Today’s decision signals that about 70 councils, church groups and charities in Australia which made similar investments may be more likely to recover about A$200 million.
CDOs/SCDOs were at the heart of starting the GFC. Basically Investment banks were busily selling high risk investments that were purported to be low risk investments to governments, large institutions, and retirement investment institutions all over the world. It's what took the entirety of Iceland down and crashed the American retail banks. They were making "lucky dips" by bundling anonymous groups of low-security mortgages with high-security mortgages and selling them all off to investors for the price of mid-risk mortgages.
Investors were in effect paying for a bundle of three cars at BMW prices, with the chance that what they bought was any combination of a Nissan Versa, a BMW, and a Ferrari. Needless to say, the unlucky investors who received a heap of three Nissan Versas for the price of three BMWs just unexpectedly flushed most of their money down the toilet.
Edited, Sep 21st 2012 8:22am by Aripyanfar