credit swap derivatives....

Interesting article from Reuters...

Thomas Huertas, head of wholesale banking at Britain's FSA, calls them a "boon to mankind." However, earlier this year, the FSA looked into how banks calculated their risks associated with CDS's.
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The FSA earlier this year asked banks to use their own internal models to value a particular complex, illiquid portfolio, and was surprised by the results.
"We had a wide variety of approaches and a wide range of valuations," Huertas told Reuters. "We had an interesting dialogue as to how they came up with that range, and it confirmed the difficulties involved."
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Hmmm... something's fishy. On the one hand we have a "boon to mankind." On the other, no one, even at banks knows how to value these things. Let's not forget that they can blow up in our faces.