It would be interesting to hear how those derivatives actually performed between early 2011 and today.
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You see, the credit crunch had almost nothing at all to do with those derivatives, the options and futures, that we value using the Black-Scholes equation.
They were eliminated when, at Summers' instigation, Clinton signed off on the Commodity Futures Modernization Act, which summarily banned any regulation of those derivatives under any existing law or by any agency.
In the case of RBS, the chief executive has to understand not only how to run a retail bank but also how to contain the risks of all those complex derivatives that are created and traded by the investment bank.
Some argue that those who use derivatives should face the economic cost whatever their legal status.
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Insiders say the biggest exposure may be in the interest-rate swaps market, which is many times larger than those for credit derivatives.
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Enron, for instance, sold a lot of those sorts of derivatives, booking profits on them straight away even though there was a huge question-mark over their long-term profitability.
The loophole in question has to do with derivatives, those infamous instruments often blamed for taking the financial system to the brink.
We think of that as a proxy for economies, business in general and to some extent it is but at the same time, the sheer amount of money that is devoted to credit markets and derivatives of those markets dwarfs those equity markets.
U.S. taxpayers were forced to pay for the stupidity and recklessness of our banks and financial institutions that frivolously lent to individuals with no justifiable means of repayment and then leveraged those loans through complex derivatives which caused the financial collapse of 2008.
Harvard had some variable-rate borrowings, and the derivatives effectively converted those debts into fixed-rate ones.
Losses from credit derivatives, unlike those from the sudden shock of 2001, have been rolling out since the summer.
Instead, the big bucks are in trading derivatives those poorly-understood financial weapons of mass destruction in the words of Berkshire Hathaway (BRK.A) CEO Warren Buffett.
Those fancy names are all derivatives of price action.
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Leading executives have complained bitterly that the new approach will paint a misleading picture of corporate finances because firms will have to report swings in the value of their derivatives even though those swings will eventually be offset by changes in their underlying business.
At the moment, derivatives spreads reflect fundamental values more accurately than those in corporate-bond markets, reckons Tim Backshall of Credit Derivatives Research (CDR).
Now those same products, known as derivatives, are pushing the world closer to another financial crisis.
The boom in derivatives was one of those moments when financial engineering raced ahead of back offices and risk-management departments, leaving them struggling to value or account for their holdings.
There are plenty of financial instruments today, such as derivatives and futures, for those who want the rushes and crashes of high-octane trading.
So I think we are addressing the fundamental -- as we call them, the systemic risks associated with hedge funds, derivatives, and some of those others.
Wall Street has been moving billions of assets into a relatively new accounting category called "level 3, " a designation that the fair value of those assets, including subprime mortgages and derivatives, couldn't be determined because there was no observable market for them.
These smaller risks can then be priced and sold, using derivatives, so that the bondholder keeps only those risks he wishes to bear.
And secondarily, that the proposals on the table on derivatives Republicans say will push the trading of those instruments overseas, make them less transparent, and cost American jobs.
Though he wasn't there at the time, Meyer says Harvard Management bought the commodity and foreign stock derivatives as a way to get exposure to those asset classes while freeing up cash to put to work elsewhere.
Although not an extraordinarily large company by many metrics, Bear Stearns was deeply involved in a number of critical markets, including (as I have noted) markets for short-term secured funding as well as those for over-the-counter (OTC) derivatives.
In addition, banks likely will be forced to put up additional collateral on derivatives transactions and in certain investment vehicles, including those housing pools of securitized assets, if their ratings are cut.
In a draft letter, to congressional leaders, the Treasury said that "all (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation".
As I explain in this paper, credit derivatives are merely a financial tool that can be used by those exposed to credit risk, say a default by the Greek government or General Electric, to share that risk with others.
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The company's reputation also has been damaged by numerous investigations into its role in the crisis, particularly its dealings in the mortgage and derivatives markets, and its sometimes-ham-handed handling of those issues.
An overly narrow definition might settle on those funds that engage in highly leveraged trading strategies which utilises short selling or complex derivatives.
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