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"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. ;-)
If investment banks and holding companies remained separate the CDSs never would've become so pervasive. CDS's are not the cause, merely an instrument.
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