It would seem that congress is behind the power curve in addressing CDS (Credit Default Swaps). The financial sector is full steam ahead with business as usual just as before the near total collapse of world finacial markets.

The problem stems from congress not having (yet) acted upon two available choices. Either regulate the hell out of derivatives or ban them. Of the two, banning them is the more pratical. The reason for that is derivatives serve no useful purpose apart from making a bunch of money for players in the derivatives marketplace.

In fact, what we have now is a variation on the theme spreading to other financial instruments, with players making the same bets on those instruments as was done in the mortgage marketplace. The push for returns (profits) is driving this and doesn't deliver a product with any inherent value. This actually injects into the financial marketplace a scheme where dollars are extracted which represents a real cost to the overall community of users of financial services.

However, with no benefit to the larger community of users of financial services there is no justification for the existence of the scheme. You can say the justification is this is how capitalism works. That of course is false. Capitalism is predicated upon provisioning a useful product for those persons who need or consume it. Derivatives fail that test because the cost is borne by all users of finacial services with this cost being involuntary in nature and not delivering to that overall user group anything of value.

http://www.huffingtonpost.com/2009/09/16/credit-swaps-are-back-en-_n_289177.html