January 24, 2008 (LPAC)--Societe Generale, France's No. 2 bank, announced $10 billion in losses today, blaming the bulk of it on one "rogue trader" -- a story which not even the press corps buys.

This morning, the bank's top leadership had to respond to nearly two hours of aggressive questioning from some 100 journalists who attended a press conference called to explain their claim that a lone trader managed to cause the bank to lose 4.9 billion euros ($7.2 bn). Additionally, the bank reported another $3 billion in losses from subprime mortgages and from the U.S. bond insurer Ambac Financial, which had insured all the toxic CDOs held by the bank.

The assembled press were especially eager to hear all about the lone (assassin) trader theory which the bank is pushing. With a straight face, bank officials tried to explain that, on Friday evening, Jan. 18, they had discovered that a small trader had fraudulently taken very high futures trading positions. One of the journalists of a leading economic daily noted that "They take us for real idiots!" It was announced later that prosecutors in Paris had opened an investigation of the trader, identified as Jerome Kerviel.

On Monday, the Societe spokesman said, the bank began to unwind the lone-trader's positions -- which is not only supposed to explain Societe Generale's losses, but also the worldwide stock market collapse at the beginning of this week!

For many months, it was widely rumored that, among French banks, Société Général was probably the worst off. So nobody believes the fairy tale of the loan trader.