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Article: Derivatives' Mr. Hyde keeps lurking
- Article from:
- Winnipeg Free Press
- Article date:
- September 18, 2009
- Author:
CopyrightCopyright F.P. Canadian Newspapers Limited Partnership Sep 18, 2009. Provided by ProQuest LLC. (Hide copyright information)
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One year ago, AIG was brought to the brink of bankruptcy by its activities in credit default swaps (a form of credit insurance). Asset-backed securities and collateralized debt obligations -- which lived up to their cheery nickname of "Chernobyl Death Obligation" -- brought the financial system to the edge of collapse.
Equity investors were having problems with exotic share options known as accumulators (nicknamed "I-will-kill-you-later").
Numerous corporations were hunkered down with their lawyers hoping to litigate their way out of significant losses of currency "hedges" with the familiar defence -- "I did not understand the risks." In Canada, the problems with asset-backed commercial ...