[Paladin2]

" It is important to note that the CDS contract is not actually tied to a bond, but instead references it. For this reason, the bond involved in the transaction is called the "reference obligation." "

This is should not be allowed.

[Neidermeyer]

” It is important to note that the CDS contract is not actually tied to a bond, but instead references it. For this reason, the bond involved in the transaction is called the “reference obligation.” “

This is should not be allowed.
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That is how the bankers insured their CDO’s on mortgage trusts 10-30X over... it is criminal... and we are all paying them off to this day on the miniscule losses (relatively speaking) on the “reference obligation”.