[Pen-l] Query: Credit default swaps: what stops a "run on the bank"?

[Gar Lipow <gar.lipow@xxxxxxxxx>]

>From what I understand there are 40 trillion dollars in credit default
swaps out there, 20 trillion of which are callable against AIG.  U.S.
2008 GDP was around 14 trillion. So what has prevented a "run on the
bank"? What has kept all of them from being called?

I'm guessing it has to be some combination of the following

1) Not all of them have had the conditions under which they can be
called met, and some of the one that could be called are against
assets in good enough shape that the asset holder prefers the asset to
the exercising the option.

2) The CDSs are concentrated in few  enough hands to exercise
discretion in calling them - the way a bank with only one depositor
might be able to avoid a run.

Anyone out there willing to explain this?
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