Economics
The Legacy of JPMorgan's Blythe Masters
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Blythe Masters is a pioneering woman on Wall Street who may yet go on to discover the secret to eternal youth, but her legacy is already known: She helped invent credit derivatives, the financial instruments that caused the economy to explode in 2008.
As outlined in Gillian Tett’s book, Fool’s Gold, a group of math wizards that included Masters at JPMorgan in the mid-1990s set out to eliminate the risk of lending money by developing a new type of contract that banks could use to insure against the possibility that a loan wouldn’t be repaid. As Bloomberg Businessweek’s Paul M. Barrett put it in a review of Tett’s book, it worked like this: