Who Oversees Credit Default Swaps?
A key impetus for combining the agencies may be the largely unregulated $30 trillion market for credit default swaps, insurance products that many observers argue contributed to the financial failures. Adam Posen, a fellow at the Peterson Institute for International Economics, contends that the securities have become toxic because they were traded on the over the counter market so often that, in many cases, buyers and sellers did not know each other, creating a domino effect of losses with each failure. “It became legally possible to gamble using this insurance,” Posen said.
