Robert F. Engle Quotes

Credit-default swaps remedied the problem of open-ended risk for me. If I bought a credit-default swap, my downside was defined and certain, and the upside was many multiples of it.

I think what we need is better understanding of how to do risk analysis of a CDO, but that they still can perform a very valuable function because they can aggregate these risks and pass them around so that mortgages or other kinds of loans can be packaged and sold to investors all over the world, who in most times, would justify a small amount of each one.

There are a lot of ways that investment banking models work, but these risks are not internalized by the people that are taking them.

At Berkshire, I both initiate and monitor every derivatives contract on our books ... If Berkshire ever gets in trouble, it will be my fault. It will not be because of the misjudgments made by a risk committee or chief risk officer.

I think the credit default swaps can take the place of the rating agencies who really have missed the ball in this procedure and are quite conflicted by the way the ratings are paid for. So, I would like to see credit default swaps become an evermore important way of understanding credit risk in the economy.

Risk managers and investment bankers and actually, all kinds of investors took on more risk than they expected. So there was a failure of risk management. There was a failure to recognize how much risk there was in some of these securities that people bought.

The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deemed these events "unlikely."

You want banks to take some risk, but intelligent risk.

You do not want to get your debt ratio out of whack.

Complexity and interconnectedness matter as much as size in assessing risk in banking.

A financial institution has the task of taking risks, and if it's a well run institution - say, Goldman Sachs - it tries to cover the potential losses to itself, but only to itself.

There is no risk-free path for monetary policy.

Don't take risk, and don't get into debt.

I think the people who've been the most overconfident in our business in the last decade have been the people that called themselves risk managers.

Market risk is like taking a plunge into a cool pool ... a lot of people are finding out right now what their risk tolerance is.

In an ideal world, one populated by vegetarians and Esperanto speakers, derivatives would be used for one thing only: reducing levels of risk. The list of individual traders who have lost more than a billion dollars at a time betting on derivatives is not short.

Be careful when you take on debt. If you take on debt personally, make sure it is small. If you take on large debt, make sure someone else is paying for it.

If you don't invest in risk management, it doesn't matter what business you're in, it's a risky business.

Risk is good. Not properly managing your risk is a dangerous leap.

My client loved risk. Risk, I had learned, was a commodity in itself. Risk could be canned and sold like tomatoes.

If you roll dice, you know that the odds are one in six that the dice will come up on a particular side. So you can calculate the risk. But, in the stock market, such computations are bull - you don't even know how many sides the dice have!

Extra interest signifies extra risk.

The CDO was, in effect, a credit laundering service for the residents of Lower Middle Class America. For Wall Street it was a machine that turned lead into gold.

If you want the most reward you have to take the most risk.

I am interested in risk, in art as well as in the realm of politics.