"When risk assessments were made in banks the one question that was not asked was "What happens if X market goes away?" because the likely answer was "it ain't gonna happen, but if it does we all go to hell in handcart, you , me, the Governor of the Bank of England and the whole economy". The risk was put in the very low risk category, not factored into any pricing models and generally ignored. On a deal by deal basis that made perfect sense because the loss on any deal was limited to the values related to that particular deal. On an aggregate basis the numbers were so huge that no bank would contemplate the losses resulting from any individual deal, so deals got done and the market consensus was that these sorts of things did not and would not happen. Which meant that the market grew and grew and the issues that were ignored were precisely those that occurred because nobody was worrying abut them."
Badenoch Appoints Lee Rowley as Chief of Staff
3 hours ago
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