Abbreviate to accumulate?

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If you ask investors for their least favourite abbreviations from the crunch, CDO, CLO, RMBS and CMBS may spring up.

This is because the structured credits, based on mortgages and property, in this ‘alphabet soup’ were the instruments whose failure stood in many investors’ minds for the financial crisis. What Lehman Brothers did for the reputation of investment banking, instruments linked to loans on sub-prime property did for financial markets. Many securities backed by residential and commercial mortgages (RMBS and CMBS respectively) carried high credit ratings, as did many bundles of loans, called collateralised debt and loan obligations (CDOs, CLOs). Numerous investors in them just looked at...

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