Did anyone other than Elizabeth Dole bring up the credit default swaps yesterday?

[Phoebe Loosinhouse]

I thought Bernacke actually blanched when she brought them up and he gave a non-answer about yes, they knew that was an issue and the NY Reserve Bank in particular was starting to regulate them.

Of course, left unanswered was - what are you going to do with the ones that already exist?

Did anyone see any meaningful discussion of the CDSs? What I heard yesterday was still just focussed on mortgages, which I think is the fog machine designed to obscure the bigger, badder problems.

[whistle]

1. Credit default swaps are what exactly?

[burythehatchet]

2. An insurance policy lenders purchase to cover bad loans

[pnwmom]

5. That's not the bad part. The bad part is that they can be bought and sold

-- at enormous profit -- by and from speculators who have NO financial interest in the underlying property.

And they aren't regulated at all and they aren't carried on the books of major financial institutions such as banks. Estimates are that more than $62 TRILLIONS of debt in credit swaps is attached to our economy, but no one really knows.

[Phoebe Loosinhouse]

6. Best analogy for that is that it's like someone other than you could have fire insurance on YOUR

house and collect if it burned down.

Third parties could stand on the sidelines and bet on outcomes. It is nothing but pure specualtion and gambling. It's the OTB of the financial markets. There is more money currently on the the table with the credit default swaps that the GDP of the entire world.

[whistle]

7. Okay, so that promted me to go to the site at the link below

http://en.wikipedia.org/wiki/Credit_default_swap

I am shaking my head

[pnwmom]

4. Here's a link to some info.

http://finance.yahoo.com/expert/article/yourlife/109609

[OregonBlue]

3. I also noticed he avoided an answer.