Money managers under the microscope
Who raised the risk budget?
How, just over half a year after some market observers pronounced prop trading perpetually and eternally dead, did the prop desk at these banks bounce back to life in a fashion that would have turned Lazarus green with envy?
After all, after taking huge writedowns on subprime securities, many of them directly attributable to their prop desks, throughout the financial crisis, a large number of the chastened banks slashed their prop desk staff and put strict risk limits on trading.
But while the financial crisis was still in full swing, someone raised the risk budget.
Who was responsible? How high up in the organisation were they? What made them raise the risk budget? Will their bonus be as big as that of the traders?
Private Eye might say, we think we should be told.