A "too big to fail" bank gets hit with an epic inside fail [UPDATE] [UPDATE II]

here's a sweet little item...

Adoboli held over $2bn UBS ‘rogue trade’

Kweku Adoboli, a 31-year old trader in UBS’s London-based exchange traded funds business, was arrested on Thursday in connection with a $2bn loss due to unauthorised trading at the Swiss group’s investment bank

The Swiss group declined to comment, other than saying the loss had been caused by “a trader” and the matter was under investigation. It warned that the discovery could prompt it to report an overall loss for the group when third-quarter figures are revealed in October.

maybe it's just me and my inherently cynical nature, but i smell scapegoat here... and tell me, please, how does TWO BILLION manage to slip below the radar...?

[UPDATE and BUMPED]

matt taibbi responds...

The $2 Billion UBS Incident: 'Rogue Trader' My Ass

[...]

There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading.


[...]

The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.

They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling.

The only thing that differentiates a "rogue" trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorized...

[...]

In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

In other words, "rogue traders" are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by deregulatory legislation giving them access to our bank accounts.

i'm still not convinced there isn't a great deal more to this than meets the eye...

[UPDATE II]

here's matt on last night's keith olbermann...



matt's right... the incentives are all backwards... there are no consequences for risk-taking failure and, in fact, there are often huge rewards... however, separating the investment firms, banks and insurance companies like was done after the great depression, even though it desperately needs to be done, isn't anywhere near the magnitude of the fix we really need... the entire system is broken, starting with the military-corporate-government "endless war" mess to the federal reserve to the national security state, extrajudicial assassinations, on and on... that said, it would certainly be a good start...

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