tag:blogger.com,1999:blog-53246864840716464.post1069816898060599625..comments2024-02-29T00:46:38.800-08:00Comments on Washingtons Blog: Credit Default Swap Holders Changed Laws So They Get Paid Ahead of Bankruptcy CreditorsUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-53246864840716464.post-3454613922816870672009-03-19T09:56:00.000-07:002009-03-19T09:56:00.000-07:00So if I understand it CDS holders jump to the fron...So if I understand it CDS holders jump to the front of the bankruptcy line (pari passu with depositors in the case of a bank?) and therefore there is an additional incentive for them, who could well be also an unsecured creditors, to prefer default of the institution. For them, the insurance policy is worth more than any asset, right? Wow! Now I understand why (case of AIG?) it's better to unwind CDS contracts and pay counterparts. Under these circumstances it's really better to set up the new good bank or insurer as a completely and legally separate entity and see what CDS holders would do and where they put their claim...M.G. https://www.blogger.com/profile/14140876295753661499noreply@blogger.com