Synthetic CDO

A synthetic CDO is a variation of a CDO (collateralized debt obligation) that generally uses credit default
swaps and other derivatives to obtain its investment goals.[1] As such, it is a complex derivative financial
security sometimes described as a bet on the performance of other mortgage (or other) products, rather than
a real mortgage security.[2] The value and payment stream of a synthetic CDO is derived not from cash
assets, like mortgages or credit card payments – as in the case of a regular or "cash" CDO—but from
premiums paying for credit default swap "insurance" on the possibility of default of some defined set of
"reference" securities—based on cash assets. The insurance-buying "counterparties" may own the
"reference" securities and be managing the risk of their default, or may be speculators who've calculated
that the securities will default.

Synthetics thrived for a brief time because they were cheaper and easier to create than traditional CDOs,
whose raw material—mortgages—was beginning to dry up.[3] In 2005, the synthetic CDO market in
corporate bonds spread to the mortgage-backed securities market,[4] where the counterparties providing the
payment stream were primarily hedge funds or investment banks hedging, or often betting that certain debt
the synthetic CDO referenced – usually "tranches" of subprime home mortgages – would default. Synthetic
issuance jumped from $15 billion in 2005 to $61 billion in 2006,[5] when synthetics became the dominant
form of CDOs in the US,[6] valued "notionally"[7] at $5 trillion by the end of the year according to one
estimate.[6]

Synthetic CDOs are controversial because of their role in the subprime mortgage crisis. They enabled large
wagers to be made on the value of mortgage-related securities, which critics argued may have contributed
to lower lending standards and fraud.[8]

Synthetic CDOs have been criticized for serving as a way of hiding short position of bets against the
subprime mortgages from unsuspecting triple-A seeking investors,[9] and contributing to the 2007-2009
financial crisis by amplifying the subprime mortgage housing bubble.[10][11] By 2012 the total notional
value of synthetics had been reduced to a couple of billion dollars.[12]

History
In 1997, the Broad Index Secured Trust Offering (BISTRO) was introduced. It has been called the
predecessor to the synthetic CDO structure.[13] From 2005 through 2007, at least $108 billion in synthetic
CDOs were issued, according to the financial data firm Dealogic. The actual volume was much higher
because synthetic CDO trades are unregulated and "often not reported to any financial exchange or
market".[8] Journalist Gregory Zuckerman, states that "according to some estimates", while there "were
$1.2 trillion of subprime loans" in 2006, "more than $5 trillion of investments", i.e. synthetic CDOs, were
created based on these loans.[6] Some of the major creators of synthetic CDOs who also took short
positions in the securities were Goldman Sachs, Deutsche Bank, Morgan Stanley, and Tricadia Inc.[8] In
2012, the total notional value of synthetic CDOs arranged was only about $2 billion.[12]

Definition
A synthetic CDO is typically negotiated between two or more counterparties that have different viewpoints
about what will ultimately happen with respect to the underlying reference securities. In this regard, a
synthetic CDO requires investors on both sides – those taking a long position and those taking a short
position.[1] Various financial intermediaries, such as investment banks and hedge funds, may be involved in
finding the counterparties and selecting the reference securities on which exposures are to be taken. One
counterparty typically pays a premium to another counterparty in exchange for a large payment if certain
loss events related to the reference securities occur, similar to an insurance arrangement. These securities are
not typically traded on stock exchanges.

In technical terms, the synthetic CDO is a form of collateralized debt obligation (CDO) in which the
underlying credit exposures are taken using a credit default swap rather than by having a vehicle buy assets
such as bonds. Synthetic CDOs can either be single-tranche CDOs or fully distributed CDOs. Synthetic
CDOs are also commonly divided into balance sheet and arbitrage CDOs, although it is often impossible to
distinguish in practice between the two types. They generate income selling insurance against bond defaults
in the form of credit default swaps, typically on a pool of 100 or more companies. Sellers of credit default
swaps receive regular payments from the buyers, which are usually banks or hedge funds.[14]

