> but weren't they collateralized by the homes? Much exaggerated in value homes, yes. > And wouldn't that make this CLO market exactly identical to the CDO ma

> but weren't they collateralized by the homes? Much exaggerated in value homes, yes. > And wouldn't that make this CLO market exactly identical to the CDO market? The mortgage debt market is backed by GSEs. When the bubble popped Fannie and Freddie held over $5 trillion in mortgage securities. They are the market maker -- the buyer of last resort -- that makes the whole mortgage securities market liquid. CLOs don't have such a market maker. There are certainly market makers, but they aren't US GSEs with multiple trillion dollar balance sheets backed by the US Treasury. This limits the degree to which the CLO market can overextend. Not that corporate debt can't grow to disruptive proportions. Problems with corporate debt is how the term 'junk bonds' emerged as a household word in the 80's. Now that we're rolling BBB quality debt into CLOs (as of last April, apparently) the clock is ticking once again.