Defaults have hit more than $300 billion worth of collateralised debt obligations built from asset-backed securities, analysts at Morgan Stanley and Wachovia said. Merrill Lynch, Citigroup, UBS and other banks suffered huge losses on CDOs of ABS, despite holding substantial amounts of what were supposed to be the top-rated tranches. The Bank of International Settlements and other entities said the products are too complex for effective risk management.

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