Chapter
The Securitization Machine
Financial engineering and the instruments that built the housing bubble.
5 entries · Chronological order
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1
Fannie Mae & Freddie Mac
1938 CEGovernment-sponsored enterprises (GSEs) created to provide liquidity and stability to the U.S. secondary mortgage market
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2
Mortgage-Backed Securities (MBS)
1970 CEA financial instrument that pools home loans into a single bond to distribute risk and provide market liquidity
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3
Collateralized Debt Obligations (CDO)
1987 CEA layered security that repackages risky debt into tranches with varying credit ratings through financial alchemy
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4
Credit Default Swaps (CDS)
1994 CEA derivative contract that transfers credit risk by functioning as insurance against borrower default
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5
Countrywide Financial
1968 CEThe largest U.S. mortgage lender whose aggressive subprime practices epitomized the excesses of the housing bubble
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