Tuesday, February 19, 2008

Funny Mortgage Presentation

Funny finance presentation courtesy of Sterz on the mortgage bond disaster. It's really only funny if you are a finance dork like me. Give it a look though.

One quick question: When I was a young finance buck taking classes at CAL Berkeley in 97', I learned all about CDO's and even how to price them. I also learned about default risk, prepayment risk, etc. I also learned about tranching these types of securities.

So what changed from 97' to 07'? Pretty much only ridiculously low interest rates and a willingness to bail institutions out -- both from the Fed.