« Florida Sees Hundred-Year Rainfall Event? | Main | Ben Bernanke Goes to Jackson Hole: 2007 vs 2008 »

Latest Stories

• Excel Wankers and Recession Averages
• Sorry, New York is Closed. Check Back Later.
• Catching Falling 2009 Earnings Estimate Knife
• Survivorship Bias in Global Markets
• Talking Positions on a Lazy-ish Retirement Portfolio

August 21, 2008

Telling CDO Quote du Jour (Circa 2005)

Here is a telling quote on the collateralized debt obligation (CDO) market, circa 2005 from a profile of Merrill Lynch's then-rocking CDO team:

“If you polled a hundred capital markets participants about IBM, most people are going to have some opinion of it. But if you went to the same group and asked them about an Ameriquest or Countrywide triple-B mortgage security, very few people are going to have any idea of how to analyze it,” says Norell. This complexity is what adds yield to ABS CDO products, he says, because demand is limited to a small pool of very specialized investors.

And there you have it. If only more people had been paying attention.

[RiskWaters via FT]

Sphere It   |   Digg it   |   Bookmark it   |   Stumble it   |   Facebook it