Morgan Stanley Shorted Doomed Baldwin CDOs

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May 14 (Bloomberg) -- In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanley created a cluster of investments known as the Baldwin deals that were doomed to fail even if default rates stayed low -- then bet against its concoction. Rather than curtailing their bets on mortgage bonds as the underlying home loans paid down, the $167 million of synthetic collateralized debt obligations kept wagering as if the risk hadn’t changed, according to sales documents. Bloomberg's Erik Schatzker and Deirdre Bolton report. (Source: Bloomberg)


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