lynn stout is a corporate and securities law professor at the university of california at los angeles. she specializes in securities regulation. david skeel is a professor of corporate law at the university of pennsylvania law school. >> brown: lynn stout, i am going to safely assume that most of us don't really get derivatives, so start there. what is the simple definition and what is the problem they've come to raise. >> some particular kinds of of derivatives can be be very complicated for an outsider to understand. i think they make more sense when you boil them down to the fact what derivatives really are are just bets. they're bets between parties over what's goingç to happen in the future. interest rate swaps are bets on what is going to happen to interest rates. if interest rates go up, the party that wins the bet gets money. if they go down, the party that loses the bet makes money. credit default swaps are bets on whether particular bonds, maybe mortgage-backed bonds are going to go up or down in value. because they become more or less risky. if they become more risky, the