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Bank Lobbyists and Geeky Lehman Synthetic CDO Traders


Silla Brush and Robert Schmidt, Bloomberg, How the Bank Lobby Loosened U.S. Reins on Derivatives, here.

Lew insisted that Gensler coordinate better with the Securities and Exchange Commission, whose new chairman, Mary Jo White, was also present. Gensler, who was deep into negotiations with his European counterparts, was surprised by Lew’s demand. He’d been hearing the same request from lobbyists seeking to slow the process, and he told the Treasury chief it felt like his adversary bankers were in the room, the people said.

Antoine Gara, The Street, God, Country, Lehman, here. Author is an associate from back office IT with a shout out to the SCDO traders, nice. The SCDO trader that impressed Mr. Gara must have been Georges given the timing, right? The hole in SCDO book P&L when everything got correllated was big enough to make sure all the SCDO folks had a shitty year, but it was big enough to threaten the LEH stock? I don’t think so.

Weekly Tuesday-evening presentations by Lehman’s various fixed-income desks revealed just how surprised some were to learn of the exotic products the firm was trading. No meeting I went to was better attended than an August 2008 presentation by Lehman’s synthetic CDO desk.

A geeky trader explained Lehman’s understanding of the loss rates of synthetic CDOs and ended his presentation with his head hung, having conceded that the product was not performing as expected. The Q&A session stretched far longer than the presentation. Since Lehman’s collapse, synthetic CDOs have yet to make a comeback.


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