Tuesday, February 17, 2009

I'm Not Understanding Something

So, we have the banks sitting on piles and piles of CDOs, because if they sell them, they'll wind up under-capitalized and begin the credit-trap death spiral. But doesn't mark-to-market accounting require them to write down their CDOs' value as soon as anybody sells enough of them to make a market?

Could it be that nobody is selling CDOs? And, if so, doesn't that start to smell a bit of collusion on the banks' part?

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