Re:Credit Suisse Takes $4.7B Hit on Archegos Meltdown
by noisy_boy on Tuesday April 06, 2021 @11:07AM
(#26712703)
The entire model is balancing risk and reward. Being careful means you'll be eaten by your competitors, your shareholders will punish you and executive comp will take a hit - what is the point of playing the game then? Instead reward taking risks and if shit hits the fan, there are always heads that can roll (if need be), fines that can be negotiated with DOJ/SEC and ever-sneakier tactics can be invented to structure even more clever deals - it is all just normal part of doing business. The two execs that got fired would have been handsomely rewarded if Bill Hwang's bet went the right way, irrespective of the recklessness.
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Re:Credit Suisse Takes $4.7B Hit on Archegos Meltdown
by osrec on Tuesday April 06, 2021 @11:17AM
(#26712862)
Yeah, but the "measure of recklessness" needs to go beyond just value at risk and portfolio sensitivities. Those things can be gamed by clever people and risk can be easily hidden.
Unfortunately, most risk managers I knew barely understood the theory enough to identify the hidden risks in the books they oversaw. Most even struggled to get the right data out of the systems to do their jobs properly!
You do make a valid point - if the recklessness somehow pays off, you're a hero (eg. Paulson).