Client Alert: Are CLOs the Next RMBS?
Publications
April 3, 2020
For the past several years, market observers have warned of risks associated with collateralized loan obligations or CLOs.
By way of example, in October 2018, referring to CLOs, The New York Times published an article titled “Wall Street Loves These Risky Loans. The Rest of Us Should Be Wary.” The article compared CLOs to residential mortgage-backed securities, stating that, as happened with RMBS, the leveraged loans pooled in CLOs were “being made to risky borrowers, lending standards [we]re dropping fast, and regulators [we]re easing the rules.”
More recently, on March 19, 2020, The Wall Street Journal published an article about leveraged loans and CLOs titled “The Next Coronavirus Financial Crisis: Record Piles of Risky Corporate Debt.” The authors noted that CLOs are “susceptible to violent price swings and have been one of the worst-performing debt investments” for the month of March 2020. The authors quoted one industry participant as saying that “‘[i]t does feel like the market accelerated into a panic over the course of the week.’”
In this article, we will: (i) provide a short introduction to CLOs; (ii) compare RMBS in the lead up to the Great Recession to CLOs today; and (iii) compare the types of claims related to RMBS that were litigated after the Great Recession to potential claims relating to CLOs.
To read the full article, please click here.
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© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
Publications
April 3, 2020
For the past several years, market observers have warned of risks associated with collateralized loan obligations or CLOs.
By way of example, in October 2018, referring to CLOs, The New York Times published an article titled “Wall Street Loves These Risky Loans. The Rest of Us Should Be Wary.” The article compared CLOs to residential mortgage-backed securities, stating that, as happened with RMBS, the leveraged loans pooled in CLOs were “being made to risky borrowers, lending standards [we]re dropping fast, and regulators [we]re easing the rules.”
More recently, on March 19, 2020, The Wall Street Journal published an article about leveraged loans and CLOs titled “The Next Coronavirus Financial Crisis: Record Piles of Risky Corporate Debt.” The authors noted that CLOs are “susceptible to violent price swings and have been one of the worst-performing debt investments” for the month of March 2020. The authors quoted one industry participant as saying that “‘[i]t does feel like the market accelerated into a panic over the course of the week.’”
In this article, we will: (i) provide a short introduction to CLOs; (ii) compare RMBS in the lead up to the Great Recession to CLOs today; and (iii) compare the types of claims related to RMBS that were litigated after the Great Recession to potential claims relating to CLOs.
To read the full article, please click here.
Related Capabilities
Related Locations
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
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