Toxie's Dead

If you were listening to NPR this morning, you would have heard that Toxie the Toxic Asset has died. The folks at NPR's Planet Money had purchased for $1,000 (and a 99% discount!) a bundle of mortgages whose values had dropped precipitously in the financial crisis. Did Planet Money make money? Listen to the whole story here. Here's the story's intro:

Toxie, Planet Money's pet toxic asset, died this week. She was killed by one of the worst housing busts in U.S. history. Toxic assets — bundles of mortgages that Wall Street sliced up and sold to investors — were at the center of the financial crisis.  When the housing market tanked, no one wanted to own them. That's when we bought one. When we bought Toxie, in January of this year, she seemed like a great deal.  We paid $1,000. That was 99 percent less than she cost during the housing boom. Every month, when homeowners paid their mortgages, we got a check. We thought we'd make back our investment before she died. But in the end, we collected only $449. It was never really about the money, though. And now that Toxie's gone, we'd like to take a few moments to remember her, and hear from those she’s touched.

An NPR listener also composed a song about Toxie!

Comments

[Brian Wolfman]

Dear Jedsalawyer:

That's a great question because, as you say, the story is less than clear. The impression that I got from the story is that all the underlying mortgages are "dead" -- that is, they are paid up (extremely unlikely) or they are foreclosed (very likely). In other words, the investors can no longer expect any money that is tied to payments made on the mortgages. I could well be wrong, but that's my best guess.

[Jedsalawyer]

I watched the video, and I'm wondering what exactly killed Toxie? I understand the creation of toxic assets, I understand what caused them to drop in value, but I'm am wondering why Toxie is being deemed "dead." What is defining Toxie as dead?