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By 2008, the failures of important financial establishments like Lehman Brothers and also the near-collapse of Other folks like Bear Stearns and Merrill Lynch highlighted the systemic threats posed by interconnected global economic markets.
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It began with years of lower curiosity costs and loose lending benchmarks, which encouraged extreme borrowing and speculative investments in subprime home loans. House loan-backed securities bundled these loans and have been marketed to investors.
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This portfolio acts as collateral to the interest produced via the CDO, and that is reaped via the institutional buyers who invest in it.
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