Subprime crisis throws up doubts on effectiveness of Basel II Accord


Based on concepts developed in the mid-1990s, critics are arguing that the Basel II Accord is out of touch with today's markets, particularly in respect of structured products.

At the core of the crisis was the bundling of sub-prime mortgages into collateralised debt obligations (CDOs), which were then underwritten by investment banks and sold to asset management firms, hedge funds and other investors.

Under Basel II, some packaged assets are treated as lower risk products as bundling assets

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