CDOs: Risky business

Deutsche Bank only discovered an alleged overstatement in a trader’s CDO book after it had been going on for over a month. What’s more, the alleged £30m overstatement was only found when Anshul Rustagi, who has since been dismissed, went on holiday. This raises questions about the effectiveness of risk controls in the fast-growing market for collateralised debt obligations. Deutsche had a barrage of controls to spot this sort of thing. But they don’t seem to have worked. It is not clear why. Bu...