There seems to be an insane amount of misinformation and misunderstanding on this topic. What you and others are describing is not financial engineering. It's corporate raiding, fraud, etc.
I'll list some examples in the field of financial derivatives (speaking here in my personal capacity, not an expert, this is not advice, disclaimer disclaimer disclaimer):
* An oil production company knows they can comfortably operate at a particular price level, P/BBL. They're willing to forego any additional profits provided they can guarantee receiving P/BBL. Commodity swaps make this possible, and it means that people in the industry get to have a reliable job despite the volatility in the market.
* The national airline of a small, poor developing country depends on tourists buying plane tickets in a foreign currency, often months in advance. How can they manage the risk of the exchange rate volatility, when one of their biggest costs are fuel and they have to pay this in yet another foreign currency? Currency derivatives make this possible, and it means this developing country can reliably operate an airline and thereby receive an economic boost from tourism, helping at least some of its citizens make it through another day.
* The CEO of a F500 company knows some bad news is about to hit the market and negatively impact the value of his stock. But he can't sell his shares because he'll be guilty of insider trading. Instead he enters into an equity swap arrangement with some poor sucker who doesn't know about this bad news, and because it's a pre-Dodd Frank Act deal, nobody is the wiser, and our CEO gets to enjoy another stress-free day on the golf course.
As I hope my last tongue-in-cheek example demonstrates, these are just instruments. How they get used and abused is a problem for regulators; they are not inherently evil.
