"We knew right up to the second before Lehman Brothers ceased being, every equity transaction, every order — who bought, who sold, down to the trader involved," recalls Ian Donowitz, a managing director of Investment Technology Group. On the other hand, neither the technologically sophisticated and market-savvy ITG nor anyone else — including regulators (and maybe Lehman itself) — was fully aware of the firm’s exposure to over-the-counter derivatives, or of other firms’ OTC derivatives exposure to Lehman.

To prevent that kind of blind risk, the Obama administration and some members of Congress are championing a central derivatives clearinghouse to make trading more orderly and transparent. That might help, and Wall Street is already moving in that direction. The catch is that even if a clearinghouse becomes a reality — and it has determined opponents — many of the most complicated and risky derivatives would still trade over the counter, perpetuating the problem of impossible-to-track risk posed by Lehman.

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