There’s an interesting bit of reporting buried deep in this good Gillian Tett column in the Financial Times last week about Geithner’s proposed regulation of credit derivatives.

Tett is one of the smartest financial journalists working, and she’s just out with a book on credit derivatives (Audit review to come shortly), so it’s comforting to read this from her:

For what this week’s announcement essentially represents is not just an effort to reform the letter of the 2000 act; it is also a move to overturn the spirit - and idea that free market discipline alone can encourage bankers to behave.

The 2000 act she’s talking about was the infamous Phil Gramm legislation that banned regulation of credit derivatives, the instruments that are in no small part responsible for the financial crisis.

But take a look at this:

Tales are circulating on Wall Street that some unscrupulous traders have been manipulating the price of “single name” CDS contracts to hurt rivals, or make quick profits. It is also claimed that banks have been deliberately trying to push companies into bankruptcy, in locations ranging from Ukraine to the heartland of the US, to profit on CDS positions they secretly hold.

Interesting, but sounds like the usual scuttlebutt/conspiracy-mongering common amongst traders. But check out the following paragraph:

One senior banker, for example, described to me this week how the large Wall Street group where he recently worked had a trading desk that would “pick off” weak companies and hedge funds, by exploiting the murkiness and illiquidity of bilateral CDS deals to push prices around. “It disgusts me, and its still going on,” he admitted.

That sounds like a blockbuster story to me. I mean, this is what you’d expect to read from some conspiracy-addled commenter on a Yahoo Finance message board. But this is the august Financial Times—and perhaps its top reporter, with a “senior banker” as the source. I don’t doubt this is for real. I just wonder why it’s buried so deep in the column. Perhaps this is a bit of bait to lure other sources who can fill in more information.

Tett is presumably restricted by the conditions of her background interview from naming the bank and exactly which companies it’s manipulating, but I’d hope she’s working her sources to get at this story through other means.

Meanwhile, this is an open invitation for all journalists on Wall Street to figure out what’s going on here. Are banks manipulating derivatives to push companies into bankruptcy or to hurt other investors? It sure looks like at least one is.

If this story breaks, the political repercussions these folks have been dealing with for the last few months is going to look like small beer.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.