The latest derivative peddled by Wall Street bankers is a hedge against another new financial product those same people have been selling, reports TheStreet.com. It’s called a “preferred-credit derivative swap” and it hedges against an investment in “perpetual-trust preferred securities.”

And what are PTPSs? They’re a bond without a maturity date so they’re treated like stock for accounting purposes and don’t weight on a company’s balance sheet like a traditional bond but (and this is the kicker) they are treated like stock without bringing voting rights.

The Lehman Brothers executive who’s in charge of selling this stuff predicts a market of $50 to $70 billion this year for the hybrid bonds and a $24 billion market for the hedge product. The market will grow for hybrid bonds-stocks as interest rates rise and the bankers will be there to provide them for stock buybacks and the like at a preferred interest rate via the new PTPS.

Columnist Matthew Goldstein raises an important question. Lehman is on both sides of the deal and there is no market for these things, so who knows what they’re really worth? And the real test will come when there’s a downturn and company’s default on their bonds and the hedge will have to cover who knows how much loss. Wait and see.