Barings Nick Leeson

Daiwa Bank Toshihide Iguchi

Sumitomo Corporation Yasuo Hamanaka

Societe Generale Jerome Kerviel

JP Morgan Chase Bruno Iksill

Rogue Traders and the Principal Agent Problem

Please present various cases of bank failure and evidenced reasons behind the problems experienced and discuss the tools to mitigate them. The examples are numerous S&L crisis, Barings, Daiwa, Sumitomo, Societe Generale, Bear Stearns, Wachovia Bank, AIG, Lehman Brothers crisis, Merrill Lynch,

Include in each example the government response and how the institutional financial problems were resolved. If the bailout package was offered, present the rationale with reference to TBTF problem and the government safety net offered to prevent systemic failure. Please relate the issue of banks failure to the concepts of asymmetric information (agency theory), adverse selection and moral hazard (lemons problems) in banking, banking regulations and supervision and deposit insurance, bank runs (panics), securitization, shadow banking, banking innovation and ethical concerns.