The 'Everybody Else Was Doing It' Strategy Fails Another Municipality

We may now have a winner in the derivative blame game competition. Following other successful forays by municipalities, such as Jefferson County, AL, into the derivatives world, the mayor of a small Italian town that was burned by an interest rate swap pins the blame on a combination of peer pressure and the swap agreement being "impossible to understand". Having lost money on the swap since mid-2007, mayor Ortenzio Matteucci, is now a leading expert on the pitfalls of herd mentality.

"At the time I thought: Can the Province of Terni, the City of Terni and all the other municipalities bigger than us, such as Milan, be all wrong?" said Matteucci, 59, dressed in a blue polo shirt and jeans. "You can make a mistake if you don't have an appropriate and deep knowledge of this and just follow what other local governments do."

'Impossible to Understand' Swap Burns 290-Person Italian Hamlet [Bloomberg]


Rajat Gupta's Lawyers May Try The "Everybody Was Doing It" Defense

There is much to like in this morning's Journal article about the Rajat Gupta insider trading prosecution, including a nice illustration of how the inside information that Gupta allegedly passed to Raj Rajaratnam actually seems to have been out in the market already. But let's start with the transcript of the call between Raj Rajaratnam and his trader Ian Horowitz, which the Journal has redacted not for confidentiality but for saltiness: Just so you can see Raj Rajaratnam saying "fuck" a lot, the full transcript of that call is here. But, anyway, the Journal story: