"Deregulation" in general is not the problem, it's the manifestation of that concept which can lead to problems.Some people would argue that "deregulation" is a misnomer since the status of CDS always has been vague and that the problem is that bankers treated Gaussian copula formulae as an oracle which even their inventor (who subsequently moved to China to take up a role in their financial risk management strategy) said is not safe. Presumably the devil made the bankers do that, too. ;-) And so the debate rolls on. ;-)
"... They ne'er cared for us
yet: suffer us to famish, and their store-houses
crammed with grain; make edicts for usury, to
support usurers; repeal daily any wholesome act
established against the rich, and provide more
piercing statutes daily, to chain up and restrain
the poor. If the wars eat us not up, they will; and
there's all the love they bear us."
-- Shakespeare: Coriolanus, Act 1, scene 1
