Guess Who Owns the Crappy CDO Tranches? It Might Be You (Via Your Pension Fund)
One of Wall Street’s ongoing pin-the-liability-on-the-chump exercises is finding purchasers for the riskiest (often called “equity”) tranches of asset backed securities and CDOs, which in the trade are called “nuclear waste.” They come about because the attractive upper tranches get priority in the distribution of cash flow and may also be overcollateralized or credit enhanced. […]
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