Add climate change as another villainous use for credit default swaps. Up until now it had been thought that the derivatives' primary contribution to global warming was the heated debate that the swaps frequently engender.
However, the House of Representatives saw enough danger to include a ban on "naked" credit default swaps and a requirement that over-the-counter derivatives go through central clearinghouses in the environmental bill that it passed last Friday, according to Reuters. The swaps found their way into the climate change bill as Congress added provisions to set position limits on energy traders and bring energy swaps under the oversight of the Commodity Futures Trading Commission....
Monday, June 29, 2009
Climate Bill Bans Naked Credit Default Swaps
Or, as Dealscape put it, "Do CDSs cause global warming?":