[Verse 1] Banks collect mortgages by the thousand Bundle them tight like wheat in sheaves Pool them together, slice and dice them MBS certificates, what investors receive Home loans from California to Maine Packaged as bonds with monthly refrain [Chorus] Securitized, bundled and sold MBS, ABS, stories retold Cash flows downstream from borrower to buyer Tranches stacked up like floors getting higher Pool the assets, slice the pie Securities born when loans multiply [Verse 2] Car loans and credit cards join the parade Student debt marching in ABS lines Not just mortgages getting the trade Asset-backed bonds with various designs Receivables flowing like rivers to sea Transformed into bonds for you and me [Chorus] Securitized, bundled and sold MBS, ABS, stories retold Cash flows downstream from borrower to buyer Tranches stacked up like floors getting higher Pool the assets, slice the pie Securities born when loans multiply [Bridge] Senior tranches feast first at the table Subordinated waits for the crumbs Credit enhancement keeps ratings stable Special purpose vehicle where money comes Prepayment risk when rates tumble down Extension risk when payments slow down [Verse 3] CDOs built from other securities Complex structures reaching for yield Synthetic versions use derivatives Correlation risks suddenly revealed When housing crashed, dominoes fell Structured products rang warning bell [Chorus] Securitized, bundled and sold MBS, ABS, stories retold Cash flows downstream from borrower to buyer Tranches stacked up like floors getting higher Pool the assets, slice the pie Securities born when loans multiply [Outro] Diversification was the dream But concentration broke the scheme Securitization changed the game Banks to bondholders, risk transferred by name
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