The $36 Billion Downfall of Archegos

Our reporters have deconstructed the three days that led to the downfall of Bill Kwong and Archegos. Today, the prosecution is expected to rest in its case in Wall Street's trial of the decade. Bloomberg Sridhar Nacharajan wrote this story. He Co wrote it joins me now. And of course, our team, you, Ava, Benny Morrison, has been all over it, not just through the trial, but through the scandal itself. What can you say about this time frame? Look, ever since this happened three years ago now, everyone on Wall Street has been fascinated by how it happened. How did someone so secretively build a $36 billion fortune and then so publicly lose it in a matter of days? In the last five weeks in a downtown New York courtroom, there has been a trial where the Justice Department has been going after Bill Huang for what it believes to be market many and lying to lenders. But in the process, we've got such vivid glimpses of what actually happened in those chaotic last three days when that firm collapsed. And it doesn't look pretty for Wall Street. You you, you have descriptions of one of the Archegos senior executives in a TSA security line in Texas dialing into a call with anxious banks on the Thursday night of the week, worried if they're going to lose money. There's a description by a Credit Suisse trader talking about how he's walking into the CS office on the Friday of that week for the first time, hearing about Archegos and distress after taking a city bike into the office to try and begin the unloading process of that portfolio. And of course, in the middle of it all, Goldman got a near $500 million gift because of the staffer screw up. It's not really that image of calculated risk taking that Wall Street tries to project. Everything that we've seen shows that there were a lot of faults and Lord of cringe worthy incidents across different camps on Wall Street. Let's talk a little more about that because I think there's so many remaining questions you have on the Bloomberg Terminal headline that the chats reveal ineptitude. Who was most inept here? I mean, the fact that you had a handful of banks that lost more than $10 billion, clearly they don't come out looking good. Credit Suisse lost 5 1/2 billion dollars. Credit Suisse doesn't exist today. And even look at some of the communications here. The this was a firm that was giving these banks vague evasive answers, essentially pinky promises about their portfolio. And yet banks were loading them up with so much in firepower for their best shocked about still is back. When you look at that time, why did the bankers try to work this out on their own? Why didn't they call the Federal Reserve or another banking regulator when something went wrong? It's it's all happening live. They had multiple conversation about can we, can we sign an NDA? Can we all have a look at the full portfolio? Can we all agree not to sell down? There were some banks that said, no, I'm not, I'm ready to shoot 1st and ask questions later. Those were the banks that escaped reasonably unheard. One of them Goldman Sachs. The others who chose to wait, who tried to play it cautiously and carefully, did not end up looking good. How does that look at the other end? On one hand, Goldman saved a ton of money. On the other hand, they got out first, maybe to the expense of others. What is reputational risk or, you know, fallout after? Are they better or worse off for it? Do you think if you go to a senior Goldman trading executive today, are they worried about a reputation of being hard edged, about being hard nosed about the process or are they bragging about the fact that they did not lose any money? And does Credit Suisse get any credit for saying let's do this slowly, let's do this in a calculated manner and not spook the markets? They don't. They're not around to tell you that tale. So that tells you how Goldman will do it again. Why wasn't a regulator called at the beginning? It again, the fact that this was all happening on the spot, like, I mean, you have a situation where 72 hours shouldn't have regulator been called. You, you have a situation where they're going to some of their biggest banks and saying, hey, we're trying to meet margin calls elsewhere. Can you give me some of your excess cash in the UBS officers? We will have a margin call tomorrow. Are you sure you want this money? Are you good for it tomorrow? Fine. Here have $300 million. Did they get their money back the next day? No, the problem is on Wednesday people are saying there's nothing much to worry about here. They had great performance in the last six months and just giving some of it back. There was no recognition until Thursday night, until the final day of the week that this was a real catastrophe.