Our 15-person, in-house Financial and Economic Consultants Group is comprised of C.P.A.s, M.B.A.s, and Ph.D. economists who assist our attorneys with the many financial, accounting, and economic issues that arise in complex litigation. This at-the-ready pool of talent and expertise enables us to more effectively and efficiently serve our clients. The newest member of our group is Justin Krieg, a Ph.D. Economist, who specializes in derivative securities.
Congratulations on becoming a newlywed. How do you describe your new job to your wife
Thank you. I help our attorneys understand the different aspects of the financial markets to better represent their clients. I proactively sift through financial news and academic literature to ferret out real economic evidence. One of the things we do is corral and organize the information from varied and vast resources to make it more useful and understandable so our attorneys can put it to strategic use representing our clients. It’s not only knowing where to find the information, it’s understanding what to do with it. We know how to distill and extract what is useful to our attorneys and their clients, providing a different perspective that often yields additional evidence and creative solutions in a case.
Members of the Financial and Economic Consultants Group each have areas of expertise in complex financial instruments. Yours is in derivative securities. What is a derivative security and how did you become interested in them?
Derivative securities are securities that derive their value from other assets such as financial derivatives, interest rate derivatives, or financial future contracts. I have always been fascinated by understanding how things work. In particular, I am interested in the strategic use of derivative securities by the various parties in the financial markets.
For example, say a commercial bank specializes in servicing a particular industry and as a result their loan portfolio is concentrated in that industry. This would expose the bank to risk that is industry specific. In order to manage and diversify that concentrated risk, the bank has several choices. It could stop originating loans in the industry it specializes in. It could sell some loans to other investors, but would have to explain to their customers why they were not comfortable taking on the risk of that customer’s loan. Alternatively, it could enter into a total return swap (which is discussed in the article I have co-authored for this issue). A total return swap is a strategy to address the bank’s risk levels and allow the bank to continue to originate loans in the industry in which it has specialized knowledge.
As a numbers guy, given the choice between word games or number games in your spare time, which would you choose?
We played a lot of Scrabble, Monopoly, and poker. My grandfathers were nuclear engineers at the Hanford Nuclear Reservation in eastern Washington so there was always an expectation that no matter what you did, you did it intelligently. My interest in strategy has manifested itself throughout my life by playing board games and poker, as well as studying game theory in graduate school. Game theory is the study of strategic decision making. I also participate in sports. When I watch a professional basketball game I get as excited about how an offense creates the open space that allows for a Lebron James dunk as I am about the dunk itself.
And, when you’re not playing games and sports?
In addition to my interest in finance in graduate school, I studied behavioral economics which is the psychology behind our economic decision making processes. Writing academic papers about behavioral economics has become a hobby of mine and I have recently resumed work on several projects in this area. The most advanced project I have, looks at how different types of incentives change people’s perceptions of charitable giving.