Parties
Investors in synthetic CDOs included

"funded" long investors, who

paid cash to purchase actual
securities issued by the CDO.
These investors received
interest if the reference
securities performed, but they
could lose all of their investment
if the reference securities
defaulted.
"unfunded" long investors, who
entered into swaps with the
CDO, making money if the
reference securities performed.
These investors were highest in
the payment "waterfall" –
receiving premium-like
payments from the CDO as long
as the reference securities
performed – but they would
have to pay if the reference
securities deteriorated beyond a
certain point and the CDO did
not have sufficient funds to pay
the short investors.
"short" investors, who bought
credit default swaps on the
reference securities, making
money if the securities failed. Synthetic CDO Diagram from Financial Crisis Inquiry Commission
These investors were often
hedge funds. They bought the
credit default swaps from the CDOs and paid premiums unfunded investors received.[15]
One example is Abacus 2004-1, the first of 47 synthetic CDOs Goldman Sachs packaged and sold. The
deal was worth $2 billion.[16] About one-third of the swaps referenced residential mortgage-backed
securities, another third referenced existing CDOs, and the rest, commercial mortgage-backed securities
(made up of bundled commercial real estate loans) and other securities.[16]

The short investor for the entire deal – "betting it would fail" – was Goldman, which purchased credit
default swap protection on the reference securities and paid premiums.

The funded investors of that CDO were IKB (a German bank), the TCW Group, and Wachovia. These
firms put up a total of $195 million to purchase "mezzanine" tranches of the deal (rated AA to BB) and in
return would receive scheduled principal and interest payments if the referenced assets performed. If those
assets did not, Goldman would receive the $195 million. In this sense, IKB, TCW, and Wachovia were
“long” investors, betting that the referenced assets would perform well.

The unfunded investors – TCW and GSC Partners (asset management firms that managed both hedge
funds and CDOs) – did not put up any money up front; they received annual premiums from Goldman via
the CDO in return for the promise that they would pay the CDO if the reference securities failed and the
CDO did not have enough funds to pay the short investors.[17] (As of 2011, Goldman, the CDO creator
and short investor has received about $930 million, while the long investors lost "just about all of their
investments".[17])

Characteristics
A synthetic CDO is a tranche or tranches on a portfolio of credit default swaps (CDS). The portfolio could
either consist of an index of reference securities, such as the CDX or iTraxx indices,[18] or could be a
bespoke portfolio, consisting of a list of reference obligations or reference entities selected by or specifically
for a particular investor.[19] Bespoke portfolios were more popular in Europe than in North America, and
thus acquired the British term "bespoke", implying a suit tailored for a specific customer by a London
Savile Row tailor.

A single-name CDS references only one security and the credit risk to be transferred in the swap may be
very large. In contrast, a synthetic CDO references a portfolio of securities and is sliced into various
tranches of risk, with progressively higher levels of risk. In turn, synthetic CDOs give buyers the flexibility
to take on only as much credit risk as they wish to assume.

The seller of the synthetic CDO gets premiums for the component CDS and is taking the "long" position,
meaning they are betting the referenced securities (such as mortgage bonds or regular CDOs) will perform.
The buyers of the component CDS are paying premiums and taking the "short" position, meaning they are
betting the referenced securities will default. The buyer receives a large payout if the referenced securities
default, which is paid to them by the seller. The buyers of the synthetic CDO are taking a long position in
the component CDS pool, as if the referenced securities default the seller of the synthetic CDO must pay
out to the buyers of the component CDS rather than the buyers of the synthetic CDO.

The term synthetic CDO arises because the cash flows from the premiums (via the component CDS in the
portfolio) are analogous to the cash flows arising from mortgage or other obligations that are aggregated
and paid to regular CDO buyers. In other words, taking the long position on a synthetic CDO (i.e.,
receiving regular premium payments) is like taking the long position on a normal CDO (i.e., receiving
regular interest payments on mortgage bonds or credit card bonds contained within the CDO).

In the event of default, those in the long position on either CDO or synthetic CDO suffer large losses. With
the synthetic CDO, the long investor pays the short investor, versus the normal CDO in which the interest
payments decline or stop flowing to the long investor.
Synthetic CDO Example: Party A wants to bet that at least some mortgage bonds and CDOs will default
from among a specified population of such securities, taking the short position. Party B can bundle CDS
related to these securities into a synthetic CDO contract. Party C agrees to take the long position, agreeing
to pay Party A if certain defaults or other credit events occur within that population. Party A pays Party C
premiums for this protection. Party B, typically an investment bank, would take a fee for arranging the
deal.

