Pioneer behind credit derivatives is leaving JPMorgan

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http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/money-power-wall-street/pioneer-behind-credit-derivatives-is-leaving-jpmorgan/

Remember credit default swaps? Once considered a key tool for banks looking to shift risk off of their books, they were among a handful of complex financial instruments that in 2008 brought the global economy to the brink of collapse.

One of the most important figures behind the creation of these derivatives is Blythe Masters, who on Wednesday announced she is leaving her position as head of JPMorgan Chase’s commodities unit.

Masters joined JPMorgan after graduating from Cambridge University, and quickly climbed the ranks to become the firm’s youngest director at age 28. She leaves as one of the most successful and influential women on Wall Street, though it’s her role in helping to invent credit derivatives that may be Masters’s enduring legacy.

The original idea was straightforward enough. JPMorgan took on risk each time it issued a loan. If it could develop a new type of contract that could…

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