutions,
and shutting down failing institutions.
Federal Housing Administration Part of the Department of Housing and Urban Development that
provides insurance on mortgage loans made by FHA-approved lenders.
Federal Housing Finance Agency Independent federal regulator of government-sponsored enter-
prises; created by the Housing and Economic Recovery Act of as successor to the Office of
Federal Housing Enterprise Oversight and the Federal Housing Finance Board.
Federal Open Market Committee Its members are the Board of Governors of the Federal Reserve
