OVERLAND PARK, Kan. — In the April 18, 2007 edition of Credit Union Times, Brian Hague, CFA president/CEO of CNBS, LLC noted that the housing slump resulting from the subprime mortgage meltdown was gaining traction, and threatened the broader economy. There was no consensus then, but three months later the bandwagon is rather more crowded, Hague noted during a recent interview.

Just last week, the latest shoe dropped, with American Home Mortgage Investment Corp., the Melville, N.Y. lender's announcement that it doesn't have the cash to fund new loans, leaving thousands of waiting homebuyers stranded. Investment banks cut of its credit lines and it's expected the company will have to declare bankruptcy.

Hague said the events following the Bear, Stearns hedge funds, so heavily invested in subprime-backed bonds becoming valueless after being dubbed at near $1.5 billion, led to a sudden distaste for the collateralized debt obligation market. "CDOs are the slumgullion of the bond market," he said. "They are backed by other bonds that, in turn, might be backed by other types of collateral, including mortgages, and they made up the bulk of the Bear hedge fund's holdings."