Banks bundled sub-prime mortgages into tranches and resold them as securities

Evidence

For their part, the mortgage salespeople passed on the mortgages to larger banks, who, in turn, bundled hundreds or thousands of mortgages (the good with the bad) and sold them in tailored “tranches” on to other investors as Structured Investment Vehicles, Collateralized Debt Obligations and Asset-backed Securities. — Max Haiven, Cultures of Financialization, 154

Categorization

• DEFINE: Lays out the securitization pipeline — mortgages bucketed into tranches sold as CDOs and ABS.
• XREF: connects to: Eurozone sovereign bonds replaced US mortgage securities as the systemic repo collateral — Mark Blyth, Austerity: The History of a Dangerous…, 237; Bundled bad loans hid their risks and true value from investors; Exploding mortgage-security demand forced lenders to invent worthless borrowers. — Mark Blyth, Austerity: The History of a Dangerous…, 94 (+1 more)

Broader Connections

• Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis #expands (0.95) — Albert Bandura, Moral Disengagement, 1492
• Bundled bad loans hid their risks and true value from investors #expands (0.90)
• Exploding mortgage-security demand forced lenders to invent worthless borrowers. #qualifies (0.75) — Mark Blyth, Austerity, 94