[quote=stansd]I’m no CDS expert, but I suspect any IB worth its salt wasn’t taking hug positions in CDS’s, but offsetting them with other instruments or offsetting positions, so, the unwinding will be painful, but it isn’t global financial collapse the 2-4 session today failing notwithstanding.

Stan[/quote]

What if you bought insurance from Lehman and laid it off to another firm? Now Lehman can’t cover your ass and you are on the hook to cover someone else’s ass. You might end up naked through no “fault” of your own.