SocGen Fraud Dominates Davos Talks

Forum delegates worry about effects on trust in financial sector
By Jason Farago,  Newser Staff
Posted Jan 24, 2008 12:43 PM CST
Participants are seen in the main lobby prior to the opening session of the World Economic Forum in Davos, Switzerland, Wednesday Jan. 23, 2008. Amid a backdrop of concern over the health of the global...   (Associated Press)
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(Newser) – 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."