Byron Dorgan: “I will soon introduce a piece of legislation dealing with derivatives. The term ``derivative'' is not readily understood…”

“I will soon introduce a piece of legislation dealing with derivatives. The term ``derivative'' is not readily understood by most. We read in the newspapers and hear on television reports these days about derivatives. The most recent news story, of course, was about a 28-year-old young fellow, an employee of the Barings Bank of England, a 230-year-old bank. This young employee of the Barings Bank of England was stationed in Singapore. In Singapore as an employee of an English bank he was betting on the Nikkei index on the Japanese stock exchange. Turns out that he lost $1 billion, and a 230-year-old British bank went under. This is not the first time we have heard about derivatives. We heard about derivatives with respect to Orange County, CA. We heard about derivative failures across this country in recent years and it has alarmed some people, and justifiably so. Some who thought their retirement earnings were safe found out that the mutual fund they thought they invested in was, in fact, leveraged with derivatives. Schoolteachers, school districts, cities, elderly people who had saved for their retirement, all have discovered in recent years the risk and potential danger of derivative trading when they do not know what they are doing. There are worldwide some $30 to $35 trillion in derivative contracts.”