» Audit the Federal Reserve

» Breaking up the Banks

» Creating a Consumer Financial Protection Agency

» Executive Compensation

Sign Up

To receive regular updates on our campaigns for Financial Reform. 


Recent Reports

July 21 - Dodd-Frank Is Five: And Still Not Allowed Outside the House
July 15 - Financial Services Conflict of Interest Act: Outlining the Need for Increased Revolving-Door and Reverse Revolving-Door Legislation
January 25 - Continued Concerns With HSBC: Giant Bank Has Been Involved in Several Legal Investigations Since Signing Deferred Prosecution Agreement
More - See All Financial Reform Reports

Banking on Failure

Speculators’ Use of Credit Default Swaps to Bet on Others’ Misfortune Is Unseemly, Dangerous

Nov. 11, 2011 — Betting on the misfortune of others has an unsettling quality to it. It just feels wrong. Under our current financial regulatory regime, speculators freely gamble on businesses failing and countries defaulting. In addition to its unseemliness, betting on others’ failure poses a grave risk to our financial system. Drawing on research from Levy Institute scholars Marshall Auerback and L. Randall Wray, “Banking on Failure” examines how speculators use credit default swaps to bet on others’ misfortune and the dangers that result from such activity. This report also proposes policy solutions to mitigate the dangers created by credit default swaps.

Copyright © 2016 Public Citizen. Some rights reserved. Non-commercial use of text and images in which Public Citizen holds the copyright is permitted, with attribution, under the terms and conditions of a Creative Commons License. This Web site is shared by Public Citizen Inc. and Public Citizen Foundation. Learn More about the distinction between these two components of Public Citizen.

Public Citizen, Inc. and Public Citizen Foundation


You can support the fight for greater government and corporate accountability through a donation to either Public Citizen, Inc., or Public Citizen Foundation, Inc.

Public Citizen lobbies Congress and federal agencies to advance Public Citizen’s mission of advancing government and corporate accountability. When you make a contribution to Public Citizen, you become a member of Public Citizen, showing your support and entitling you to benefits such as Public Citizen News. Contributions to Public Citizen are not tax-deductible.

Public Citizen Foundation focuses on research, public education, and litigation in support of our mission. By law, the Foundation can engage in only very limited lobbying. Contributions to Public Citizen Foundation are tax-deductible.