, Columnist
Meet Wall Street’s Latest Frankenstein
Collateralized fund obligations take on a new life.
What could go wrong?
Photographer: Hulton Archive/Getty Images
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The townspeople just can’t win.
Consider Wall Street’s latest financial Frankenstein of a bad idea, collateralized fund obligations. Perhaps a better monster metaphor would be zombies, because these securities are the sort of terrible concoction that rise out of the Wall Street swamp and don’t seem to die. Collateralized fund obligations, or CFOs, were first given life in the early 2000s, but the market for them has mostly been dormant since the financial crisis. It has come back only recently.