From the BBC:
Police in London have arrested a 31-year-old man in connection with allegations of unauthorised trading which has cost Swiss banking group UBS an estimated $2bn (£1.3bn).
Kweku Adoboli, believed to work in the European equities division, was detained in the early hours of Thursday and remains in custody.
UBS shares fell 8% after it announced it was investigating rogue trades.
The Swiss bank said no customer accounts were affected.
One question is what ramifications such a write-down might have on the bank’s liquidity. In this cloudy and dark financial atmosphere, fire-sales of assets to pay down such a loss might spark panic.
Another question is how — after the Jerome Kerviel and Nick Leeson debacles — does a large financial fail to effectively monitor its staff’s trading activities? Hasn’t investment banking experienced enough of these rogue trading shocks to put a system in place to prevent these kinds of activities?
After all, if a too-big-to-fail bank suddenly implodes, the state is perfectly willing to stand-by to inject in the earnings of future generations to “save the system”
Now it will be interesting to see were those losses made, the ECB and SNB have set up dollar-swap lines lately, and there was rumor of a swiss bank needing the liquidity in the dollar area, ofcourse all major players in Switzerland immidiatly denying.
This is what happens when the Pac Man generation, “Manages” the Iphone Generation.
Lets treat the Haircut on Bonds, like a rogue trader. Loans to Governments must be transparent and not unnecessarily burdensome on the population.
Take a look at this link, in particular the approach by Equador. A Bond holder must take a hair cut when they loaned funds in dubious circumstances.
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