Banks Sell ‘Toxic Waste’ CDOs to Calpers, Texas Teachers Fund
By David Evans
June 1 (Bloomberg) — Bear Stearns Cos., the fifth-largest U.S. securities firm, is hawking the riskiest portions of collateralized debt obligations to public pension funds.
At a sales presentation of the bank’s CDOs to 50 public pension fund managers in a Las Vegas hotel ballroom, Jean Fleischhacker, Bear Stearns senior managing director, tells fund managers they can get a 20 percent annual return from the bottom level of a CDO.
“It has a very high cash yield to it,” Fleischhacker says at the March convention. “I think a lot of people are confused about what this product is and how it works.”
