Akadien has recommended "The Big Short" already, and I'd second that. It goes into a lot of detail about this situation. The problem with trying to price these

Akadien has recommended "The Big Short" already, and I'd second that. It goes into a lot of detail about this situation. The problem with trying to price these CDOs was that an individual CDO might be made up of 100 pieces of other CDOs which each might be made up of parts of another 100 CDOs, which each might be made up of parts of a bond containing thousands of individual loans. So you could go and look at the individual loans but the effort to try and price the whole thing accurately would have been phenomenal. The most honest thing the agencies could have done was refuse to rate them. But that probably wouldn't have gone down very well with their clients.