Default Swaps May Be Next In Credit Crisis Ultimate Moral Hazard Looms in the Markets By JULIE SATOW, Staff Reporter of the Sun | September 22, 2008 The biggest Wall Street story most Americans haven't yet heard of is the $62 trillion unregulated credit default swaps market. Here is one scenario: A hedge fund buys insurance in case a company defaults on its bonds — a so-called credit default swap — when the hedge fund doesn't necessarily own the bonds. Then it immediately shorts the stock, driving down the company's share price, leading to a downgrade, and eventually triggering a...