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Jerome a Paris:
We are in a crisis to a arge extent because no riks analysis was performed on underlying assets, and one of the reasons this happened is that those that structured the financial instruments did not hold them - and did not really care if they were sound: they only cared if they were marketable, which is not the same thing.

Well Jerome is the banker here - if not a derivatives trader - and so I am taking his word for it - though to be honest, this is exactly what I would expect to have happened.  As I noted above, risk analysis if expensive and skilled, and if a bank wants to cut costs...

Also there is a more general trend in all businesses - the emergent dominance of the marketing department over production/engineering and even R&D.  Business now - and the larger and more complex it is - the more so - is all about managing perceptions - consumer, regulator, investors, bankers - and the actual reality of what is happening on the ground in terms of product quality is almost an irrelevance.  I would be surprised if banking were any different - and particularly the more exotic hedge fund and derivatives end of the business.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Mar 24th, 2009 at 08:14:18 AM EST
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