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Which CDOs and Banks Had Deals With the Most Cross-ownership?

By Implode-Explode Heavy Industries

``Wall Street created fake demand for their hottest product ? mortgage-backed securities called collateralized debt obligations [2] ? in the two years before the financial meltdown. Their activity increased banker bonuses but ultimately made the crisis worse... we found 85 instances during 2006 and 2007 where two CDOs bought pieces of each other's unsold inventory. These trades, which involved $107 billion worth of CDOs, approximately a fifth of the market, underscore the extent to which the market lacked real buyers. Often the CDOs that swapped purchases closed within days of each other.''

Full post as published by Mortgage Lender Implode-o-Meter on September 27, 2010 (boomark / email).