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Originally Posted by . . . Yrs to Go
CDS isn't really insurance any more than a put or a call is. We shouldn't have it regulated by the insurance commission and we really, really, really, shouldn't have it regulated at the state level. Moving CDS trading from the over-the-counter market to an exchange (something broker dealers have vigorously opposed, until now) is sufficient to fix the problem with CDS. Rest assured that this will happen. And when it does, CDS will become as vanilla as any other exchange traded security.
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I think you are right. Having CDS traded on exchange would the reduced the uncertainty and fear associated with this products and would have given greater visibility to management and regularity.
It would be stupid to have them regulated by the states. But that was one of the criticism of Commodities Future act by 60 Minutes.
I am not as optimistic as you that with Democrats firmly in control, everybody running for cover, plus Congress attempting to pass blame,that your sensible solution will come to pass.
I'd like to see trading in a new type of CDS. Congressional Dipshit Swaps this would be insurance policies against Congress doing dumb things and would help mitigate the cost of their policy. I am sure they would quickly turn into a multi trillion dollar market.
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