Why Toxic Assets Are So Hard To Clean Up

Here's a great article explaining toxic assets and how incessant securitization caused a lot of the current economic problems we have.

Securitization is basically transfering risk / reward into a product.

For example, if someone borrowed $100,000 and has to pay 6% interest on it from a bank. A bank might want to turn that into a security and sell it to someone like you or me who would pay something like $110,000 to receive the 6% interest and the whole loan back.

Banks do this to raise capital and make other loans that they may securitize.

http://online.wsj.com/article/SB124804469056163533.html