I have 4 billion in residential CDOs, collateralized debt obligations.

Or they might even start to buy things that aren't Treasuries.

Well everyone knows that it's not going to be exactly 10 .

So just in kind of our everyday personal finance world, your mortgage is actually secured debt.

So, each of these is an investor.

We would create incentives for securitization.

The mortgage...

What happens if let's go to that scenario where we talked before 20 of the borrowers just say, you know what?

This is highly rated mortgage backed securities, maybe they have a slightly higher interest rate.

My next presentation, I'm going to take it to a further

So that's what we're going to show you in the presentation on collateralized debt obligations.

I have a whole video on mortgage backed securities.

And because it's a junkier rating, no one is going to want to buy it.

Those are essentially derivative securities that are derived from mortgage backed securities.

What we are going to do is go buy things like highly rated mortgage backed securities, or things like commercial paper, AAA corporate debt, so that those things, the interest on those things goes down.

Most of the loans we're familiar with in our personal

Let's say it's um let's say its 10 billion of commercial mortgages.

So let's think about how we manage our money.

So right here are a whole bunch of people's mortgages.

why.

And that caused housing prices to go up.

Well I have the original mortgage on my house.

Now one thing I want you to keep in mind is, they get 10 only if every one of these borrowers pays their loans, never defaults, never pre pays.

I suffered from my mortgage loan.

But you should watch the videos on mortgage backed securities and collateralized debt obligations, if you want to get a better understanding of exactly how the money flows go.

And then this is the thing that I really wanted to highlight, that it also had 4 billion of residential collateralized debt obligations.

This is really the tip of the iceberg.

It's only worth 100,000 now.

Let's say I'm some type of the Investment Bank.

We all have heard of it.

Of course, if enough people start defaulting, even these people start to get hurt.

And we said, OK on the assets side, had some government bonds, had some AAA corporate bonds, some commercial mortgages.

You're assuming interest only loans.

And that company has the right to payments that are secured by mortgages.

What does it mean, derivative?

Now what are my liabilities?

But for the simplicity of this argument,

Right?

Remaining mortgage on the home, 1 07,000.

You can actually do this type of a structure with any type of debt obligation that's backed by assets.

Your address in Brooklyn, the payments on your mortgage, how long you've been a member of the NYPD.

I am right now thirty four years old and

And when they default, what is kind of the recovery?

So when housing prices go down, that's the only situation where really you should have foreclosure.

The 400 million senior tranche we raised from 1000 senior securities, collateralized debt obligations.