The Graveyard Is Full of Credit Default Swap Victims By Scott Rothbort About this article: Tim, the prima facie evidence against credit default swaps is American International Group (AIG) and Lehman Brothers. Had AIG not been allowed to sell credit default swaps or done so with proper oversight, then much of 2008 might not have occurred. Certainly AIG would not have been in the situation it found itself in. Had credit default swaps not been transacted recklessly in an unregulated manner then Lehman might not have been forced to file for bankruptcy. You can use data any which way you want to prove or disprove a point, but the graveyard is now full of credit default swap victims (directly and indirectly). Furthermore, the buyers of credit default swaps know that they have someone who will bail out the other side. We have created a huge moral hazard that remains unchecked. I have been involved in the derivatives business since 1984. I ran... To read the rest of this article and sign up for a FREE trial click here...

If you choose a 14-day free trial of RealMoney and you do NOT call to cancel within those 14 days, you will pay $129.95 — a $100 savings off the regular annual subscription price of $229.95. Unless you cancel before the end of that year, your subscription will automatically renew for another year at the then-current subscription price.

Offer applies only to new annual subscriptions, and is subject to change at any time. Void where prohibited.

If you choose a monthly subscription, you pay $34.95 per month. You will be notified if the current monthly rate of $34.95 changes at any time in the future.

TheStreet is a publisher. None of the contributors or their affiliates will provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. From time to time, any or all of the contributors or their affiliates may hold positions in securities mentioned and they may trade for their own accounts. In cases where the position is held at the time of publication, appropriate disclosure is made.

© TheStreet, Inc., 14 Wall Street, 15th Floor, New York, NY 10005.