Will CLOs become today's CDOs?

A major cause of the Great Recession was the CDO (a collateralized debt obligation). It was a structured asset-backed security sold to high risk mortgagees that eventually seriously wounded the mortgage market and the economy. Now, the financial geniuses are pushing the CLO, a collateralized loan obligation. Like CDOs they are being sold to high risk borrowers - companies with junk-level credit ratings. The C.L.O.s are made up of loans to between 100 and 300 already indebted corporate borrowers. Sears, which filed for bankruptcy this week, was among the companies that took what are called leveraged loans. Such loans to companies hit a record of more than $550 billion last year, eclipsing levels in the last years before the financial panic.