In the securities industry, much of the multi-trillion dollar trading that occurs in the markets remains un- or under regulated. One such under regulated market is the trading of Credit Default Swap‘s, the banking industry’s own weapons of mass destruction. A credit default swap is a financial swap agreement where the seller of the CDS will compensate the buyer in the event of a loan default or other credit event.* Using CDS’s, Blackstone, the controversial private equity firm, has committed what you and I might call an insurance fraud but, due to a lax regulatory and legal framework, what they have done is not classed as a crime or a breach of any market regulation.
Of course, you will not have heard about it (unless you follow this blog) because as explained in the clip, the press (including the financial press) largely did not bother to report any of the details. Why? Because “it can’t be explained in 10 seconds” so news editors do not think it would catch the public’s attention and, anyway, this highly profitable sham transaction is considered to be “just another day on Wall Street“.
In financial services CRIME PAYS!
To watch the clip you need to type or copy and paste the password: imincorrigible
Video © Comedy Central
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