During the recent housing boom, the companies also guaranteed more complex collateralized debt obligations, which are backed by portfolios of bonds.
But these days, trying to value certain subprime securities or the more complicated collateralized debt obligations, or C.D.O.'s, which are pools of mortgage securities, is difficult as well.
In the first half of 2007, they issued more fraudulent collateralized debt obligations than for the full year 2006, as they desperately tried to shove losses on unwary investors.
This gives their deals more the flavor of collateralized lending, since the business getting the cash is on the hook for the loss if a receivable proves uncollectible.
They were, in fact, building blocks for even more esoteric vehicles known as collateralized debt obligations, or C.D.O.'s.
In the first quarter of this year, banks issued about $26 billion in new collateralized loan obligations — more than in the same period in 2007, according to S&P Capital IQ.
These banks paid upward of $100,000 for ratings on mortgage bond deals, according to the Financial Crisis Inquiry Commission, and several hundreds of thousands of dollars for the more complex structures known as collateralized debt obligations.
The site has a database of more than 12,000 municipal, corporate, collateralized mortgage obligation, zero coupon and Treasury bonds currently available for purchase from several hundred trading desks.
Even if budgets stay the same, there is a tendency to seek out more complex and more esoteric swaps, collateralized debt obligations, indexes and other instruments from previously unmapped parts of the economy.
Stock ownership is concentrated among the wealthy; junk bonds and collateralized loan obligations only more so.
