Looming Leverage

This is the first time I have heard anyone in the mainstream media mention the risk of collapse that is inherent in the CDS markets - this market is predicated upon a risk transfer mechanism which implies that there is someone on the other side of the trade willing to write the insurance that you seek. The looming question is: what happens when a few of these overeager underwriters of risk blow up...who is left holding the bag?

Derivatives Banks Concerned by Hedge Fund Leverage

Thanks to the author of the article, Risk, who in my mind did a much better job with this one than the last article I quoted here...though I still can't get over his name.
The uber-doomsdayer crowd would likely think it was all part of a conspiracy related to the Plunge Protection Team but that would be silly ;).