Why did credit default swaps make the crisis worse?

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Practical Financial Management

ISBN: 978-1133593683

7th edition

Authors: William R. Lasher

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Question Posted: May 14, 2015 11:08 AM

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Credit default swaps were once viewed as a great innovation for making mortgage markets more stable. Yet, the swaps were sometimes criticized for making the credit crisis worse. Why?
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Why did credit default swaps make the crisis worse?

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CDSs distributed the risk of default in subprime ridden CDOs in a networ...View the full answer

Practical Financial Management

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