Collateralized debt obligations, the complex debt securities linked to pools of risky mortgages and derivatives, have caused astronomical losses across the global financial system. Many of the macroeconomic assumptions about house prices – and the likely default rates on mortgages – have turned out to be so wrong that the resulting losses for banks and insurance companies turned a financial crisis into a global economic disaster which continues to be felt to this day.
Lehman ruling creates new doubts for CDOs
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