Boom. The second of the four pillars went down yesterday.
When the dust settled at the end of trade, 11% of ANZ’s (ASX:ANZ) share price was missing. Its weakness was the same one that crushed 15% of National Australia Bank on Friday. The falling and uncertain value of CDOs.
Collateralised Debt Obligations are pot-luck assets. Investment banks basically take a bunch of different ingredients – high-risk mortgages and low-risk mortgages, for example – and stir them together into one product. Then they sell these off to whoever wants them.
