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  • Wall Street Breakfast: Must-Know News [View article]
    Collateralized Bond Obligations (CBOs) are investment-grade bonds backed by a collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of the junk bond involved. CBOs backed by highly risky junk bonds receive higher interest rates than other CBOs. What the the S.F. writer is saying apparently, is "Buyer beware!"

    Ok, that's fine. But if the CBO contains junk bonds based on sub-prime mortgages deceptively sold to unsophisticated buyers, it seems to me that the seller has some reponsibility here, both the original seller of the sub-prime mortgage and the seller of the CBO. Otherwise what you are saying is that it is ok to sell defective goods to unsophisticated (and unknowing) buyers. It is ok to sell a dead pig in a poke, in other words (no peekee, please), or a defective automobile. There are laws against such practices, of course, especially with regard to new cars that don't work right . They are called "lemon laws."
    Jun 11 18:47 pm |Rating: 0 0 |Link to Comment
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