The blockbuster case brought against Goldman Sachs on Friday by American securities regulators put a particularly exotic species of structured security—the synthetic collateralised debt obligation—in the public spotlight.

The CDO at the centre of the Goldman case was particularly toxic, with some 99% of the underlying assets downgraded by ratings agencies within a year of the deal closing. The suit focuses on the influence that a hedge fund, Paulson & Co, may have had on the CDO’s construction, and whether Goldman should have told prospective investors more about this influence. Paulson famously bet heavily against the mortgages of the sort that were packed into the CDO that Goldman sold to investors. 

However, it’s not as if other CDOs were performing well while Goldman’s tanked. Some 70% of CDOs rated by Fitch were downgraded during 2009. Less than half of the securities that began 2009 rated AAA ended the year that way, with 16% of formerly AAA securities plunging all the way to “junk” status in a matter of months.

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