Modern Subprime Finance 101

Nice, useful figure from The Deal on how modern finance worked to create the subprime mess, or at least how it worked up until there stop being a functioning capital market.

More here.

Comments

[mortgage:]

Good chart. The crisis is actually due to CDO structure and leverage, not just the subprime collateral. Wall St. & the rating agencies have ducked this critical point. Any A, AA or AAA asset that is synthetically created and leveraged 10, 20 or 30x on top of BBB tranches is suspect. Using teaser rate Subprime/ Alt A that would have payment shock was playing Russian Roulette.

2008 Oct 06 02:55 PM