What are Collateralized Debt Obligations?
The talk of the summer up and down Wall Street was the mortgage crisis. At the heart of the problem are CDOs – collateralized debt obligations, which are securities backed by a pool of bonds and loans. Dylan took to the streets of Times Square to find out if the average passerby knew what a CDO was. Check out the video:
CDOs are central to brokers’ earnings next week. Guy Adami thinks that banks’ exposure to CDOs could present a problem for some of them.
The earnings picture will hopefully provide some clarity as to if these companies even know what their debt obligations really are, Jeff Macke said.
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Trader disclosure: On Sept. 14, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (SWY); Najarian owns (CREE), (GS); Finerman’s Firm Owns S&P 500 Puts, Russell 2000 Puts, (BEAS), (ASD), Is Short (LEAP); Finerman’s Firm and Finerman Own (HD)