dimanche 28 mars 2010

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De Zero Hedge:

In fact, according to Michael Lewis, the former Morgan Stanley prop trader lost "more than any single trader has ever lost in the history of Wall Street." Maybe it is time for a repeat appearance of Mr. Mack on Fox Business, this time with some more probing questions by his fans.

Max Abelson discusses the blatant contradiction between Mack's presentation of reality... and facts:

Halfway through this month’s 60 Minutes interview with the financial journalism deity Michael Lewis, a snapshot of a half-grinning banker in a pinstriped suit filled the screen. With a thick neck and soft face, mouth turned tightly upward, the former mortgage bond trader Howie Hubler smiled out unknowingly at 12 million viewers.

In his nice New Orleans drawl, Mr. Lewis said that this banker lost Morgan Stanley about $9 billion. “More than any single trader has ever lost in the history of Wall Street. And no one knows his name.

Yes, prop trading is fine and well, and just waiting for the next massive loss, although not so much at Morgan Stanley, which under Mack's watch was downgraded a third-tier investment bank, after Mack decided to not take any risks ever again... and was summarily booted.

Some more details on Hubler:

By the end of 2004, he was skeptical of the subprime mortgage business, and craved new ways to bet against it. He found Morgan Stanley customers willing to sell him credit default swaps on pools of subprime mortgage loans, which, though there are many poetic ways of putting this, was like taking out an awesome insurance policy on a house you’ve built in quicksand.

But the economy’s fall took a while to begin, which was a problem for Mr. Hubler—who in April 2006 was put in charge of his own Morgan Stanley hedge fund, called the Global Proprietary Credit Group. To make up for the millions of dollars that it cost to carry his subprime bets until the bad times hit, he sold insurance on slightly better mortgages. He wagered on a disaster he clearly saw coming, and then against a worse disaster he was blind to—agreeing to insure the house next door, prettier but in the same sand. And because insuring something that’s less risky is less lucrative, he had to sell several times the amount of swaps that he himself had bought


And just in case you thought someone may not make a million dollar bonus after losing his firm's shareholders almost ten billion, you would be dead wrong.

“What happened to Howie Hubler?” Steve Kroft asked this month on 60 Minutes.

“He’s allowed to resign from Morgan Stanley and he takes with him millions of dollars in back pay,” Mr. Lewis answers. “Tens of millions of dollars in back pay.”

Not only that, but Hubler is back to his old antics, not so much collecting pennies in front of a rollercoaster this time, as preying on the broke.