Analysis of information sources in references of the Wikipedia article "Synthetic CDO" in English language version.
Firms like Goldman found synthetic CDOs cheaper and easier to create than traditional CDOs at the same time as the supply of mortgages was beginning to dry up.
Credit default swaps were often compared to insurance: the seller was described as insuring against a default in the underlying asset. However, while similar to insurance, CDS escaped regulation by state insurance supervisors because they were treated as deregulated OTC derivatives. This made CDS very different from insurance in at least two important respects.
Synthetic CDOs on about $2 billion in debt were sold last year, Bloomberg writes, citing Citigroup data, and CDOs on another $1 billion have been sold so far this year.
An example of securitizations captured by the Volcker Rule include: Synthetic securitizations; Re-securitizations; CDOs of asset-backed securities such as RMBS, CMBS and other ABS; and Certain ABCP conduits.
