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After all, this broker was not alone in taking a hammering. It just took the ''worst'' hammering, and has been the most candid about how. | After all, this broker was not alone in taking a hammering. It just took the ''worst'' hammering, and has been the most candid about how. | ||
Nor was Credit Suisse an institution that was out of its depth in a market it did not understand. Most of its missteps have a curiously sociological, ''human'' cast to them. Some speak of bad management: poor organisation, unclear responsibilities, fiefdoms and [[silo]]s, under-communication of what mattered, over-communication of what did not; others speak just to ordinary mortal frailty: the thrall of [[Christian name|rank and status]], the fear of speaking up, making management reports and [[dashboard]]s accommodate the risk, rather than making the risk accommodate the models; [[buttocratic oath|backside-covering as a primary goal]], inexplicable insouciance in the face of steadily escalating risk and, when it comes to it, outright [[Mediocre you|mediocrity]] in senior personnel. | |||
The end game sums up how dire the whole sorry business was: In March, 2021, the broker gingerly ''asked'' Archegos to consider a new proposal under which it would recharacterise $1.35 billion of the $2.4 billion in [[excess margin|excess]] [[variation margin]] ''it currently held for Archegos'' as [[initial margin]]: ''asked'', that is, when it was contractually entitled to ''demand'' that, and more, on 3 days’ notice. And, while ''thinking about it'', Archegos systematically demanded CS ''disburse the entire $2.4 billion''. | The end game sums up how dire the whole sorry business was: In March, 2021, the broker gingerly ''asked'' Archegos to consider a new proposal under which it would recharacterise $1.35 billion of the $2.4 billion in [[excess margin|excess]] [[variation margin]] ''it currently held for Archegos'' as [[initial margin]]: ''asked'', that is, when it was contractually entitled to ''demand'' that, and more, on 3 days’ notice.<ref>That short notice period, by the way, was fatal. ordinarily a prime broker can ''instantly'' recharacterise free cash as margin — i.e., at the precise moment a client asks for it. Possession being nine-tenths of the law, this was a very, very important risk mitigant. By agreeing to even a short notice period, Credit Suisse obliged itself to pay out money before it could ask for it back.</ref> And, while ''thinking about it'', Archegos systematically demanded CS ''disburse the entire $2.4 billion''. | ||
===Archegos’ reputation and competence=== | ===Archegos’ reputation and competence=== | ||
[[File:Archegos NAV to 2020.png|alt=Archegos NAV 2012-2020|350px|right|thumb|Archegos’ performance between 2012 and 2020 was ''all over the shop''...]][[File:Archegos NAV to armageddon.png|350px|right|thumb|... and then it got ''worse''.<ref>Figures taken from the {{CS report}}</ref>]]What emphasis should you place on a record of misfeasance and bad management? | [[File:Archegos NAV to 2020.png|alt=Archegos NAV 2012-2020|350px|right|thumb|Archegos’ performance between 2012 and 2020 was ''all over the shop''...]][[File:Archegos NAV to armageddon.png|350px|right|thumb|... and then it got ''worse''.<ref>Figures taken from the {{CS report}}</ref>]]What emphasis should you place on a record of misfeasance and bad management? | ||