Eye Crosser #2: Collateralized Debt Obligations or CDOs

Just in case you did not view my blog entitled:
Some details that help explain the Great Recession and Global Economy Crisis
I thought that I’d repeat the definition of a CDO.  CDOs were at the root of most of the global economic crisis that has unfolded. The link at the end of the definition paragraph leads to a great animated graphic of how a CDO works.  Thanks to BizJournals for this animated graphic.

Residential mortgage-backed securities. A type of derivative (as I understand it) that was sliced and diced up to make the many levels of tranches of “risk” that were sold to both governments, private, public, religious organizations, you name it…these securities were “HOT.” They are referred to in several different ways: CMOs, CDOs, it appears that there are different ways to “package” a derivative, through the use of mortgages, currencies, etc. The Business Journals designed an interactive graphic to visually depict this type of instrument “in action.”  What is a C.D.O?

Author’s Addendum (9/13/15): Here’s a short video from CNBC about: Collateralized Debt Obligations (CDOs): CNBC Explains.



3 thoughts on “Eye Crosser #2: Collateralized Debt Obligations or CDOs

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