Last week, all three rating agencies - Moody's, Standard and Poor's, and Fitch - announced downgrades of subprime linked debt. And this week, Bear Stearns said investors in one of its hedge funds that bought CDOs on a leveraged basis would get none of their money back. They were wiped out, said the letter reported by Bloomberg, buying Triple-A bonds. Just how subprime CDOs, suspicious byproducts of a disreputable industry, came to be rated AAA is a story worth telling, but today we will stick to the news. Bear went on to say that while investors in one of its two endangered funds had been wiped out, investors in the other fund could breathe a sigh of relief - they had only lost 91% of their money.Crazy.
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