By Cory Doctorow (GPG 0xBF3D9110957E5F4C) @doctorow.pluralistic.net · 25/07/2026The whole point of collateralized debt obligations and swaps was to offer loans to people with bad credit - even loans they obviously couldn't pay back - without incurring a default risk. 12/ 1322
By Cory Doctorow (GPG 0xBF3D9110957E5F4C) @doctorow.pluralistic.net · 25/07/2026Subprime mortgages supercharged the practice of loan origination and resale (where a bank offers you a loan and then sells that loan to someone else, so your default becomes their problem) by splitting the loans into pieces. 13/ 1243
By Cory Doctorow (GPG 0xBF3D9110957E5F4C) @doctorow.pluralistic.net · 25/07/2026These pieces were recombined according to complex mathematical formulas that supposedly "proved" that the default risk from poor borrowers had been "offset" by combining them with other borrowers' loans and wrapping them in opaque insurance contracts. 14/ 1291
