CDO Crisis

The CDO (Collateralized Debt Obligation) crisis was part of the 2008 financial crash. Banks bundled thousands of home loans into complex financial products called CDOs and sold them to investors. Many of these loans were risky, especially subprime mortgages. When borrowers started defaulting on payments, the value of these CDOs plummeted, causing huge losses for investors and financial institutions. This eroded trust in financial markets, triggered a credit crunch, and led to a severe economic downturn, illustrating how risky lending and misjudged financial products can threaten the entire economy.