One investment bank described a synthetic CDO as having

characteristics much like that of a futures contract, requiring two counterparties to take
different views on the forward direction of a market or particular financial product, one short
and one long. A CDO is a debt security collateralized by debt obligations, including mortgage-
backed securities in many instances. These securities are packaged and held by a special
purpose vehicle (SPV), which issues notes that entitle their holders to payments derived from
the underlying assets. In a synthetic CDO, the SPV does not own the portfolio of actual fixed
income assets that govern the investors’ rights to payment, but rather enters into CDSs that
reference the performance of a portfolio. The SPV does hold some separate collateral securities
which it uses to meet its payment obligations.[20]

Another interesting characteristic of synthetic CDOs is that they are not usually fully funded like money
market funds or other conventional investments. In other words, a synthetic CDO covering $1 billion of
credit risk will not actually sell $1 billion in notes, but will raise some smaller amount. That is, only the
most risky tranches are fully funded and the less risky tranches are not; after all, the entire point of
structuring risk into tranches is that the less risky tranches are supposed to be inherently less likely to suffer
default.

In the event of default on all the underlying obligations, the premiums paid by Party A to Party C in the
above example would be paid back to Party A until exhausted. The next question is: who actually pays for
the remaining credit risk on the less risky tranches, as well as the "super-senior" risk that was never
structured into tranches at all (because it was thought that no properly structured synthetic CDO would
actually undergo complete default). In reality, many banks simply kept the super-senior risk on their own
books or insured it through severely undercapitalized "monoline" bond insurers.[21] In turn, the growing
mountains of super-senior risk caused major problems during the subprime mortgage crisis.

Impact on the subprime mortgage crisis

According to New York Times business journalist Joe Nocera, synthetic CDOs expanded the impact of US
mortgage defaults. Prior to the creation of CDS and synthetic CDOs, you could have only as much
exposure to non-prime mortgage bonds as there were such mortgage bonds in existence. At their peak,
approximately $1 trillion in subprime and Alt-A mortgages were securitized by Wall Street. However, with
the introduction of the CDS and synthetic CDOs, exposure could be amplified since mortgage bonds could
be "referenced" by an infinite number of synthetic CDOs, as long as investors agreed to take the other side
of the bet. For example, the Financial Crisis Inquiry Commission Report found that more than $50 million
in notional amount of credit default swaps in Synthetic CDOs referenced the low-rated BBB tranche of the
one mortgage-backed security – "CMLTI 2006-NC2" – which had an initial principal amount of only $12
million. This was just one of many low-rated tranches referenced by multiple CDSs that later defaulted.[16]

Synthetic CDOs were both "cheaper and easier" to create, easier to customize, and arranging them took a
fraction of the time of that arranging cash flow CDOs.[3] In 2006-2007 – as interest rates rose and home
prices became increasingly unaffordable – subprime mortgage origination starting to run out of risky
borrowers to make questionable home loans to, and at the same time the number of hedge funds and
investment banks interested in betting with CDS (a raw material of synthetic CDOs) against repayment of
the bad home loans grew.[22][23]

Debate and criticism

Synthetic CDOs have been strongly criticized for making the subprime mortgage crisis worse than it
already was — or as journalists Bethany McLean and Joe Nocera put it — turning a "keg of dynamite" that
was subprime loans "into the financial equivalent of a nuclear bomb".[10] Zuckerman calls the growth of
synthetics, "the secret to why debilitating losses resulted from a market that seemed small to most
outsiders".[6]

Economist Paul Krugman and financier George Soros have called for their banning. Krugman wrote in
April 2010 that: "What we can say is that the final draft of financial reform ... should block the creation of
'synthetic CDOs,' cocktails of credit default swaps that let investors take big bets on assets without actually
owning them."[24] Financier George Soros said in June 2009: "CDS are instruments of destruction which
ought to be outlawed."[25]

Author Roger Lowenstein wrote in April 2010:

...the collateralized debt obligations ... sponsored by most every Wall Street firm ... were
simply a side bet – like those in a casino – that allowed speculators to increase society’s
mortgage wager without financing a single house ... even when these instruments are used by
banks to hedge against potential defaults, they raise a moral hazard. Banks are less likely to
scrutinize mortgages and other loans they make if they know they can reduce risk using swaps.
The very ease with which derivatives allow each party to 'transfer' risk means that no one party
worries as much about its own risk. But, irrespective of who is holding the hot potato when the
music stops, the net result is a society with more risk overall.

