mikeg3

Nationalizing Bank Losses

I don't think you can constitutionally cancel a CDS contract unless the issuer goes bankrupt.


On Feb 01 04:05 PM One Eyed Guide wrote:

> Real estate/housing being underwater is an old style problem that
> the banking system can easily handle over time. Banks have a derivative
> problem (as BigAl and Tom stated earlier). Mortgage backed securities
> can work thier way out over time but Credit Default Swaps (seekingalpha.com/symbo...)
> will wipe out anyone who issued them. The solution is to give bank
> creditors a haircut by allowing issuers to default on CDS's without
> penalty by simply returning the premium. Anyone (hedge funds, for
> example) who can't return the premium goes bust so you still clean
> out some of the real dead wood without destroying needed financial
> structure.