Krugman Equates CDO Market To ‘90s Stock Bubble

  • 03 Jul 2007
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In a recent column in The New York Times’ opinion section, economist Paul Krugman parallels the current state of the collateralized debt obligation market with Enron-style accounting practices of the 1990’s stock bubble. Krugman argues that the ratings agencies, Standard & Poor’s, Moody’s Investors Service and Fitch Ratings have been approving risky CDOs with high ratings even when the bonds don’t deserve such ratings.

Krugman says that the price of a basket of loans within the $800 billion subprime mortgage market has lost about 40% of its value since January. He also estimates that losses in the CDO market may range between $125-250 billion and cites some analysts as believing that a wave of problems in the CDO market will further dampen housing prices.

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  • 03 Jul 2007

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 6,415 22 12.84
2 Citi 5,781 17 11.57
3 BNP Paribas 3,530 14 7.06
4 Credit Suisse 2,783 8 5.57
5 Rabobank 2,633 4 5.27

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 99,251.11 279 13.17%
2 Bank of America Merrill Lynch 90,895.27 265 12.06%
3 Wells Fargo Securities 72,661.39 222 9.64%
4 JPMorgan 52,367.24 169 6.95%
5 Credit Suisse 41,885.89 127 5.56%