8 ms·
> the CDOs are probably tranched, so there will be some portions that are safe The mortgage CDO's where tranched in 2008 also.
by have_faith 3y ago
> the CDOs are probably tranched, so there will be some portions that are safe
The mortgage CDO's where tranched in 2008 also.
- masfuerte 3y agoSort of. They took the shitty bottom tranches from the mortgage CDOs and repackaged them as new CDOs. The credulous ratings agencies gave these new CDOs the same rating as the old ones but it took only a modest market downturn to wipe out even the top tier of these second level CDOs. Even this might not have been a problem if the whole thing hadn't been massively leveraged. The fact that mortgages were involved was nearly irrelevant. This shitshow could have been built on anything. The regulatory reforms that tackled the mortgage market were missing the point.