A lot of people are acting all shocked and dismayed over the little slip-up that happened at Credit Suisse. Saying they can believe something like this would happen over at Bear, where Jimmy Cayne spends all the money on chips and forgets to leave an IOU, and UBS, where God retroactively punishes, and Citi, where you’ve got eight people sharing one chair and nobody can even hear themselves think, but not at CS. Bad things don’t happen to good people and bad things like multi-billion dollar mistakes certainly don’t happen to good people who live within 200 feet of the Shake Shack. I’ve got news for those of you failing to “get” how Credit Suisse could suddenly come up with this gigantic fuck-up, worthy of even Citigroup’s praise, when just last week Brady Dougan told reporters everything was cool– there never was any “error.” Well, never any error that D-gan didn’t orchestrate himself.
And no, I’m not talking about fraud. Let’s leave that up to Goldman, the professionals. Listen to D-gan’s wording from yesterday’s call: he defends the bank’s controls, saying it was a “very good sign” the “errors” were caught “rapidly, and…by our internal processes.” You can almost see him cocking his eyebrow slightly, just ever so slightly, too, can’t you? That’s because he’s got a secret– this whole thing was a drill. Not a joke, a drill. Dougan wanted to test the controls in real-time; make sure everything was up to code. Two something billion dollars was sacrificed now so that twenty something billion dollars doesn’t have to be sacrificed later. Don’t believe us? That’s fine, you’re entitled to your own (woefully misguided) opinion, and we know you’ll come around eventually. Get into my head and it’ll make sense. In the meantime, I challenge you all to come up with a more plausible explanation for what happened. It’s an impossible task but nonetheless, the best answer wins lunch at the SS, on Carney.
Credit Suisse Suspends Traders After Mispricings [DealBook]
Dougan’s Assurance of Shareholder `Comfort’ Proves Immaterial [Bloomberg]
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
someone forgot to carry the 1
someone forgot to carry the 1
Entertainment Budget
rounding error
Approximation of Pi as 22/7
Universal free healthcare.
Mike’s Hard Lemonade
Ron Paul?
Brady W. Dougan responds:
“We inadvertantly included Jewish assets (circa 1945) from our special account in our inventory of asset back securities. The error has been corrected, and we remain committed to transparency and probity in all our dealings.”
im ashamed
whats bull is the whole ” leopard doesn’t change its spots” angle the wsj is doing today. this is nothing like the misleading results from the 80s and 90s previous versions of CS already endured
last time i checked 2.8 is still less than 18 that UBS has already thrown out the door
i’ll be consoling myself at the shack w an arnold palmer and 2 shack burgers under the new heaters for the afternoon
When traders mark their own books without a “monitor” stuff like that will happen.
Oh wait, the “model was wrong” so to help the model get back on the right track they “adjusted” the marks. Yeah, that’s the ticket.
If the desk in question is the one I’m thinking of, then I can promise with absolute certainty that I know who the problem was, and lets say he has some similar tendencies to Zach Michaelson
Still too early for the double shack burger, fries and root beer. I’m going to head out at 11.50, which I think is strategically the best time to beat the lunch rush.
sorry folks-you all are missing the point.
The mismark is deliberate and a SOP @ CS for years. The process is called “desk price rules” and is designed to boost the bonus pool.
CS is one house that hase two pricing feeds; one for customers (so they do not misreport their year end results)& one for the BD…
@ 11:35– YOU are missing the point. credit suisse didn’t make any errors, unless we’re including intentional errors. IT WAS A DRILL TO TEST THE CONTROLS.
After reading Thad’s post, they decided to take the money to the Mercury Bar.
would the Trader Appologist care to weigh in on this or is his confirmation email still hung up in the system … oh sorry, your system is perfect, what I meant to say was blocked by his own spam filter
Let me guess, they marked some losses in $ when they should have used the euro sign (€)? Damned computers!
I hardcoded interest to save time
Blame it on Jerome Kerviel…
-Smn
Blame it on Jerome Kerviel…
-Smn
This is what happens after traders continue to tell risk management and accountants that they don’t understand the market and the traders begin to believe their own bs. A small variance one month, a bit more the next…this loss did not happen over two weeks.
CS control groups responsible for price testing of trader postions were subject to a 10% reduction in 2007 expenses.
Deprive control groups of resources: one shouldn’t be surprised this happened.
What a genius move by management…..