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Citi’s $900M Misfire Happened During Software Switch

bloomberg.com

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Re: Citi’s $900M Misfire Happened During Software Switch

#31

Post by nashashmi »

kmarc wrote: post #27

I'm put on a banking project (as external) which already flushed down the toilet around ~$500M. Based on my experiences of the meetings and meetings about meetings, I totally understand how the incompetence lead to this clusterfuck. My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." He answered that although he is in the banki…

Good question!

The banking industry owns more money and is scheduled to own a whole lot more money in the future. And by "more money" I mean more market share of all the money in the world.

The biggest threat to their treasures is when government prints more money. Because it limits what they are able to spend lest they cause spiraling inflation.

The banking industry is the MOST powerful industry in the world. And they don't know it or they keep the realization of that power in a tight fist.

Edit: in the context of this loss, they didn't lose anything. They just bought the debt from the creditor. They are still owed money from the debtor.

Re: Citi’s $900M Misfire Happened During Software Switch

#32

Post by nashashmi »

howeyc wrote: post #28
kmarc wrote: post #27

I'm put on a banking project (as external) which already flushed down the toilet around ~$500M. Based on my experiences of the meetings and meetings about meetings, I totally understand how the incompetence lead to this clusterfuck. My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." He answered that although he is in the banki…

> My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." They create it. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

Only central banks create money. The others redirect money away from insurance vaults.

Insurance requires a load of money in a vault for when disaster strikes. When it does, they curtail lending. The impact of losses is not felt immediately. It is felt much later.

Re: Citi’s $900M Misfire Happened During Software Switch

#33

Post by dustingetz »

kmarc wrote: post #27

I'm put on a banking project (as external) which already flushed down the toilet around ~$500M. Based on my experiences of the meetings and meetings about meetings, I totally understand how the incompetence lead to this clusterfuck. My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." He answered that although he is in the banki…

https://alhambrapartners.com/2019/04/22/eurodollar-universit...

Re: Citi’s $900M Misfire Happened During Software Switch

#34

Post by ManskY »

kmarc wrote: post #27

I'm put on a banking project (as external) which already flushed down the toilet around ~$500M. Based on my experiences of the meetings and meetings about meetings, I totally understand how the incompetence lead to this clusterfuck. My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." He answered that although he is in the banki…

All you have to do is open their annual financial statement to understand where it all comes from.

Re: Citi’s $900M Misfire Happened During Software Switch

#35

Post by zuppy »

netsharc wrote: post #23
user5994461 wrote: post #10

Earlier quoted context omitted.

Bank transfers between banks are not reversible.

Do you mean when the mortal clients of the banks are doing them, or when the banks are doing them? I imagine bank CEOs know each other and can even call each other and say "Oh sorry old chap, that was a mistake!".

you are reading an article about a case when the bank could not take back its money, I think this answers your question :)

Re: Citi’s $900M Misfire Happened During Software Switch

#36

Post by gpm »

tumetab1 wrote: post #9
sharken wrote: post #6

Earlier quoted context omitted.

At least Citibank is trying to upgrade their ancient systems, but it sure looks as if previous or current CEOs failed to exercise due diligence. Doesn't look like good risk management at all.

Actually, banks risk management is easy. Most in-bank or between banks transfers are reversible and usually a non-issue. That why the risk management probably says something like this: Risk: Incorrect transfer of funds to customer in another bank Mitigation: Manual review of all funds transfer above 5 million dollars Mitigation: Besides litigation issues, lost funds are easily recovered by asking the receiving bank S…

    Risk: An employee can transfer all of a customers funds to an oversees bank account
    Mitigation: Multiple employee must approve transfer of funds
    Mitigation: No individual employee can deploy modifications to the computer system actually doing the transferring.
    Mitigation: No team can both write code and access (the important) production systems
    Mitigation: Must stand on head while deploying code, because people standing on their head are more honest
    Status: Risk accepted, we'll have 10 more meetings to review this next month.
The idea that bank transfers are reversible is false. Some are, some aren't, the adversaries are interested in the ones that aren't. The idea that manual review is a trivial fix is very false. Even if there was a trivial fix, the idea that you could get this past the numerous gatekeepers with a simple and easy process is probably false in most banks.

Re: Citi’s $900M Misfire Happened During Software Switch

#38

Post by tolbish »

dustingetz wrote: post #33
kmarc wrote: post #27

I'm put on a banking project (as external) which already flushed down the toilet around ~$500M. Based on my experiences of the meetings and meetings about meetings, I totally understand how the incompetence lead to this clusterfuck. My question to my boss was rather: "but _where_ do these banks get this huge amount of money from? I guess it's not from the $5 account fees." He answered that although he is in the banki…

https://alhambrapartners.com/2019/04/22/eurodollar-universit...

I think I found his thesis in the Epilogue:

> QE is the puppet show; bond trading is the real deal.

Re: Citi’s $900M Misfire Happened During Software Switch

#40

Post by toomuchtodo »

HenryBemis wrote: post #7
LordAtlas wrote: post #5

This is the key part: "But the employee didn’t select the correct system options -- instead allowing the loan to be repaid in full with interest. Colleagues who are supposed to catch such errors didn’t." Saved you a click.

From experience in investigating mishaps like that: 1) no maker-checker control, 2) no imposed limits (with forced maker-checkers - more than one checker)($900m with one click???? what the actual ....), 3) lack of training, 4a) pressure to do this NOW NOW NOW NOW (sorry for the caps), 4b) overworked/tired (matching point 6 below), if that person is "stuck" at home with two screaming kids aged 2-6 for the past five mo…

While the jobs weren't on HN, Hashicorp has a very strong security/governance/compliance team based on my interview there. Credit where credit due.
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