Synthetic CDO - CFAI reading question

hey all,

hoping someone could help me out, reading page 499 in the CFAI volume 5 book.

Towards the bottom it states that banks can shrink their balance sheet exposure without having to sell the assets… just wondering if someone could explain the mechanics of how this is done?

is the bank on the winning end of the credit default swap? that is, if a ‘credit event’ happens, do they get the pay out of the difference between par value and fair market value? are they the ‘buyer of protection’ ?

So in a cash based CDO motivated by balance sheet exposures, are they literally selling their bonds to an SPV, who then sells this out in tranches and they in turn receive the cash from the selling of the exposures?