Really?? 7 BILLION dollars, and no one knew???

PARIS (AP) -- Police on Saturday questioned the young trader blamed for a massive fraud that cost France's Societe Generale bank more than $7 billion, as the country's president accused global financial institutions of having "gone haywire" and urged common sense.

The possible motivations of the 31-year-old trader, Jerome Kerviel, remained a mystery, and the bank said it appeared that he made no personal gain from the unauthorized trades.

Judicial officials said Kerviel was taken into custody earlier in the day - two days after Societe Generale's announcement that he was responsible for one of history's biggest frauds. The officials spoke on condition of anonymity because the investigation was ongoing. Under French law, Kerviel can be held up to 48 hours.

Jean-Michel Aldebert, head of Paris' financial police, said Kerviel gave himself up. He "is very well, he's collaborating," Aldebert told reporters.

The debacle further rattled an already nervous banking sector and has fueled a debate about risk management.

"If we can make profits in a matter of hours, we can also have huge losses," President Nicolas Sarkozy said during a visit to India. "We must stop with this system that has gone haywire and that has lost track of its aim."

He added: "It appears to be time to ... inject a bit of common sense into all these systems."

French officials said the trader had been dealing with more than $73.3 billion. That figure outstrips the bank's market capitalization of $52.6 billion, and is close to the annual GDP of entire nations such as Slovakia, Qatar or Libya.

It remains unclear whether Kerviel's actions, if proved, were motivated by malevolence, ambition or some other reason. Three union officials representing Societe Generale employees said managers at the bank who briefed them about the fraud told them Kerviel was having family problems.

Acquaintances described Kerviel as reserved and considerate, a young man who once taught children judo and held the door for elderly neighbors.

Experts and others including France's prime minister have questioned whether a single futures trader could have managed such large sums. Some have suggested Societe Generale might have used Kerviel as a scapegoat for other losses.

Paris prosecutors are conducting a preliminary investigation based on three complaints: one by the bank accusing Kerviel of fraud, and two by small shareholders.

In an interview published Saturday, Societe Generale's chief executive, Daniel Bouton, dismissed the notion that the bank's actions helped fuel the turmoil on world markets.

"It's absurd!" Bouton told Le Figaro daily in an interview published Saturday. "Anyone could calculate our contribution to the market in recent days."

Bouton said Kerviel had been betting throughout 2007 that markets would fall - a winning position. But the trader overstepped his authority and wagered much more money than he should have, Bouton said.

So at the beginning of January, Bouton said, Kerviel voluntarily created losing positions to neutralize his earlier gains and cover his tracks.

But this month's quickly dropping markets turned "this sad affair ... into a Greek tragedy: His virtual losing position became huge," Bouton was quoted as saying.

Despite the bank's $7.14 billion losses, which Bouton called "enormous and abnormal," he insisted Societe Generale's viability was not at risk.

In Thursday's statement, the company also announced another $2.99 billion subprime-related loss and said it planned to raise $8.02 billion in new capital.

French Finance Minister Christine Lagarde, speaking Saturday at the World Economic Forum in Davos, Switzerland, said she has been asked to compile a report on the fraud, Dow Jones Newswires reported.

Lagarde said her report will look at "the reality of facts based on real hard data," and "how and why" the bank's security controls failed to prevent the fraud.

The bank says the scale of the damage was so great only because of the bad timing of the discovery - right before the worst day in world markets since Sept. 11, 2001. It also fired Kerviel's supervisors.

Societe Generale's shares have lost nearly half their value over the past six months. After an up-and-down day Friday, the shares closed down 2.5 percent at 108.62

Comments

Someone HAD to have known ...

Someone HAD to have known and heads will roll. Stay tuned.

Now, will they be held accountable? Bob Dylan said it in a song on his album "Infidels" - "Steal a little and they put you in jail, steal a lot and they make you king". Another take on that is what Donald Trump did a number of years ago. He was so completely broke, beyond "bankrupt" and managed to borrow millions and millions of dollars. See, when you owe the bank a few thousand or a hundred or two hundred thousand, the bank OWNS YOU. BUTTTT, when you owe the bank MILLIONS and MILLIONS, then YOU OWN THE BANK. If you don't get it it, it's like this, the bank will put you out on the street, will do all it can to exact a "pound of flesh" and even let you die if you owe up to a certain amount. HOWEVER, if you owe them sooooo much that they would really Hurt if you didn't pay it back THEN they have a vested interest in seeing to it that you do well, that you not only live but that you prosper and so you are able to pay them back!

THAT is why if you steal a lot they make you king.

That is most likely what happened here. Someone knew alright but they were too concerned that they (the bank or those who's money was being absconded with) would lose a fortune if this guy was stopped that they simply let him go on and on taking more and more, like gamblers throwing more an more good money against bad, with the notion that at some point he'd be able to repay them.

Greed, isn't it an amazing thing? That and fear are what have been driving the American people since Bush took over the White House. His latest ploy should come as no surprise either. Give everyone who earns any money $600, $300 more for his and $300 more for that (I'm slated to get $900) to try and pretend to bail us out of the absolute economic ruin he's got us into. It's nothing more than a shot in the arm and with NO LONG STANDING PLAN TO CORRECT THE UNDERLYING PROBLEMS THAT HE GOT US INTO THIS MESS IN THE FIRST PLACE WITH. So why does he do this? Because greed rules. People actually believed the last time that they were getting a free bunch of money from him with that so-called "tax rebate" and it got him votes. The money was only an advance on money you had to PAY BACK as soon as tax time came along again, EVERY CENT was taken back. But people are FOOLISH. They are VERY Easily fooled when you appeal to their GREED. That's how this guy got away with it just as Bush is going to score all kinds of public support "points" (of which he has almost ZERO right now, even from his OWN republican party) by giving back a pittance compared to what he has cost us all. NO solution to the problems he has caused that got us into this mess, just a splash, a flash in the pan, to wow the people who are so gullible and GREEDY. GREED is how this guy got away with it. People who knew were too God Damned Greedy to stop him thinking they would win out in the end. Hell, it wasn't their money they were managing, er - make that MISSmanaging, anyway.

I read about that, it's ...

I read about that, it's crazy and now he's missing right? DUH????!!!
oh but he gave himself up later....I see HIS supervisors were fired, well that's their JOB, to SUPERVISE!!!