He argued that speculative CDS should be banned and that more capital should be set aside by institutions
to support their derivative activity.[26]

Columnist Robert Samuelson wrote in April 2010 that the culture of investment banks has shifted from a
focus on the most productive allocation of savings, to a focus on maximizing profit through proprietary
trading and arranging casino-like wagers for market participants: "If buyers and sellers can be found, we'll
create and trade almost anything, no matter how dubious. Precisely this mind-set justified the packaging of
reckless and fraudulent "subprime" mortgages into securities. Hardly anyone examined the worth of the
underlying loans."[27]

Former Federal Reserve Chairman Paul Volcker has argued that banks should not be allowed to trade on
their own accounts, essentially separating proprietary trading and financial intermediation entirely in
separate firms, as opposed to separate divisions within firms. His recommendation – the Volcker Rule –
would apply to synthetic securitization.[28]

Specific issues

The Financial Crisis Inquiry Commission noted that while the credit default swaps used in synthetics were
often compared to insurance, unlike insurance policies in the US they were not regulated. That meant that a
party with no "insurable interest" could buy a credit default swap as a pure bet (known as “naked credit
default swaps”) – forbidden with insurance. This allowed inflation of potential losses or gains on the default
of a loan or institution. Insurance regulators also required that

insurers put aside reserves in case of a loss. In the housing boom, CDS were sold by firms that
failed to put up any reserves or initial collateral or to hedge their exposure. In the run-up to the
crisis, AIG, the largest U.S. insurance company, would accumulate a one-half trillion dollar
position in credit risk through the OTC market without being required to post one dollar’s
worth of initial collateral or making any other provision for loss.[29]

The CDOs have also been described as serving as a way of hiding short position of bets against the
subprime mortgages from investors who depended on credit rating agency ratings to judge risk. In the case
of the Synthetic CDO Example provided above, there were a number of "Party Cs" who bought synthetic
CDOs from investment banks, not because they had examined the referenced securities and thought a long
position was prudent, but because they trusted the credit agency rating the investment bank had paid for.
The investors were unaware that the investment bank had created the synthetic CDO because they – or a
favored client such as Paulson & Co. – wanted to bet on the default of the referenced securities, and needed
the investor to pay them off if they won.[30] The New York Times quoted one expert[31] as saying:

The simultaneous selling of securities to customers and shorting them because they believed
they were going to default is the most cynical use of credit information that I have ever seen ...
When you buy protection against an event that you have a hand in causing, you are buying fire
insurance on someone else’s house and then committing arson.[32]

One bank spokesman said that synthetic CDOs created by Wall Street were made to satisfy client demand
for such products, which the clients thought would produce profits because they had an optimistic view of
the housing market.[8]

The crisis has renewed debate regarding the duty of financial intermediaries or market-makers such as
investment banks to their clients. Intermediaries frequently take long or short positions on securities. They
will often assume the opposite side of a client’s position to complete a transaction. The intermediary may
hold or sell that position to increase, reduce or eliminate its own exposures. It is also typical that those
clients taking the long or short positions do not know the identity of the other. The role of the intermediary
is widely understood by the sophisticated investors that typically enter into complex transactions like
synthetic CDOs.[33][34]

However, when an intermediary is trading on its own account and not merely hedging financial exposures
created in its market-maker role, potential conflicts of interest arise. For example, if an investment bank has
a significant bet that a particular asset class will decline in value and has taken the short position, does it
have a duty to reveal the nature of these bets to clients who are considering taking the long side of the bet?
To what extent does a market-maker that also trades on its own account owe a fiduciary responsibility to its
customers, if any?

