The financial officer was not amused. She found a recent magazine item about derivatives to be "rude and unacceptable," and wrote to the publisher to complain.
The article in question? A Beavis and Butt-Head parody in November's issue of Derivatives Strategy in which the sultans of stupidity break into a swap dealer's computer, using one of their favorite anatomical terms as a password. Mistaking the program for a video game, "Boovis and Beethead" alter a trading model, costing their employer millions.
In any other banking publication, the piece would have stuck out like Larry Flynt at a PTA meeting. But publications dedicated to covering derivatives, whose twentysomething readers trade in notional amounts that dwarf the gross domestic product of some nations, routinely include irreverent jokes and parodies.
"It's partly the youth of traders, partly the inclination not to take themselves so seriously as senior bankers," said consultant Kenneth Cunningham, formerly a derivatives dealer at Mitsubishi Bank and head of trading at Continental Bank.
Closing the gulf between traditional bankers and their less-inhibited cousins on the trading floor would be good for the business, bankers say. With more banks and brokerages than ever vying for derivatives business, managing the people who manage swaps has become an important issue for banking executives.
Bankers note that problems at Bankers Trust New York Corp.'s derivatives desk three years ago were worsened by some incriminating tapes of traders' giddy talk of "rip-off factors" whereby they could "take a little money" from clients.
If derivatives traders took banking relationships more seriously, these bankers say, derivatives might enjoy a better reputation.
For the time being, however, a vibrant cottage industry in derivatives humor continues to flourish, ranging from the dregs of Beavis and Butt-Head to elaborate send-ups of the latest contrivances from derivatives designers.
The Jan. 6 edition of the weekly newsletter Swaps Monitor included an article that spoke of the development of "political derivatives"- instruments that circumvent campaign contribution laws or pay out based on the outcome of elections.
The article quoted an anonymous dealer saying: "Any time you have laws or regulations that prevent people from doing something, it's an opportunity for derivatives."
Considering the bizarre instruments traders have actually concocted, political derivatives sounded plausible enough to prompt a banker at a major money-center to alert an American Banker reporter to their existence.
Alas, it was a hoax.
"The humor in these things is that they could be true," said one derivatives trader. "They're farfetched, but not far off."
Martin Mayer points out in his new book, The Bankers: The Next Generation, that derivatives desks sprouted in the early 1980s, as commercial banks sought to make the drudgery of funding the bank a source of profits.
These desks attracted a new generation to banks-to the alarm of traditional bankers even then.
"We used to have a guy in bonds who would say that derivatives traders were going to ruin the world," one trader at a Wall Street brokerage recalls. "And we'd say, did you mean 'ruin' or 'rule?'"
Carolyn Jackson, who recently retired from the derivatives business to write a novel (see article below), says traders were rulers of their domains when she joined Chase Manhattan Bank's nascent derivatives desk in 1982.
"Nowadays, derivatives teams have legal departments, dealers who negotiate the terms, back offices full of marketers, and traders who manage positions," she said. "When I started, one person did all that."
Typical for traders at the time, Ms. Jackson's education included economics. But as specialization has beset derivatives, banks have begun looking to traders with nonfinance backgrounds.
"There's a new generation of PhDs going from academia into finance," said Gene Shen, managing director at the Whitney Group, a New York headhunting firm. "They apply complex models from nuclear physics and- literally-rocket science, and trade on those models."
For these reasons, he said, less than 1% of people with commercial banking backgrounds delve into derivatives.
While traders might be armed with a sense of humor and the intelligence to structure complicated deals, some privately are willing to acknowledge that they don't know or care much about conventional banking.
Traders "don't think like bankers," said one trader at a commercial bank. "They don't think in terms of building relationships, they think of designing stuff."
Another trader said "political derivatives" might be a reach, but not by much. "You wouldn't sell 'political derivatives,' but you might take the same kind of thinking and apply it to real estate or some other kind of business."
This emphasis on designing the latest product before everyone else on Wall Street has it means traders sometimes lose focus on traditional banking services. "They all too often don't understand clients' needs," one trader acknowledged.
And while some commercial bankers spend many years cultivating clients and developing their careers, few traders hang around the derivatives desk long.
Kenneth Cunningham, who after 14 years in the business turned in his trader's badge for a consultant's card, says frequent turnover is the nature of derivatives.
"The bad ones get fired, others burn out in about five years, and for some others, after about 10 years, there's not much thrill left," he said. "The job is about adrenalin, excitement, and challenge-and after a while the challenge kind of pales, so what's to keep you going?"
Even before the Bankers Trust scandal broke, executives at some banks were taking steps to rein in their traders by forcing derivatives traders and commercial bankers to work together more and focus on client needs, says Alec Diacou, a former senior vice president at Sumitomo Capital Markets who specialized in developing relations with institutional investors for his firm.
Without steady relations with a reliable group of clients, he said, traders are forever having to design the next big thing in derivatives.
And the pressure to do that can lead to "political derivatives" and other questionable instruments that tar this multitrillion-dollar field's reputation.
"Eventually, the two sides must converge," said Mr. Diacou. "Bankers must become swap experts and swap experts must become bankers."
If this ever happens, maybe the bankers will learn to tell better jokes.