Interesting. Have you see "The Big Short"? Towards the end there's some scenes where banks aren't paying out on Credit Default Swaps (I think) even though the mortgages were failing. The movie didn't really touch on why this was happening. Was this caused by the second manipulation that you mentioned?
I don't think it is related. The CDS in question was buying credit protection (i.e. insurance against a default) on a portfolio of subprime RMBS bonds. When a default occurs in that portfolio, the protection seller (the bank) must make whole the buyer of the protection as if he held the underlying bond (which in this case he didn't, it's like buying insurance on your neighbor's house, you get paid if it burns but you didn't suffer the loss yourself since you didn't own the house). But before that, both parties must post collateral to each other on the fair value of the CDS contract, which will ultimately converge to the payoff of the credit protection. This is to ensure that no party is taking risk on the other party defaulting before the maturity of the CDS (exactly like margin calls when you are buying a stock on margin).
Problem, the portfolio of subprime RMBS consists in a lot of small transactions, which don't necessarily have an active market, and that led to disputes between the protection seller and the protection buyer on what the CDS contract was really worth (you can't translate 1 for 1 a rise in delinquencies - % of subprime borrowers ceasing to make payments on their mortgages - and the ultimate loss suffered on the portfolio of mortgages after the property has been foreclosed and sold several months/years later). It mattered not just because the other party would have to post more collateral, but also because the other party would have to mark a loss if the agreed value was less than what it marked the position for in its books and records.
