Collateralized Debt Obligations (CDOs)

[@cwazychik]

Can someone please clarify- when banks sell these CDOs- do banks have to repay back this purchase price back to the investors in future? Is this a situation of debt against debt?

[@466vid]

The banks do not assume any risk in a classical CDO transaction. This is why all these assets get transferred to the special purpose vehicle in case the CDO assets default, instead of remaining on the bank's balance sheets.