What a mess. With multibillion dollar trading losses, we are starting to see heads roll. Citigroup is losing its longtime fixed-income head Tom Maheras and several of his lieutenants. Merrill is continuing in its approach to managing human capital, bringing in new blood and losing experienced hands in the fixed income business. Oh, and they are putting someone into a Chief Risk Officer role. Talk about closing the barn doorâ¦. Other firms have fared very poorly but so far without executing any of the troops. Morgan Stanley layered a heart-stopping $390 million one-day loss in its proprietary trading desk on top of far bigger losses on leveraged loans and the like. This loss in Process Driven Trading was similar in timing to the losses at Goldmanâs Global Alpha fund, AQR and other quant hedge funds. Which pretty much tells us that what this secretive group at Morgan Stanley was up to was a not-so-secretive strategy: They had a lot of capital riding on the same sort of momentum and value versus growth quant equity strategies as the rest of the gang. What I donât understand in all of this is that for all the mention in the press of the risk takers, there is not a single mention I have found of the people who are supposed to be overseeing the risk. If you are the Chief Risk Officer and everything blows up, donât you bear some responsibility? http://blogs.wsj.com/economics/2007/10/16/bookstaber-asks-where-were-the-risk-managers/