There's a big battle brewing about how the credit default swaps and other derivatives ought to be regulated. Some in the government favor moving the market onto an exchange formally, which would certainly entail heightened regulatory requirements. The industry would like to enhance its transparency and disclosure standards but stop short of actual exchange trading; the big dealers have invested in a central clearing mechanism.

From George Soros comes another option: Ban CDSs outright. This would seem odd from a hedge fund manager. He calls them "instruments of destruction which ought to be outlawed. Reuters describes his reasoning this way: "Going short on bonds by purchasing a CDS contract carried limited risk but almost unlimited profit potential. By contrast, selling CDSs offered limited profit and practically unlimited risk." He noted the case of one massive seller: AIG. So what do you think? 

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