Which CDOs And Banks Had Deals With The Most Cross-Ownership?

See which CDOs exchanged pieces with other CDOs through our interactive feature that reveals the incestuous nature of Wall Street’s CDO business.

As we reported last month in our story with NPR’s Planet Money, top investment banks on Wall Street created fake demand for their hottest product – mortgage-backed securities called collateralized debt obligations [2] – in the two years before the financial meltdown. Their activity increased banker bonuses but ultimately made the crisis worse. As real investors fled the market, Wall Street’s CDO machine arranged for CDOs to buy other CDOs.

We have now created an interactive feature that lets you see for yourself [1] one way in which the market became rife with self-dealing. As our story noted, we found 85 instances during 2006 and 2007 where two CDOs bought pieces of each other's unsold inventory. These trades, which involved $107 billion worth of CDOs, approximately a fifth of the market, underscore the extent to which the market lacked real buyers. Often the CDOs that swapped purchases closed within days of each other.

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