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Cdo Market Shudders On Bear Stearns Fund Collapse

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Not since 1994 have mortgages with past due payments been so high, according to first-quarter data compiled by the Federal Deposit Insurance, the agency that insures deposits at 8,650 US banks. Lehman analysts estimated in April that the collateral backing CDOs had fallen by $25 billion.
Nobody wants to look at the truth right now because the truth is pretty ugly,” Mr Castillo said. “Where people are willing to bid and where people have them marked are two different places.”
We’re not surprised to find the principal circle of players is pretty interconnected,” said Roy Smith, professor of finance at New York University Stern School of Business and former head of Goldman’s London office. “What we’re looking for is whether the interconnection creates a negative domino effect: Whether hedge fund A creates a problem for other hedge funds, which in turn creates a problem for the prime brokers that are lending to them.”


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next 4 weeks is very important if we see another collapse form another major player, then its all over, CDO will bring down the US like teh bonds market did to the russians.

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