As of now, there has been no court finding as to the accuracy of BofA’s $1.95 billion or whether the seizure of the $500 million was lawful. Meanwhile, BofA is still trying to recover its $357 million of collateral. But it turns out that before the bankruptcy filing, Lehman had deposited this collateral with its clearing bank, J. P. Morgan, which upon the bankruptcy seized it to cover derivatives debts that Lehman supposedly owes Morgan. So, to sum up, Morgan has captured $357 million of either BofA’s or Lehman’s assets—we don’t know which—to offset what Lehman supposedly owes Morgan on derivatives, though Morgan has never told the court what that amount is.

We may put down some of these absurdities to lawyers pushing their claims. But to avoid the kind of morass this tale describes, a working group co-headed by Jerry Corrigan has recommended that the counterparties in a trade periodically discuss and agree on its value. One intermediary helping that happen is a Swedish company called TriOptima, which offers a service called TriResolve. Raf Pritchard, head of TriOptima’s U.S. operations, says his reconciliation service is booming, embraced by derivatives folk who, for example, truly wish to know what amounts of collateral should be changing hands. It sounds as if some of the Lehman litigants could benefit from the service.

Considering the unending complications of derivatives, wouldn’t we be better off without them? Robert Pickel, CEO of the International Swaps and Derivatives Association, acknowledges that the opposition includes “a camp that would ban them all—like Charlie Munger would” (referring to the vice chairman of Berkshire Hathaway). But the very suggestion of a ban causes most of those with even remote connections to the derivatives business to stiffen; turn from friendly to antagonistic; question the sanity of the fool who asked; and recite the creed of financial derivatives, which is that they beneficially spread risk. Never mind that we have spent several pages casting doubt on the idea that, the wholesale spreading of risk is a virtue. In the mind of all who have dealt with derivatives, and typically made their living off them, it is.