The Newest Franken-Finance Creation: Liquidity Derivatives

With Wall Street now under the harsh glare of public and government scrutiny, one might assume that big banks -- especially those that benefited most from government support -- would be treading cautiously in trying to expand their trading operations. Fortunately for the financial blogging community, no healthy sense of irony appears to have developed among the credit-trading team at Citigroup (C): They're trying to create a market for liquidity derivatives, which would theoretically allow borrowers to hedge the risk that another financial crisis might makes credit access more costly or less available.