“Credit-default swaps written on companies that were presumed not to be in danger of collapse but that are now on the brink  that is the overhang on the financial markets,” said Sylvain R. Raynes, a mathematics professor at Baruch College in New York and an expert in structured finance at R & R Consulting. “The financial system is frozen largely because of credit-default swaps.”

C.D.S.’s have introduced other economic burdens as well. Christopher Whalen, managing partner at Institutional Risk Analytics, argues that speculators who use credit protection to bet against financial institutions add instability to the system and cause the cost of taxpayer bailouts of the banks to escalate.

Normally, if a company goes bankrupt, a trustee steps in and helps it get back on its feet. The process can be brutal for creditors, suppliers and employees. But the ill effects of a bankruptcy are magnified if billions of dollars in insurance must also be paid out by companies that wrote protection on a beleaguered company’s debt.

While the amount of credit insurance outstanding is around $30 trillion, Robert Arvanitis, chief executive of Risk Finance Advisors in Westport, Conn., says he believes fully half that amount isn’t problematic because it consists of winning and losing stakes that offset each other.

But that still leaves $15 trillion worth of contracts that may be in need of triage.

What if a company that wrote insurance can’t produce the required payout when a default occurs? The buyer should take the hit, Mr. Arvanitis said.

“If you live in a house and you don’t buy reputable insurance and a fire burns it down, it’s your fault,” he said.

Yet as the huge A.I.G. rescue indicates, there’s a risk that errant C.D.S. bets could end up being the taxpayers’ problem anyway.