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  • Geithner unwilling to ban credit default swaps [naked swaps]

    03/26/2009 6:35:56 PM PDT · by rabscuttle385 · 84 replies · 1,918+ views
    The Hill, Washington, DC ^ | 2009-03-26 | Michael O'Brien
    Treasury Secretary Tim Geithner said that he likely will not ban one of the key financial instruments that led to the collapse of AIG and a number of other institutions. "My own sense is that banning naked default swaps isn't necessary and wouldn't help fundamentally in this case," Geithner told Rep. Joe Donnelly (D-Ind.) when asked about the value of the instrument. Credit default swaps were insurance policies offered by AIG and other companies on bundles of toxic assets, allowed under the assumption that increasing property values would fuel increased value for mortgages. Under those assumptions, the credit default swaps...