CDOs and the subprime mortgage market

As the US subprime mortgage market grew, more and more subprime loans were packaged up as securitisations

Those that are sympathetic to the banks' cause could argue, with some justification, that there is a very simple explanation for why home loans in general and subprime lending in particular has accounted for so much of the collateral in the CDO market. The simple mathematics of it are that the US is the most indebted society in the world, and home loans comfortably account for the lion's share of that indebtedness.

According to Federal Reserve Board data, as of the second quarter of 2006, 36% of

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