Interactive: CDOs’ Interlocking Ownership
Oct. 20: This text has been corrected.
As we reported last month with NPR’s Planet Money, in the two years before the meltdown Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. As part of our story, we wrote of 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other. The trades enabled the completion of $107 billion worth of CDOs and underscore the extent to which the market lacked real buyers.
- Click on a CDO to see the other CDOs it swapped unsold pieces with.
- Click on an underwriting bank, for example Merrill Lynch, to see which banks’ CDOs had cross-ownership.
- Click on the bank tab to get a sense of how many instances of cross-ownership there were for any given bank. (Or see them all.)
Download the data behind the chart.
Correction: This post previously reported that there were 85 instances during 2006 and 2007 in which two complex securities known as collateralized debt obligations bought pieces of each others' "unsold" inventory. In fact, there were some instances when this cross-exposure occurred through later transactions. The banks sometimes used such transactions to minimize their own exposure to CDOs they had created.
Our interactive graphic includes at least one example of cross-exposure that did not involve "unsold" inventory. A CDO called Tourmaline III made a sidebet in 2007 that mirrored the performance of a piece of a CDO called Zais Investment Grade 8; that same year Zais 8 bought a piece of Tourmaline III. Both CDOs were underwritten by Deutsche Bank.