PT - JOURNAL ARTICLE AU - Larry Cordell AU - Greg Feldberg AU - Danielle Sass TI - The Role of ABS CDOs in the Financial Crisis AID - 10.3905/jsf.2019.1.072 DP - 2019 Mar 28 TA - The Journal of Structured Finance PG - jsf.2019.1.072 4099 - https://pm-research.com/content/early/2019/03/28/jsf.2019.1.072.short 4100 - https://pm-research.com/content/early/2019/03/28/jsf.2019.1.072.full AB - We examine the role of asset-backed security collateralized debt obligations (ABS CDOs) as a primary catalyst for the financial crisis. We show how ABS CDOs became the main investment vehicle for the riskiest investment-grade securities in the private-label mortgage market. We estimate a final tally of writedowns on ABS CDOs, $410 billion in total, with $325 billion assumed by AAA and “super-senior” securities, which had minimal capital, margin, or liquidity requirements. Pre-crisis regulations allowed excessive leverage at some firms investing in these securities, imperiling their solvency and placing them at the center of the financial crisis.