Archegos: Difference between revisions

{{a|risk|}}No. It’s still too soon.

It is no longer too soon, for on July 29, 2021 the Credit Suisse Special Committee to the Board of Directors has presented its ''{{plainlink|https://www.credit-suisse.com/about-us/en/reports-research/archegos-info-kit.html|Report on Archegos Capital Management}}'' to the board and, for some reason known only to the board, they have published to it to the known world. This seems to be a final act of self-harm from an organisation whose serial acts of self-harm the report catalogues in such clinical, precise detail.  

''What on Earth did they think they would achieve by releasing this report?'' It caused ''another'' precipitous drop in the firm’s stock price — nearly four percent — to go with the twenty percent drop it suffered when news of the default first broke.

That said, it is an act of self-harm for which the watching world should feel tremendously grateful. Not only a sizzling read, arriving just in time for Bank executives as they head for a fortnight to the sun loungers of Mykonos and Ibiza, but it is a beautifully clear explanation of the business of [[equity prime brokerage]] in particular and global markets broking in general, and a coruscating dismemberment of the way investment banking operates, both inside Credit Suisse and without.  

This is a proper horror story: Stephen King has not a patch on this.  

''Everyone'' involved in the business of prime services, and global markets broking generally, should read this report.

And while the goings on at CS were breathtakingly, class-leadingly chaotic — it is hard to believe that any one organisation could have made ''so'' many unforgivable errors, in such scale, over such a long period, so consistently, missing many opportunities to cotton on, without catching even ''one'' lucky break as the apocalypse unfolded around it — this really is a royal flush of idiocy — the ''makings'' of all these [[joint and several liability|joint and several]] catastrophes is imprinted in the DNA of ''every'' multinational organisation. An onlooker who denies it — who does nmot shudder and think, ''there, but for the grace of God, goes my employer — is showing precisely the lack of awareness that nearly sank CS.  

After all, CS was by no means alone in taking a hammering in the fallout from Archegos.

The Special Committee makes a number of excellent recommendations — all worth heeding — but stops short of the one that must have been most tempting to the Board: ''get the hell out of the broking business altogether''.

What is interesting is that almost all of the most egregious errors were sociological: they speak of human foibles, the thrall of power, obsession with models and capital calculations and not risk, with arse-covering, deference to hierarchy, fiefdoms and silos, insouciance and, when it comes to it, idiocy. In a period when Credit Suisse gingerly asked Archegos to consider a new margin proposal, Archegos responded by requesting CS pay it $2.4 ''billion'' in excess variation margin it held with Credit Suisse. And Credit Suisse ''paid it'' without question.