As our economy slowly regains momentum, I am confronted with the fact that it could happen again unless federal regulations are put in place to control business practices like credit default swaps.
Credit default swaps are contract companies use to to protect themselves against losses if the debts are not repaid. These practices are legal contracts, though terribly risky and clearly have a detrimental effect on our economic security as we all learned from AIG and the TARP bailout one year ago. This article explains in more detail: Newsweek - "The Monster That Ate Wall Street"
Most recently, a lawsuit for breach of contract was filed by Citigroup to recoup the losses that Morgan Stanley was supposed to pay them. The difference between what is owed and what Morgan Stanley has paid is staggering: Citi Sues Morgan Stanley for 245 Million
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