Mistake by traders cost USD 8 billion

A mistake by traders at Morgan Stanley's mortgage business has blown an USD8bn hole in the bank's finances. In what might be the biggest single loss by a trading desk on Wall Street, Morgan Stanley said it was stuck holding vast quantities of mortgage derivatives that had plunged in value since the summer, and kept on plunging in November. John Mack, chief executive, called it "an error of judgement". Colm Kelleher, chief financial officer, said the bank had learnt "a very expensive and humbling lesson".