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" ... Aramonte and Avalos did point to significant differences between today’s CLOs and the CDOs in the lead up to the crisis. “CLOs are less complex, avoiding the use of credit default swaps (CDS) and resecuritisations; they are little used as collateral in repo transactions; and they are less commonly funded by short-term borrowing than was the case for CDOs. In addition, there is better information about the direct exposures of banks.” They also explained that “When conditions in the housing market turned, the complexity and opacity of CDOs amplified financial stress. In contrast, CLOs are much less complex. Their collateral is diversified across firms and sectors, and the known incidence of synthetic collateral or resecuritisations is minimal.” According to them, Senior CLO tranches currently appear to benefit from larger loss-absorbing cushions than existed for CDOs. Equity and, in particular, mezzanine tranches make up larger shares of the capital structure of CLOs than they did for precrisis subprime CDOs. However, the actual protection afforded to senior tranches depends crucially on their sensitivity to default risk and, importantly, loss correlation risk.” ... "