Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

Questions for Banks That Put Together Deals

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Topic Forums » Economy Donate to DU
groovedaddy Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-21-10 11:43 AM
Original message
Questions for Banks That Put Together Deals
They were the black boxes of the subprime era, byzantine creations of the brightest minds on Wall Street that made and then lost vast fortunes.

But now, after so much financial pain, Wall Street is nervously tallying the potential legal costs from its misadventures in collateralized debt obligations, known as C.D.O.s, among the most toxic financial instruments ever devised.

C.D.O.s, which produced much of the financing for the mortgage explosion, are at the heart of the Securities and Exchange Commissions civil fraud case against Goldman Sachs as well as a broader S.E.C. investigation of sales and disclosure practices at many Wall Street firms.

Until the bottom fell out, these instruments also powered an age of riches on Wall Street. Initially, bundling mortgage bonds into C.D.O.s helped open the spigot of easy money that allowed Americans to buy more house than they could afford.

But Wall Street, as it is wont to do, took the concept to another level, creating securities that allowed investors to make side bets on the housing market. Known as synthetic C.D.O.s, they did not raise money for home loans or serve any other broad economic purpose.
Printer Friendly | Permalink |  | Top

Home » Discuss » Topic Forums » Economy Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC