Totally, especially with leverage and a large notional insurance/derivitives liability. If reality moves in the wrong direction against that insurance and there

Totally, especially with leverage and a large notional insurance/derivitives liability. If reality moves in the wrong direction against that insurance and there's nothing but debt at the end to the payees, then too-big-to-fail cascade effects, ala late 2007, happen in the system again. This is why derivitives should be heavily regulated. IMO, even the most libertarian government would not allow a normal insurance company take on so much leveraged potential liability without at least a disclosure to the consumer that says, "Hey, this company probably can't payout the policy you just bought from them." Yet somehow it's okay for financial instruments? IMO, Dodd-Frank should have forced financial institutions to calculate their overall liability on derivitives as part of their capital requirements. This would never happen though, as they trade so rapidly most banks probably don't even know at any given time what would happen to their derivitives liability if the market swung wildly, either up or down. We're going to have another 2007 again, for sure. I have no idea when, but we did not solve the underlying problem at all.