Looks like the 60 minutes story on CDS confused (misled?) me:
"It's a form of legalized gambling that allows you to wager on financial outcomes without ever having to actually buy the stocks and bonds and mortgages.
It would have been illegal during most of the 20th century, but eight years ago Congress gave Wall Street an exemption and it has turned out to be a very bad idea."
"It's legalized gambling. It was illegal gambling. And we made it legal gambling…with absolutely no regulatory controls. Zero, as far as I can tell," Dinallo says.
"I mean it sounds a little like a bookie operation," Kroft comments.
"Yes, and it used to be illegal. It was very illegal 100 years ago," Dinallo says.
The Bet That Blew Up Wall Street, Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis - CBS News
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