Now, let's take a look at the CMO process. Now, we have the following players. We have the borrower, then, we have the mortgage broker, and clearly, we have the bank. Then we have the investment bank. And then we have CMO buyers, for simplicity like this. So in this episode we will discuss the first part. So, in this drama, there is act one, looks like this. So this is a house. This is a window. This is a cat sitting in. So, you would like to get the mortgage for this house. So you go to a broker and the broker asks you few questions, because it's as well sometimes in the subprime cases as well. Are you employed? You say well, you know, no. Do you have enough income? Well, not now, but maybe. They say, no problem. We'll give you a loan. We've no down payment. We have no interest. We've even postponed payments. Why is that so? Because the broker gets commission if he sells this mortgage. But here, you can see that there is a bank. The bank has nothing to seem for right now, but the contract is between the bank and the borrower. And the broker here sells it, and the broker gets commission from the bank. Now, when the broker sold the mortgage and collected the commission, he doesn't care anymore. Now, see what happens now with the bank. The bank should care about what the broker does. But, does the bank do it in reality? Let's see what's the behavior of the bank. The bank says, well, we have relaxed requirements. And that's too bad because clearly, there is high risk because of that. So, I as a bank should care. But then the bank thinks, if the price of the house goes up, then this risk is alleviated. Why? Like I said before, well, if the price goes up of them, these people who took these mortgages with no income, no nothing, they maybe will be able to make some of these payments to refinance so, basically. And after all, even if they default, I foreclose on this house. But now, it's price is higher. So, even after I pay some commission to the home seller, I still will make up for my potential loss. So, I as a bank, start to behave more negligently. I stopped caring much. Now, at the same time what happens is that here, I as a bank, think that I can resell that to the IB. Well, that in this case, if I have this option, then I care even less. Because if I resold the well, the question is the price. But if I still resold them, I can resell good mortgages at a nice price, and then the poor performing mortgages may be at a discount. But I still do not take that much risk. And even if some of the poor, but the home prices go up, then it's not such a bad thing. So basically, this whole setup results in the fact that banks start to behave imprudently. So, we are back to the classic case of adverse incentives that always are accompany such developments. Now, from here, we have to move ahead. And in the next episode, we will see other players. Namely, the bank, the investment bank, and the final clients.