Credit Default Swap is like insurance bet on some bond, mortgage backed security or credit instrument default. Investment Banks would act like a bookie taking bets and if nobody defaults that is great extra income to pay the big bonus to executives. The potential payout is usually many times the banks assets so if a lot of these bet go sour banks will go bankrupt, at that point all the money the banks spend lobbying will pay off as it is bailout/bailin time.