What are collateralized debt obligations?
I believe it means putting many debts in a pool, selling the mixed debt in collateralized debt such as a bond. This is what brought down so many banks. The bought collateralized mortgage debt thinking they were getting a safe investment. The bond rating agencies weren’t doing their job when they rated these investments as high quality. When the bubble burst and people couldn’t pay their mortgages, the bonds lost value and some of them couldn’t be sold or they sold at a big loss to the seller.
