FT--Bio-Finance is approaching its Frankenstein moment – the creation of living mortgage backed securities from scratch. Sometime within the next few months, quantitative biologists are likely to announce that they have made a live mortgage backed CDO from ingredients that can be bought off the shelf, in Miami, Nevada and Orange County and on the street in the East Village.
Researchers led by Crack Vendor, the most prominent figure in molecular bio-finance, last year synthesized an entire AAA rated Collateralized Debt Obligation – with all the quantitative instructions the CDO needs to live and mutate into a live contagion – from toxic laboratory chemicals. They also converted one species of Wall Street banker into a derivatives dealer through a “rat genome transplant”. The next step is to insert the artificial genome into an empty jail cell and “boot it up”, creating the world’s first "fully synthetic" asset backed banker.
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