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The CDS Problem

Part of today's Senate Banking Committee Hearing on the U.S. financial crisis focused on the credit default swap (CDS) market. As Stephanie Dhue explains, these swaps are like insurance contracts that pay out when debt on a security is defaulted, and they have only been lightly regulated.



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External Links/Articles*

• Federal Reserve Bank of Atlanta(PDF Document)
  The Atlanta Fed is part of the U.S. central banking system. This links to the text of a speech given by David Mengle of the International Swaps and Derivatives Association at the Atlanta Fed's 2007 Financial Markets Conference. The speech is titled, "Credit Derivatives: An Overview."
• Federal Reserve Bank of New York (PDF Document)
  The New York Fed is part of the U.S. central banking system. This links to a March 2007 New York Fed staff report titled, "Credit Derivatives and Bank Credit Supply." The report offers some background information about the credit derivatives market, which includes credit default swaps.
• International Swaps and Derivatives Association (ISDA)
  ISDA is a trade association representing the derivatives industry. The organization's counsel, Greg Zerzan, is interviewed in Stephanie Dhue's report. The ISDA website currently features a news item titled, "ISDA Comments on Chairman Cox's Testimony to the Senate Banking Committee."
• State of New York
  As Stephanie Dhue reports, the State of New York plans to regulate credit default swaps as insurance starting January 1, 2009. This links to a September 23, 2008 press release issued by the State of New York titled, "Statement from Governor David A. Paterson on Credit Default Market."
• U.S. Senate Committee on Banking, Housing, and Urban Affairs
  This links to material related to today's Senate Banking Committee hearing on "Turmoil in the U.S. Credit Markets." The material includes video of the hearing as well as copies of the testimony given by Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, SEC Chairman Christopher Cox, and Federal Housing Finance Agency Director James Lockhart.

*Clicking these external links will take you off the NBR web site on PBS.org. NBR has no affiliation with these sites.