This week we learned about different fixed income markets (money markets, bond markets, loan markets, mortgages...). Add

[answerhappygod]

This week we learned about different fixed income markets (money
markets, bond markets, loan markets, mortgages...). Additionally,
we also learned the mechanics of collateralized mortgage
obligations and collateralized loan obligations.
In this forum discuss the collateralization process and
the reasons underlying the decisions by financial institutions to
collateralize their loan portfolios. Think about how this process
creates a wide dispersion of risks associated with this type of
assets beyond their origination point.
Furthermore, consider the growth and size of CLO of leveraged
loans (loans to highly indebted companies) as a source for
triggering another financial crisis when a conflation of events
such as a deterioration in the economy, deflation of asset prices
and rising risk of default, etc. occur. Evaluate the extent of
interconnections within the financial industry that can magnify
risks to the financial system.