Legalized fraud, an excerpt from last Wednesday's Daily show. [View all]
In a nutshell:
Company (A), the private equity firm Blackstone, takes out a Credit Default Swap against an unrelated company (B), named Codere. In case Codere should fail to meet its debt obligations, Blackstone can then collect a substantial sum of money by virtue of having acquired this Credit Default Swap.
Blackstone then makes a loan to Codere of 100 million dollars with the proviso that Codere upon accepting the loan will intentionally delay a payment it owes to another company, let's call it company (C), until past the due date - meaning the Credit Default Swap will kick in and result in a payout to Blackstone. Codere then delays a debt repayment to Company (C) by 2 days past the due date as required by the terms of their loan agreement with Blackstone, the Credit Default Swap is triggered and Blackstone collects a cool $15.6 million thanks to their financial (and apparently legal) sleight of hand.
Jon Stewart sends ace financial reporter Samantha Bee to investigate and report back on why this legalized fraud received no publicity in the mainstream media.
Video at link:
http://www.thedailyshow.com/watch/wed-december-4-2013/blackstone---codere
= new reply since forum marked as read