See also
Collateralized debt obligation
CDO-Squared
Magnetar Capital
Shelf corporation
 Special purpose entity
Subprime mortgage crisis
The Big Short

References
1. Lemke, Lins and Picard, Mortgage-Backed Securities, §5:16 (Thomson West, 2017-2018
ed.).
2. The Financial Crisis Inquiry Report: Final Report of the National Commission (https://books.
google.com/books?id=gf7zqVX5zhAC&pg=PR24). Washington, DC: GPO. 2010. p. xxiv, 8.
ISBN 9780160883590.
3. The Financial Crisis Inquiry Report (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCI
C.pdf\). National Commission on the Causes of the Financial and Economic Crisis in the
United States. 2011. pp. 142–3. "Firms like Goldman found synthetic CDOs cheaper and
easier to create than traditional CDOs at the same time as the supply of mortgages was
beginning to dry up."
4. McLean, Bethany and Joe Nocera, All the Devils Are Here: The Hidden History of the
Financial Crisis Portfolio, Penguin, 2010, (p.264)
5. FINANCIAL CRISIS INQUIRY REPORT (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GP
O-FCIC.pdf), p.191
6. Zuckerman, Gregory, The Greatest Trade Ever: The Behind-the-Scenes Story of How John
Paulson Defied Wall Street and Made Financial History, Broadway Books, 2009, p.176
7. the total of the underlying debt of synthetics on which investors were betting
8. NYT-Banks Bundled Bad Debt, Bet Against It, and Won|Gretchen Morgenson| December 24,
2009 (https://www.nytimes.com/2009/12/24/business/24trading.html?_r=3&ref=business&pa
gewanted=all)
9. Quote: "the other side of the bet wasn't someone who had investigated the mortgage-backed
security – like Burry and Redleaf did – and thought they were betting on its performance. It
was someone who was buying a [triple A] rating and thought he couldn't lose money" (p.266)
McLean and Nocera, All the Devils Are Here (https://books.google.com/books?id=8tGsDQjE
aXoC&pg=PT284) 2010
10. Quote: the synthetic CDOs "turned that keg of dynamite [subprime loans] into the financial
equivalent of a nuclear bomb", (p.263) McLean and Nocera, All the Devils Are Here (https://b
ooks.google.com/books?id=8tGsDQjEaXoC&pg=PT281) 2010
11. quote="The losses were magnified by derivatives such as synthetic securities" p.xvi
FINANCIAL CRISIS INQUIRY REPORT (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GP
O-FCIC.pdf)
12. Gongloff, Mark (20 March 2013). "Synthetic CDOs Return To Wall Street, What Could
Possibly Go Wrong?" (https://www.huffingtonpost.com/2013/03/20/synthetic-cdos-return_n_
2918704.html). 03/21/2013. huffingtonpost.com. Retrieved 4 September 2013. "Synthetic
CDOs on about $2 billion in debt were sold last year, Bloomberg writes, citing Citigroup
data, and CDOs on another $1 billion have been sold so far this year."
13. "Broad Index Synthetic Trust Offering - BISTRO" (http://www.investopedia.com/terms/b/broa
d-index-synthetic-trust-offering.asp). Investopedia. Retrieved 29 January 2014.
14. Kohler, Alan (19 November 2008). "A tsunami of hope or terror?" (http://www.businessspecta
tor.com.au/bs.nsf/Article/A-tsunami-of-hope-or-terror-LHRJP?OpenDocument). Business
Spectator.
15. The Financial Crisis Inquiry Report (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCI
C.pdf) (PDF). National Commission on the Causes of the Financial and Economic Crisis in
the United States. 2011. p. 142.
16. The Financial Crisis Inquiry Report (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCI
C.pdf) (PDF). National Commission on the Causes of the Financial and Economic Crisis in
the United States. 2011. p. 145.
17. The Financial Crisis Inquiry Report (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCI
C.pdf) (PDF). National Commission on the Causes of the Financial and Economic Crisis in
the United States. 2011. p. 143.
18. Albergotti, Reed (30 July 2013). "Heard the One About the CDO That Actually Wasn't? Don't
Ask" (https://online.wsj.com/news/articles/SB1000142412788732417000457863585174559
