Soros wants to ban credit default swaps. Is he blaming a cause or a symptom?

It's no great secret that George Soros is not a fan of credit default swaps. "Some derivatives ought not to be allowed to be traded at all. I have in mind credit default swaps. The more I've heard about them, the more I've realized they're truly toxic," the hedge-fund manager and political activist recently told attendees at an international banking conference. "CDS are instruments of destruction which ought to be outlawed."

Soros's exhibit A: American International Group (AIG), which sold CDS worth hundreds of billions in notional value, and which, when demands for collateral overwhelmed its ability to pay, was forced to accept a humiliating government rescue package last fall.