sanerdudette

Well I was had today. In my job as head of credit risk monitoring for a major international bank, I was cc’d on a e-mail which was sent by the person in charge of our modeling team to the traders. The gist of the mail was that in order to encourage front office personnel to use our new risk modeling tool, all trades simulated today using that tool would be assigned 0 CVAR. In other words, no credit risk, a virtual carte blanche on trading. The small print on the bottom (which I did not see) said “valid only for trades transacted between 11:59 p.m. and 12:00 a.m.

Panic struck. I began feverishly dialing the sender, demanding to know who approved such a preposterous promotion. Much to my embarrassment, it was quite some time before I realized that this was an April Fool’s joke.

The origin of April Fool’s day is not well documented. One theory is that April 1 was once considered to be the first day of the year in France. When King Charles IX changed it to January 1, some stuck with April 1. Those who didn’t adapt to the change were called April Fools. Another theory is that April Fool’s Day was first celebrated soon after the Gregorian Calendar was accepted. Those who still adhered to the old Julian calender were called April Fools

Whatever the origin, I will be sure to check my calendar daily before going to work.

On the heels of another story about executive compensation at AIG, there was a story about AIG paying billions of dollars in TARP funds to Goldman Sachs, Deutsche Bank and other investment banks. All the press I have read on this is way too vague and imply that there was some wrongdoing involved.

Simply stated, AIG paid this money to other banks because it represented collateral it owed on credit derivatives. AIG paid the collateral and terminated the contracts, thus reducing the risk both counterparties had on their books, and limiting losses for both. In the event of a downgrade by one of the rating agencies, AIG’s collateral requirements would increase, and failure to meet margin calls would trigger a calamity for all of its counterparties.

This was not a misuse of taxpayer money, but appropriate of use of bailout money

/>Tough times are hitting all of us, but Ryanair, Europe’s largest discount air carrier is contemplating having its passengers pay to use its in-flight toilets.

Ryanair raised its net income forecast on Dec. 2 for the year ending March 31 to 50 million euros ($63 million), citing that the falling price of oil has more than compensated for the lower fares it’s offering to stave off a drop in traffic. Passenger numbers rose 11 percent in January from a year earlier as many flocked from higher priced carriers to the cut-rate Ryanair.

Ryanair already makes half its income on ancillary income made from baggage charges, beverage charges, etc. It is difficult to believe that the few euros earned from charging for use of the facilities would be worth its while. This idea is sure to leave passengers pretty peeved.

When I began my career in banking over 25 years ago, I was hired by Citibank. John Reed had just taken the helm and the 1980’s were a heady period for the powerful bank. It is difficult to fathom the fact that Citi has fallen so far and that an American bank would be headed towards nationalization.

The Treasury Department said it would convert as much as $25 billion of preferred shares into common stock provided private holders agree to the same terms, the government said in a statement today. The conversion would give the U.S. a 36 percent stake in the New York-based company.

Think about it, at $1.25 a share, Citibank stock is selling for less that the bank charges to use its ATM’s. The Mets’ new stadium, named Citi Field, is now derisively referred to as Debit’s Field. This recession is not going to end anytime soon.

Today bank regulators released details of the stress tests the 19 largest banks will be subject to in the coming weeks. The goal is to determine the value of the assets on the balance sheets and to see whether banks have enough capital to withstand the economic downturn as it is forecasted now and also under a more adverse scenario which reflects a deeper and longer recession than in the baseline. Those in need may receive new government money.

For GDP, the “more adverse” scenario, calls for a 3.3% GDP decline in 2009 followed by a 0.5% gain next year. The adverse scenario for home prices incorporates a 22% decline this year and 7% drop next year. The adverse scenario for unemployment is 8.9% this year and 10.3% in 2010.

As a risk manager for a major international bank, I have strong doubts about whether this can be completed by the end of April as projected, and I doubt that the adverse scenarios proposed are severe enough.

Llindsay Vonn was edged out by German Skier Gina Stechert by just one-hundreth of a second in yesterday’s downhill race at Tarvisio, Italy. Vonn missed the opportunity to set a United States women’s record of 19 World Cup victories.

Vonn skied with a surgically repaired tendon in her thumb which she severed on a champagne bottle two weeks earlier. The injury could have hindered her pole plants.

With less than a year from the Vancouver Olympics, Vonn is a heavy favorite reach the podium in the five events she may race. Vonn placed eighth in the downhill at Torino after sustaining a brutal crash days earlier. Since then Vonn has been focused on the 2010 Games.

The town of Lake Placid, nestled in the Adirondack Mountains is a superb destination all four seasons a year. This weekend, it was transformed into a mini-olympic village as it played host to the Empire State Winter Games, an ameteur athletic event for qualifying New York State residents.

The alpine skiing events, the slalom and giant slalom are held on the world-class courses at Whiteface Mountain, the site of the 1980 and 1932 Olympic Games. The events are coordinated by the New York State Ski Racing Association (NYSSRA) which sponsor a series of qualifying races, the Empire and Trophy Series.

Student-athletes from National Sports Academy (NSA) put on a good showing, taking five medals. This years winners are as follows:

Slalom
Ladies
Gold: Kelly Burgart, (HO)
Sllver: Jennifer Higgins (BM)
Bronze: Aylin Woodward (NSA)

Men
Gold: Thomas Scheeler (HV)
Silver: Matthew Oot (LB)
Bronze: Justin Norton (NWS)

Giant Slalom
Ladies:
Gold: Aylin Woodward (NSA)
Silver: Kelly Burgart (HO)
Bronze: Georgia Nagle (NSA)

Men
Gold: Andrew Beck (NSA)
Silver: Peter Van Ingen (GP)
Bronze: Everett Keller (HU)

Special mention to Erik Obey of Brooklyn, New York who placed 20th ad 31st in the giant slalom and slalom respectively. Not a bad showing for the lone “city slicker” in the field.