Toxic assets

This week the treasury guaranteed what has been called $300 Billion of toxic assets. I really don't understand what comprises a toxic asset. Toxic by definition is something that is poisonous, so much so that it can cause death or serious debilitation. I'm not sure how a mortgage security or a CDO can cause death, at least to a human being.

The real issue is that these firms holding toxic assets have toxic levels of leverage that has led to their inability to make markets in the securities they hold. It's fine for firms to apply leverage to capitalize on their competitive advantage; however, many financial institutions appear to have misjudged their competitive advantage. They believed they were supreme experts at quantifying risk. It is this lapse in judgement that has been toxic to their shareholders and taxpayers alike.