By Klapi (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Synthetic CDOs Are Coming

They are back from the dead and marching south.

Bank Lobbyists Fighting New Provision on Trust Preferred CDOs

Turns out mortgages weren’t the only toxic assets that were packaged into CDOs. Small community banks issued billions of dollars in trust preferred securities before the credit crunch as a way to prop up their capital cushions. Problem is, the only way they could sell the so-called TruPS to investors was to bundle them up into CDOs.