This chapter establishes a link between credit derivatives and bonds. The investigation into Freddie Mac and Fannie Mae's accounting problems dragged on until 2006, when the Agencies voluntarily agreed to a cap on the size of their retained portfolios of around three‐quarters of a trillion dollars each. Changes in the political fortunes and leadership of Freddie Mac and Fannie Mae corresponded to a change in the pattern of debenture issuance of the two firms. The functioning of credit derivatives markets is a primary concern to all participants in the fixed income market, whether or not they are directly involved in trading the securities. Of primary concern in this chapter is what happens when things go wrong. While credit derivatives are the fastest‐growing segment of the fixed‐income market, their behavior during times of crisis is only now beginning to be understood.