Stan, unless I am misreading you, you seem to be assuming that $100 of CDO is backed by $100 of home equity. I don’t understand this to be the case at all-from what I’ve read a 30% decline in home prices would easily wipe out many CDOs in their entirety.
Unfortunately after googling for a few minutes I can’t find a definitive source on this. Anybody know where to find details on the typical debt to equity ratio of a CDO?
