MBIA’s CDO Misadventures Continue (Commercial Real Estate Edition)

" So the monoline got themselves into a world of hurt thanks to writing guarantees on CDOs based on dodgy residential mortgages. " And the next iteration is likely to be CDOs with heavy exposure to commercial mortgage backed securities (by contrast, ones composed of whole loans would not be as troubling, since a CDO made of whole loans is functionally equivalent to a commercial real estate mortgage backed security, or a CMBS. It’s a first, not a second, generation securitization)."