Credit Suisse

Light your candles, hang some mistletoe, ring in 2013, and then come back January 2 prepared to clear out your desk. Read more »

The good news: due to logistical issues, no one will be fired before tonight’s holiday party! The less good news: you’ll likely still be fired eventually. Read more »

  • 05 Dec 2012 at 5:07 PM

Layoffs Watch ’12: Credit Suisse (Again)

More cuts at the House of Dougan, on top of the ones in Russia, were said to have gone down today. Read more »

  • 29 Nov 2012 at 2:45 PM

Layoffs Watch ’12: Credit Suisse

Cuts are said to be going down circa now at the Swiss bank. Sales and Trading was Tuesday and Wednesday. Read more »

  • 26 Nov 2012 at 4:10 PM

Layoffs Watch ’12: Credit Suisse

Cuts are expected to go down at the House Of BD. Read more »

This New York Attorney General lawsuit against Credit Suisse is mostly the same as all the other lawsuits by all the other regulators against all the other banks. Here is a summary, based on the complaint:

  • Some mortgage originators made crappy loans, because that was the style at the time.
  • They sold them to Credit Suisse to bundle into MBS.
  • Credit Suisse’s due diligence was of the form “hi, is this a loan? APPROVED,” in part because they sucked or whatever but mostly because there were competitive pressures where if they didn’t buy the loan someone else would1 and if you’re the guy whose job is to buy loans and you buy zero loans and say “well the thing is, they were all bad loans,” you are fired, so your incentives are not socially optimal.
  • The offering documents for the MBS said things like “ooh our due diligence is so good, so good,” though no specific falsifiable claims are made about the quality of the mortgages or the diligence, and every claim of the form “we only approve good mortgages” is followed immediately by “unless we decide to approve bad ones.”2
  • Dumb emails were sent because, you know how mortgage traders are with their email.3
  • The MBS lost value for an assortment of reasons, some due to Credit Suisse’s bad diligence, some not.
  • That all certainly seems fraudy, so New York is suing CS “for making fraudulent misrepresentations and omissions to promote the sale of residential mortgage­-backed securities (RMBS) to investors.”
  • Credit Suisse has a nontrivial argument that it didn’t break the letter of the law, fraudulent-misrepresentation-wise, since it never specifically said “these loans are good” but only things of the form “we have pondered the goodness of these loans in our heart, except when we haven’t.”
  • But its loans, and its diligence process, and its emails, are all sufficiently dumb that there’ll probably be a settlement with a high-8/low-9-figure dollar amount and no admission of guilt.

Whatever, boring, the end. But then I came to this: Read more »

The SEC settled cases today with JPMorgan and Credit Suisse over “misleading investors in offerings of residential mortgage-backed securities” for a total of about $400 million, which the SEC plans to hand out to those misled investors. There’s been a lot of this sort of thing recently, so here’s a quick cheat sheet on who is suing whom over what mortgages:

  • Everyone is suing every bank over all of their mortgages.

So fine but is that not weird? Two things to notice about big banks is that they are (1) big and (2) banks, both attributes that tend to accrue lawyers. And a thing that lawyers are supposed to do is stop stupid cowboy bankers from doing stupid illegal things. If you told me that one or two banks decided to go without lawyers for cost-cutting and/or risk-increasing reasons, I would be skeptical but perhaps willing to play along, but all of them? I am certain that JPMorgan has lawyers.1

The mystery is resolved and/or deepened if you look at most of what is being settled in these cases, which in highly schematic outline was:

  • banks wanted to hose investors,
  • they asked their lawyers if that was okay,
  • the lawyers checked the documents and said “yes,”
  • so they did.

In ever so slightly less schematic outline: Read more »