Credit Suisse Taps Investors for Cash After Archegos Loss Widens

https://www.wsj.com/articles/credit...egos-loss-widens-11619070830?mod=hp_lead_pos3

"Bank said it has lost $5.5 billion so far from the hedge fund’s failure, wiping out what had been a strong quarter for trading and deal making"

I dont know what is worse, that they lost $5.5B without the CEO being aware of what was going on or WITH his awaress and approval of the whole thing

This goes to show that pretty much any financial institution can go under overnight if they are doing big enough shaddy things. Next time around, it might be $50B or who knows...

 

Something is seriously wrong if CEO doesn't know about such a huge, concentrated exposure to one single customer.

 

"Reckless excessive greed/leverage" is a common theme in finance. We usually only hear about it when it goes sour... like LTCM.

 

I wonder how much Goldman made front running the firesale.

 

Credit Suisse only has a 22 billon market. Same as Duece bank

These European banks aren't doing very well

 

CEO should be aware of having thousands of clients just like you may be aware of your trading system having thousands of positions. But you may not think too much about the most risky positions when they make money all the time. Hedge funds and traders blow up for the same reasons and don’t have any clients.
GME story is very similar, when some hedge funds were shorting many companies and couldn’t think about specific one causing the most damage. And every type of business blows up when clients don’t pay or when disaster wipes them out. All creatures learn from experience all the time and this will continue as long as life exists in the universe. I’m guessing this includes you.

 

But aren't they supposed to have worst case risk management in place to prevent a GME tail risk black swan type of event?

 

Most people's worst case risk management is a 90-day Value At Risk model or some garbage like that

 

Risk management goes out the window with a hooker and a bottle of cognac.

 

Doubt they mad money,their goal was to unload the stock at a level which didnt blow thru the collateral posted..

Nice guys tat they are,they stuck it to their hedge fund clients,soliciting bids ,not telling them there was a shitload of stock that had to be blown out.One of the few times you dont want to be first call...

Hard to front run a firesale,when you are the one of the partys leaping out the window