I appreciate your input Gregory. Per Investopedia: ”A credit default swap is, in effect, insurance against non-payment”
So, if I understand you correctly, you are saying that banks have sold CDCs in massive amounts. If so, they are confident that the Fed / Feds or .gov will rescue them no matter what. In the mean time if they are selling CDSs, they “picking up pennies in front of a steamroller”.
So who is taking the other side, who bought the CDSs?