Since derivatives are opaque, a realized loss by one organization may be viewed as information about the portfolio positions of other organizations. The problems from derivative transactions thus come from information problems. This points out the need for changes in the accounting rules or investment regulations. When banks use derivatives, the problems are more severe. First, even knowing more about the derivatives position of a bank may not allow outside stakeholders to determine the overall riskiness of the bank.
Banks invest in many non-derivative instruments that are illiquid and opaque.
Thus, even if the value of their derivative positions were known, it would be hard to know how subject to interest rate and other risks the entire bank would be. This makes them different from most other organizations that invest in derivatives. Second, bank failures can have external effects. The failure of several large banks can lead to the breakdown of the payments system and the collapse of credit markets for firms. It is clear that if banks have similar positions, the failure of one bank is likely to mean the failure of many.