You that NR was bad??

Jonbvn

Interesting to see that a French bank (SG) has uncovered as massive fraud today.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3242996.ece

Sorry for somewhat OT post:o

Liz_the_Whizz

:eek: French bank eh?

You would think they would have learned their Leeson

purch

It does beggar belief that in in the 21st century something of this magnitude could still happen !!!!

We shouldn't think though that this doesn't happen to lesser degrees all over the Financial Markets, as has for decades

Back in the late 1970's a medium sized German Bank was 'banned' from FX trading by the Bundesbank after a trader was found putting dealing tickets into his bottom drawer and trying to 'forget' them

On the annual accounts of the Bank of New York N.A. for 1992 there is listed as an 'extraordinary item', a sum of about $46 million, which was the profit made by a 22 yo Options Trader over a 5 week period (before he was eventually rumbled and sacked) by massively exceeding his trading limits

But $7 bill. :eek: I cannot conceive of how positions which could make that kind of loss could be 'overlooked' by a Bank, or even how an exposure of that magnitude wouldn't have been 'flagged' by the futures market itself !!!!

baby_boomer

purch wrote: »

It does beggar belief that in in the 21st century something of this magnitude could still happen !!!!

Not at all.

Until bank and insurance shareholders insist on director bonuses being for long term "performance" the problem will continue.

There is a big issue, however. Bank directors (and other FTSE 100 directors) are rarely in situ long enough to make it possible to establish a long term bonus plan. Therefore the directors are always thinking on a short term basis. Which sets director interests against the long term interests of shareholders and employees.

RayWolfe

Couldn't be more correct.
The non-performing American mortgages are a classic example of short term profit for long term issues.
Can't imagine why I own shares ... I own but have absolutely no control.
Ah well, I could have put my "investments" in the National Lottery and lost the lot. ;-)

baby_boomer

And the UK government rescuing a failed bank can only add to the moral hazard surrounding the risks directors will be prepared to take in order to grab their future bonuses .

RayWolfe

Not that easy.
If NR had not been rescued A&L would have followed with B&B next. The major banks would have been next.
Confidence in the banking system is paramount in any advanced economy. However, if you are saying that it should have been nationalised without compensation (other than residual value) then I agree.

purch

All very true...but slightly off topic

Personally I'm far more 'exercised' :mad: by an idiot trader running up a huge position in Futures without anyone 'apparantly ' realising, until it had racked up a $7b loss..........

And I'm even more 'exercised' :mad: when I find out that the unwinding of this huge position was the main engine behind the European markets large sell-off on Monday, which ultimately panicked the Federal Reserve Bank of the U.S.A. into making an extraordinary decision to cut the Fed Funds target by 3/4 pct

So basically the Fed cut rates all because of an stupid Frenchman !!!
:eek:


Anyway sorry to interrupt........I'll leave you to continue your conspiracy theories :cool: