 Quote:
Originally Posted by ERD50
And I only have a minute now, but I think the problems with the CDS's were that there was some of that implicit govt guarantee in there, which distorted the risk.
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I never heard this before. CDS really has nothing directly to do with the whole housing mess (Fannie, Freddie, and all). And to my knowledge the government was never involved in the Credit Default Swap market (at least before the credit crisis). CDS is just another way to trade credit risk. It's very similar to buying or selling a bond on margin. It doesn't really serve any purpose the government would be interested in.
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