The securities were multi-sector collateralized debt obligations
. The CDS were issued by AIG's Financial Products Group.
Collateralized debt obligations
(CDOs) are the notorious debt instruments that wreaked havoc during the crisis.
The latest sales were from a $28.82 loan collateralized by exotic collateralized debt obligations
backed by mortgage-backed securities held in the so-called Maiden Lane III facility.
Three years later, banks are finally agreeing to pay the fines while regulators continue to dole out new ones--most stemming from actions related to toxic securities, namely collateralized debt obligations
. These fines may look big on paper, but in reality they represent a small fraction of any major bank's assets.
Wells Fargo (NYSE: WFC) has agreed to pay a fine of USD11m to settle charges that its unit, Wachovia Capital Markets, had priced two collateralized debt obligations
more than what they were worth.
As one of its top executives told the commission, "no one wants to buy disaster protection from someone who is not going to be around." AIGFP's CDS guaranteed debts such as bonds, mortgage-backed securities and collateralized debt obligations
held by banks and other institutions.
Joe recommends prohibition of the collateralized debt obligations
that turned out to be a major factor in the Wall Street meltdown of 2008.
Judging by its content, the securities losses are related to such alphabet soup investments as ABS (asset-based securities), CDOs (collateralized debt obligations
) and CMOs (collateralized mortgage obligations).
He depicts how the risk of 2,393 subprime loans, with a face value of $430 million, was turned into high-grade investments with the help of "special purpose vehicles," and then collateralized debt obligations
, or CDOs.
Tom Pope's April 1 article, Mortgaged-Backed Investments Threaten Nonprofits, attempts to describe the risks nonprofit managers face when investing in collateralized mortgage obligations and collateralized debt obligations
, especially in the wake of the current credit crisis.
Some types of discounted debt instruments include corporate bonds, municipal bonds, certificates of deposit, stripped bonds, and collateralized debt obligations
. There are a number of debt instrument exceptions to the OID rules.
N-Star VIII is collateralized by commercial real estate loans (91.9% of pool), mainly subordinate debt positions, as well as commercial real estate collateralized debt obligations
(CRE CDOs; 8.1%).