Derivatives education for boards: weighing the whys along with the why nots
Financial Institutions | Kennett Square, PA
SummaryBob Newman, managing director for Chatham Financial, questions common objections to swaps and uncovers truths that may motivate your board to take a fresh look at derivatives.
Well-documented stories of speculators using derivative structures to gamble and lose their firms’ capital, along with Warren Buffett tagging them as “financial weapons of mass destruction” have made interest rate swaps a non-starter for many community banks. It seems that the preponderance of evidence against derivatives has led many community bank boards to view the issue as an open and shut case, rather than carefully considering all of the facts before passing judgment on these instruments. But questioning the four most common objections to swaps uncovers some overlooked truths that may motivate your board to take a fresh look at derivatives
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