In my previous post, I mention how the ratings agencies came up with AAA ratings for what was essentially garbage debt. Well, this article explains the process of creating this garbage debt and shows why so many ratings agencies fell victim to believing that this debt was worth a AAA rating. It's rather long, so I'd summarize it, but it's honestly written so well and so clearly that I feel like it really shouldn't be summarized. Anywho, if you'd care to understand the subprime mortgage debacle a little better, this is a phenomenal read.
Explaining CDOs
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