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Rescission is an equitable remedy made available by State Statutes. It is available in particular for Insurance products when certain statutory requirements have been met. Rescission Statutes in the States generally follow the same script, with much the same language. Florida's Insurance Rescission Statute is a good example: Fla. Stat. § 627.409 (2009).
One of the requirements which a party invoking the remedy of Rescission under the Florida Rescission Statute must meet, is to show that "[i]f the true facts had been known to the insurer pursuant to a policy or other requirement," then the Insurance would not have been issued, or if issued, it would not have been issued in as large an amount, or a larger Premium would have been charged if the Insurance would have been issued anyway. Fla. Stat. § 627.409(1)(b) (2009). [Emphasis added.]
One of the two kinds of Credit Default Swaps is Credit Insurance. See, for example, the post here on December 24, 2009. The party issuing Credit Default Swaps -- and AIG for example reportedly issued many of them -- should, it seems, be entitled to claim the status of an Insurer. Further, the issuing party should it seems be allowed to invoke the applicable State Rescission Statute accordingly, to rescind the CDS's it issued but would not have issued had it known "the true facts ... pursuant to a ... requirement".
Inasmuch as many Credit Default Swaps qualify as Credit Insurance, making the party issuing them an "insurer," why should these "insurers" not pursue their available Remedies at law, in Equity ... or by Statute?
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