S2. Securitization, CDOs and the Sub-Prime Crisis

The volume of issue of CDOs and the corresponding ability of banks to issue mortgages had a significant impact on the quantity of mortgages that could be made by banks. This video explores the topic of securitization further with a particular focus on CDOs and how that relates to the sub-prime crisis.

Category:

Education

Tags:

• saving
• investing
• savings
• investment
• securitization
• securitisation
• mortgages
• sub-prime
• wealth
• money
• finance
• economy
• educational

[Jonchess]

Big question-How much of this s**t is there in the system?

[savingandinvesting]

@Jonchess A lot - depending on the numbers you look at - trillions of dollars, directly or indirectly fuelling lower lending standards, mortgage related bankruptcies, the failure of many financial institutions and playing a significant role in subsequent bailouts of major financial services firms across the globe. It is one of the key elements of global financial crisis. The book 'The Big Short' or the movie 'Inside Job' cover aspects of all of this in a fairly interesting and entertaining way.

[Jonchess]

This surely is the underlying cause of all the current debt crisis.

Mutton securities dressed up as lamb(apologies for vegeterians out there for the analogy). In Europe this is happening again under the noses of everybody.

The euro itself is a veneer under which sub-prime assets (dodgy government bond s are priced in at the risk free rate) and in the process fuelling an unsustainable and potentially disastrous expansion of credit.

[anolmec]

gimmee a aaa

bbb

cdo

aa

bb

cds

cdo

whats that spell f r a u d

thanks for the vid

[inthebluescrossroad]

leverage.... jesus christ....they sould put a limit on how much you can speculate with credit. or maybe put a higher tax on market speculating transactions? hmm who knows...

[elwalvador]

So they divided essentially worthless mortgage back securities into 3 traunches and sold off the "senior" traunch as a "tiple-A" rated investment? I wonder if the buyers of these so called senior debt even knew what they were actually buying. Because if they did, they never would have bought it. And if they didn't understand what a CDO is then they shoulnd't have bought it.