The investment banks may be hot water over their behaviour during the ABCP crisis, if a story told on Friday by one anonymous executive speaks to what was happening on the Street during August, 2007.
Responding to a Globe and Mail column on the regulatory probe into the asset-backed commercial paper meltdown, a posting that defended the dealers, a money market trader fired in an e-mail that opened: "You're on the wrong track."
"I worked during that period on a money market desk and had a close up view of the explosion. Actually I had a bit more info than most on that desk," said the trader.
"I knew at the very least in early August that Coventree was going to blow up soon, and I expected that would be the end of the third party paper market. I'm not making this up. There were at least a handful of people on my desk with the same knowledge," he said.
"When the news release came out (I believe it was just after 9am on a Tuesday morning...) from Coventree, there was not a lot of shock on our desk. There were even a few chuckles. We knew it was coming," said the note.
In signing off, this individual said: "I'm sharing what I know with the regulators now."
If there was this level of knowledge on trading desks - a widely-shared expectation that the ABCP market was about to implode - and the desk responded by dumped their own employer's commercial paper on to unsuspecting clients, then market watchdogs should bring on the fines. And heads should roll in the fixed income departments of investment banks.