7268). Wall Street Journal.
19. Structured Products and Related Credit Derivatives - A Comprehensive Guide for Investors.
pp254-255. Lancaster Schultz Fabozzi. John Wiley & Sons, Inc., 2008
20. WSJ-Goldman Responds to SEC Complaint-April 2010 (https://blogs.wsj.com/deals/2010/0
4/19/goldman-responds-again-to-sec-complaint/)
21. Tett, Gillian (2009). Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was
Corrupted by Wall Street Greed and Unleashed a Catastrophe (https://books.google.com/bo
oks?id=9aQOCMEI7m8C&pg=PA126). New York: Simon and Schuster. p. 126.
ISBN 9781439100752.
22. NYT-A Wall Street Invention Let Crisis Mutate-Joe Nocera-April 16, 2010 (https://www.nytim
es.com/2010/04/17/business/17nocera.html?hp)
23. The Financial Crisis Inquiry Report (https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCI
C.pdf) (PDF). National Commission on the Causes of the Financial and Economic Crisis in
the United States. 2011. pp. 142–3.
24. NYT-Paul Krugman-Looters in Loafers-April 2010 (https://www.nytimes.com/2010/04/19/opin
ion/19krugman.html?hp)
25. Reuters-George Soros-Ban CDS as Instruments of Destruction-June 2009 (https://www.reut
ers.com/article/idUSPEK34367320090612)
26. NYT-Lowenstein-Gambling with the Economy-April 2010 (https://www.nytimes.com/2010/04/
20/opinion/20lowenstein.html?ref=opinion)
27. Washington Post-Samuelson-Goldman's Rendezvous with Reality-April 2010 (https://www.
washingtonpost.com/wp-dyn/content/article/2010/04/21/AR2010042102528.html)
28. "The Volcker Rule's impact on financial institutions' ownership and sponsorship of structured
finance and securitization transactions" (http://www.lexology.com/library/detail.aspx?g=be99
1f52-58d1-48fc-8137-d97974cb9f0f). November 4, 2011. Cadwalader Wickersham & Taft
LLP. 4 November 2011. Retrieved 18 September 2013. "An example of securitizations
captured by the Volcker Rule include: Synthetic securitizations; Re-securitizations; CDOs of
asset-backed securities such as RMBS, CMBS and other ABS; and Certain ABCP
conduits."
29. FINANCIAL CRISIS INQUIRY COMMISSION REPORT (https://www.gpo.gov/fdsys/pkg/GP
O-FCIC/pdf/GPO-FCIC.pdf) (PDF). GPO. 2011. p. 50. "Credit default swaps were often
compared to insurance: the seller was described as insuring against a default in the
underlying asset. However, while similar to insurance, CDS escaped regulation by state
insurance supervisors because they were treated as deregulated OTC derivatives. This
made CDS very different from insurance in at least two important respects."
30. The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going (https://web.arc
hive.org/web/20100410084812/http://www.propublica.org/feature/all-the-magnetar-trade-ho
w-one-hedge-fund-helped-keep-the-housing-bubble), by Jesse Eisinger and Jake Bernstein,
ProPublica, April 9, 2010
31. Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York Banks
Bundled Bad Debt, Bet Against It and Won (https://www.nytimes.com/2009/12/24/business/2
4trading.html?pagewanted=all)
32. MORGENSON, GRETCHEN; LOUISE STORY (December 23, 2009). "Banks Bundled Bad
Debt, Bet Against It and Won" (https://www.nytimes.com/2009/12/24/business/24trading.htm
l?pagewanted=all). New York Times. Retrieved 4 September 2013.
33. Reuters-Felix Salmon-Is there a Goldman CDO Scandal-April 2010 (https://web.archive.org/
web/20100115065939/http://blogs.reuters.com/felix-salmon/2009/12/24/is-there-a-goldman-
cdo-scandal/)
34. WSJ-Goldman Responds Again to SEC Complaint-April 2010 (https://blogs.wsj.com/deals/2
010/04/19/goldman-responds-again-to-sec-complaint/)

Further reading
Kohler, Alan (19 November 2008). "A tsunami of hope or terror?" (http://www.businessspecta
tor.com.au/bs.nsf/Article/A-tsunami-of-hope-or-terror-LHRJP?OpenDocument). Business
Spectator. Article on synthetic CDOs.
Lemke, Thomas P.; Lins, Gerald T.; Picard, Marie E., Mortgage-Backed Securities (Thomson
West, 2017-2018 ed.).

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