The revelation of enormous fraud by a rogue trader at Société Générale pushed other issues aside today at the World Economic Forum in Davos, Switzerland, CNBC reports. A panel on sovereign wealth funds turned into an impromptu discussion on repercussions of the $7.3 billion cover-up. The market turmoil that the SocGen scandal exacerbates led one delegate to say simply, "investment banks are horrendous."
Trust in the banking system might be the biggest casualty of the SocGen fraud, panelists agreed. "First you had subprime, then the bond insurers, and now this," said one banker. Also on hand was French Prime Minister François Fillon, who told delegates the scandal was "a very major case of fraud" but "not tied to the financial markets."