Nassim Nicholas Taleb Quotes

Regulation of derivatives transactions that are privately negotiated by professionals is unnecessary.

It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade. The worst have failed; investors no longer fund them and are not likely to in the future.

Derivatives trading should be standardized and as much as possible moved to clearinghouses.

Main Street investors, who cannot trade credit default swaps, should not be tempted to trade an instrument with the same risk profile simply because it has been given a different name.

It is vital for officials and regulators to have input from people within our businesses who understand the intricacies of how financial markets operate and the consequences of certain policy decisions.

Money never seems to be interested in strengthening regulatory agencies, for example, but always in subverting them, in making them miss the danger signs in coal mines and in derivatives trading and in deep-sea oil wells.

Creating a regulatory system that reflects the modern-day realities of financial markets is not as difficult as it may appear.

Derivatives are a huge, complex issue.

This crisis exposed very significant problems in the financial systems of the United States and some other major economies. Innovation got too far out in front of the knowledge of risk.

Derivatives in and of themselves are not evil. There's nothing evil about how they're traded, how they're accounted for, and how they're financed, like any other financial instrument, if done properly.

Strong banks want strong regulation.

The Commission concludes that the banking supervisors failed to adequately and proactively identify and police the weaknesses of the banks and thrifts or their poor corporate governance and risk management, often maintaining satisfactory ratings on institutions until just before their collapse. This failure was caused by many factors, including beliefs that regulation was unduly burdensome, that financial institutions were capable of self-regulation, and that regulators should not interfere with activities reported as profitable.

A striking feature of financial service activities during the past few decades is that the financial transactions essential to the operation of the 'real' economy has become increasingly dwarfed by speculative activity.

Fannie Mae may have conformed to the rules but the rules didn’t conform to reality. A major bank or financial institution could meet every single regulatory requirement yet still be at the risk of collapse.

There’s a lot of money in making financial products whose risk few understand. Simplicity might be good for economics, but it’s lousy for Wall Street bonuses.

Unregulated derivatives like credit default swaps threaten our regulated markets, or indeed our economy without any Federal agency knowing about it.

… attempting to supervise the financial sector is a fool’s errand

I think people have to be very careful with new ideas [in fiancé and economics]. What you need to worry about is when you have something that’s a really good idea, but you get too much of it too fast, like over-the-counter derivatives.

People far too often associate derivatives markets with mere speculation, but there are very legitimate businesses that need derivatives to protect themselves against risk.

The good thing about a dealer's derivatives portfolio is that it is marked to market.

In an ideal world, one populated by vegetarians and Esperanto speakers, derivatives would be used for one thing only: reducing levels of risk. The list of individual traders who have lost more than a billion dollars at a time betting on derivatives is not short.

We've used derivatives for many, many years. I don't think derivatives are evil, per se, I think they are dangerous.

The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen). Say you want to write a contract speculating on the number of twins to be born in Nebraska in 2020. No problem-at a price, you will easily find an obliging counterparty.

What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so.

Derivatives are like sex. It's not who we're sleeping with, it's who they're sleeping with that's the problem.