Can you explain "credit default swaps" as a financial tool; method.?

A "credit default swap" is what happens when business A takes its debt, sells the debt to business B to remove the debt from its balance sheets, but then has to make monthly payments to business B. Business B views the credit default swap as an asset--they are being paid by business A. In theory, both businesses have benefited: business A move the big debt off its books and substitued a monthly expense (this will improve its balance sheet standing but negatively impacts the profit-and-loss report) while business B has added a liability (it owes the debt) but realizes an increase in its net income (the payments coming from business A count as income). In reality, both businesses have failed. If the debt is called in then business B must pay it. If they cannot, then they call in the debt owed to them by business A. If business A cannot pay then both businesses should fail and have to go into bankruptcy. Credit default swaps play a significant role in the current economic situation, along with subprime mortgages, because many businesses were using them to artificially improve their financial position. The Securities and Exchange Commission, which should have been regulating--or forbidding--such things claimed "we cannot regulate a financial product we don't understand". If the SEC doesn't understand it then they should make it illegal until they do understand it.