During his visit this afternoon to NU's editorial headquarters here in Hoboken, New York Insurance Superintendent Eric Dinallo raised an interesting possibility to help fuel a reborn Insurance Exchange in the Empire State--the trading of credit default swaps, which is not as crazy as it might sound at first blush!
Before you push the panic button, given the fact that CDS dabbling nearly destroyed American International Group (and threatened to take the entire economy down with them), when you think about it, the idea makes a lot of sense.
"Theoretically, the New York Insurance Exchange would be a perfect place to clear credit default swaps," Mr. Dinallo said during a 90-minute exclusive Q&A with NU's editorial staff. "The exchange offers the transparency that's been lacking up until now, and could qualify these trades as insurance, which is what they should have been considered all along, because they promise a guaranteed payment."
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