Finally, I get it
Good! Now that you've got an "overview" of the subprime mortgage meltdown problem....here's a good explanation of how these subprime mortgages were transformed into AAA-grade (highest grade) paper that was bought by entities (pension funds, money market funds, etc.) who demand/require "safe investments" for their customers (and is the reason why the subprime mess is extending far beyond the housing market.)
"The Axis of Easel: Subprime Derivatives
YouTube - subprime derivatives
In the video, you will hear him mention that the securities are divided into "tranches."
TRANCHE: A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". (The tranches in this case are divided by risk.)
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