Soros urges ban on credit default swaps

BEIJING, June 13 (UPI) -- Credit default swaps distort risk and fuel dangerous speculation, billionaire investor George Soros told international bankers and financiers in China.

"It's like buying life insurance on someone else's life and owning a license to kill him," Soros said Friday of the swaps, which pay the buyer face value if a borrower defaults, in exchange for the underlying securities or the cash equivalent.

Using Detroit-based General Motors as an example, Soros said some GM bondholders had more to gain from bankruptcy than re-organization of the company as a result of their default positions, The Daily Telegraph reported Saturday.

The Hungarian-born U.S. fund manager urged a ban on credit default swaps as the world's financial system struggles to right itself in the wake of last year's credit crisis.

The crisis has put the world's banking system on "life support," Soros told the Institute of International Finances, an association representing 370 financial institutions.