then resold their loans in bulk to Wall Street banks. The banks, in turn,...

then resold their loans in bulk to Wall Street banks. The banks, in turn, bundled the loans into high-yielding residential mortgage-backed securities {RMBS} and sold them on to investors around the world, all eager for a few hundredths of a percentage point more return on their capital. Repackaged as collateralized debt obligations {CDOs}, these subprime securities could be transformed from risky loans to flaky borrowers into triple-A rated investment-grade securities.

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