Wednesday, November 14, 2007
The departure of Charles Prince from Citigroup and Stan O’Neal from Merrill has started me wondering about the bigger risk-tolerance picture. To understand it better I looked at a quick cross-section of results in FirstRain, and was struck by how rapidly this shakeup has accelerated, from the occasional blogger highlighting an exception to the risk binge to weekly predictions of the meltdown (A Prescient Call on the Merrill Meltdown) to a daily deluge of coverage in the last few weeks.
In context, the significant moves by Citi Citi Buys Credit-Focused Hedge Fund make me wonder how the risky decision process works in such high stress situations.
Most reassuring is that many banks seem to be doing just fine so far including Deutsche Bank Deutsche Bank's Net Rises 31% and Lazard Lazard's Net Triples Amid Record Results; but, what I think nobody knows so far is when the other shoe can be safely considered dropped, both for Merrill and other big players like Citi where For Citi, Stakes Get Higher