Collateralized Debt Obligations: "A Triumph of Greed Over Fear" - Seeking Alpha:
"'More than anything else, this borrowing represents a triumph of greed over fear.'
When you boil all the risks down to their essence, its all about reputation, as shown with the decision by BSC to bail out their wayward progeny. But there is a limit to the amount of capital which BSC or any prime broker can deploy to prop up the sagging market for CDOs. Look for the Fed to get involved in the CDO mess sooner rather than later, but hopefully before a major dealer is taken down. Just imagine what happens to the dollar and to the US financial markets if the Fed begins to accept this toxic waste as collateral on emergency discount window loans."