The problem is those banks who lost out on these Credit Default Swaps owe the speculators trillions of dollars, many times the value of the mortgages themselves. This is what McCain was talking about when he said greedy investors on used Wall Street as a casino. These were high stakes bets on high risk loans.
Outlawing them retrospectively would annul the trillions in debt. Is it totally fair? Perhaps not, but making the taxpayers pay these debts is even less fair, and far more economically damaging.
I absolutely agree with what you said. According to Dimmiwits, I am an uneducated conservative. Doh!