The technology behind the collateralized debt obligation, or CDO, has been around since the 1980s, but only more recently has it been applied to mortgage-backed securities. It was designed to provide investors with greater diversification and disperse the risk of mortgage lending. But so-called mezzanine CDOs such as Norma actually served to magnify and concentrate the risk. Here is how they were made.
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Courtesy of the Wall Street Journal.
Mortgage Glossary
