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This isn't just a mortgage or housing crisis.
At the center of this still-unfolding disaster is the collateralized debt obligation, or CDO.
Steven Pearlstein, Washington Post, December 10, 2007

The financial giants that originated, packaged, rated and insured all those subprime mortgages were the same ones, run by the same executives, with the same fee incentives, using the same financial technologies and risk-management systems, who originated, packaged, rated and insured home-equity loans, commercial real estate loans, credit card loans and loans to finance corporate buyouts.

It is highly unlikely that these organizations did a significantly better job with those other lines of business than they did with mortgages. But the extent of those misjudgments will be revealed only once the economy has slowed, as it surely will.

CDOs are not new; they were at the center of a boom and bust in manufactured housing loans in the early 2000s. But in the past several years the CDO market has exploded, fueling not only a mortgage boom but also an expansion of all manner of credit. By one estimate, the face value of outstanding CDOs is nearly $2 trillion.

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