The failure of Lehman Brothers has exposed new fault lines in the credit default swap market, with the bank's absence putting pressure on its counterparties to buy more credit insurance just as confidence in the market is waning.

"It is a cannibalistic frenzy," says one lawyer representing some of the Lehman counterparties in disputes with the failed investment bank. "The credit default swap market has taken on a life of its own. There are huge exposures out there."