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The Wall Street Money Machine

As investors left the housing market in the run-up to the meltdown, Wall Street sliced up and repackaged troubled assets based on those shaky mortgages, often buying those new packages themselves. That created fake demand, hid the banks’ real exposure, increased their bonuses — and ultimately made the mortgage crisis worse.

Enticed by profits and bonuses, Wall Street took advantage of complicated mortgage-based instruments to reap billions, only to exacerbate the eventual crash.

CDOs’ Interlocking Ownership

See which CDOs exchanged pieces with other CDOs through our interactive feature that reveals the incestuous nature of Wall Street’s CDO business.

Which CDOs and Banks Had Deals With the Most Cross-ownership?

See which CDOs exchanged pieces with other CDOs through our interactive feature that reveals the incestuous nature of Wall Street’s CDO business.

Welcome to CDO World!

The CDO Daisy Chain

Chart: A Bank's Best Customers

In the last two years of the boom, CDOs created by one bank commonly purchased slices of other CDOs created by the same bank.

Banks' Self-Dealing Super-Charged Financial Crisis

As investors left the market in the run-up to the meltdown, Wall Street created fake demand, increasing their bonuses — and ultimately making the crisis worse.

Merrill Lynch Did a Deal ‘Precisely’ Like Goldman's, Suit Asserts

Merrill Lynch and the Dutch bank Rabobank, which has sued Merrill over a failed CDO deal, have been sending dueling letters to a judge about whether Merrill's actions were similar to the ones that led to fraud charges against Goldman Sachs.

Magnetar Letter to Investors About Our Story -- And Our Response

Responding to reporting by ProPublica, the Chicago hedge fund Magnetar sends a letter to investors criticizing the news coverage. It does not deny that it bet against CDOs that it bought, but emphasizes that its practices were not illegal.

Magnetar Gets Started

E-mails Give Glimpse of How Magnetar Worked

E-mails with business partners suggest Magnetar's clout: The firm was involved at the start of deals and pushed for riskier bonds to be included in CDOs. One deal fell apart partly because of Ischus Capital Management's unease with pressure from Magnetar.

The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going

The hedge fund Magnetar helped create mortgage-based securities, pushed for risky things to go inside them and then bet against the investments, resulting in billions in losses for investors and ultimately making the financial crisis worse. It’s a story of the perverse incentives and reckless behavior that characterized the last days of the boom.

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