As Americans grow increasingly suspicious of the Federal Reserve and the sophisticated financial instruments used by central banks – credit default swaps, for example – many have come to see derivatives as financial weapons of mass destruction. This growing public distrust is complicated further by unexplained financial jargon. I addressed this issue in my first segment with Terri Duhon, the founder of a financial consultancy called B & B Structured Finance. While I was on a recent trip to Europe, I met Terri in London to discuss her new book How the Trading Floor Really Works. Terri’s financial experience is exceptionally rare; one of the reasons I was interested in her account of the fast-paced world of the trading floor is that women do not often decide to become traders. In this segment, we delve into the world of derivatives in order to clarify why they exist, how they work, the role derivatives play in debt and equity markets, and to highlight the differences between fact and public perception. We also touch on the U.S. Treasury market, LIBOR and interest rates, and Terri’s views on the real causes of the crash. From her first interview for a job on Wall Street through her successful career as a trader and financial consultant, Terri offers a fascinating look into the complex field of risk management. Tune in for an insider’s look at the culture of finance and financial products.
Original air date: 2/25/2013