Word: banking
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...January 23rd, nobody had heard of Jérôme Kerviel. He was just another junior trader at France’s second largest bank, Société Générale. A day later, his name headlined nearly every major financial daily across the globe. Although his desk was limited to about $180 million in positions, Kerviel had forged passwords, faked control e-mails, and fabricated hedges in order to go well beyond the limit. He had learned all the necessary control tricks to pull off this feat during his time at the bank?...
...When his managers liquidated his positions, Kerviel held unhedged bets for over 60 billion dollars. Somehow, no one had noticed trades that exposed the bank for its entire market value. The managers silently sold Kerviel’s assets in a rapidly declining market amidst fears of global recession, and ended with over 7 billion dollars in red on their balance sheet...
...Today, several voices have called for more regulation of investment banks like Société Générale. Speaking at the Harvard Kennedy School, French Socialist leader Segoléne Royal cited the Kerviel case as an example of why a sort of global regulatory central bank is needed. Royal may be right: Regulation, like good risk management, may help curb moral hazard. But this is just part of the solution...
...what became the first modern bubble (and bust), John Law single-handedly obliterated the incipient Parisian stock market. Once a penniless gambler, the rogue Law became part of the King’s court and eventually rose to Controller-General of Finances. He achieved control of the central bank, most money-issuing mints, the national debt, the collection of indirect taxes, and the largest player in the market, the Company of the Indies. Unchecked, monopolistic control of the market was part of his “Plan Sage;” but it eventually collapsed spectacularly, hindering French finances...
...system can also operate live, in real time. CCTV operators, keeping a vigilant eye on a bank of 39 monitors in their windowless office, can ad lib broadcasts, asking people, for instance, to pick up the litter they've just dropped, or warning them that their behavior's unacceptable...