Credit Default Markets are Looking Suspect

Muni CDS markets – Wall St banks are accelerating their presence in the muni CDS market; UBS has started making markets in muni derivatives for the first time in two years while a group of large banks is working to standardize paperwork for CDS tied to the securities. The issue is “politically explosive” and the banks involved could risk a backlash from the states (California is going to force all its debt underwriters to disclose all CDS trades conducted on the state’s debt). WSJ