Non-Payment of Credit Default Swaps on Greek Debt

Gretchen Morgenson noted the fact that credit default swaps (CDS) on Greek debt are not being paid off despite the fact that many investors are only getting 50 cents for each dollar of debt. This issue is a bit more complicated than presented in the column.

Major European banks essentially had their arms twisted to "voluntarily" accept a partial write-down on Greek debt. The ruling on the swaps hinged on the fact that no one who held Greek debt did not actually get a payment that they were...