The Wall Street Money Machine: CDOs Interlocking Ownership (ProPublica Reports)

Sep 24, 2010 at 12:33 PM
DailyBail in Wall Street Bailout, cdo, cdos, propublica, securitization, wall street, wall street

Brand new from ProPublica.

• "I'll buy your crap and you'll buy mine."

• "And we'll both report higher sales."

• "Then we can both have bigger bonuses."

• "Sweet.  See you on the tarmac at 3 pm."

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As we reported last month with NPR’s Planet Money, in the two years before the meltdown Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.  As part of our story, we wrote of 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other's unsold inventory. 

The trades enabled the completion of $107 billion worth of CDOs and underscore the extent to which the market lacked real buyers.

Check out both links at ProPublica, though I think it was hand-built for Janet Tavakoli:

• Which CDOs and Banks Had Deals With the Most Cross-ownership? (article)

• The Wall Street Money Machine -- CDOs’ Interlocking Ownership (infographic)

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More detail:

On Wednesday, we launched an interactive news application to help readers understand the cross-owned nature of Collateralized Debt Obligations (CDOs) in 2006-2007.  This cross-ownership helped inflate the bubble, and ultimately made the financial crisis worse.

• http://www.propublica.org/nerds/item/the-rainbow-connection-how-we-made-our-cdo-connections-graphic

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And some very quick background from last month:

•  Rampant CDO Fraud At Merrill, Citigroup, Other Banks (ProPublica article)

 

 



 

Article originally appeared on The Daily Bail (http://dailybail.com/).