[mdda]

But the contents of each CDO and CDS was/is completely transparent to the buyer and seller. Maybe the buyers were less sophisticated than the sellers, but that's really too convenient an excuse. The whole CDO construction process was openly called 'Ratings Arbitrage' after all.

I agree that things should be transparent : And so the right thing to do is to force all CDS to clear vs. a central counterparty, with publicly known mark-to-market pricing. Similarly, banks should be required to mark-to-market on an arms-length basis. But somehow this legislation never gets passed...