VIEW FROM THE GROUND FLOOR: It's easier, in hindsight, to give a friend the benefit of the doubt than to think that you should be investigating his trades

The question of Eurosport or CNBC raised its head again last week as I spent most of it in a hotel in Malaga turning on the TV during the occasional thunderstorm.

My unscientific report is that 25 per cent of my viewing time was taken up with CNBC and the remainder with Eurosport. This might have been skewed by the fact that Eurosport was showing a WTA tennis event in which I was interested, whereas CNBC was concentrating on the US economy in which, last week, I wasn't.

However, I did watch the AIB news conference, which was given wide coverage. The Americans (and the British - BBC World was also available) are clearly of the opinion that more heads should roll, particularly that of Susan Keating, the Allfirst chief executive. The Irish investment community is taking a more relaxed view, with the secretary of the Irish Association of Investment Managers, Ann Fitzgerald, saying that the decisions of the AIB board were made on a range of issues and not just whether or not Susan Keating should keep her job.

But it struck me (and everyone else) as strange that both Michael Buckley and Lochlann Quinn should tender their resignations while Ms Keating didn't seem to feel the need to offer hers.

Now the discussion is about her "connections" in Baltimore and there has been some suggestion that, because she is an influential member of the community, losing her would mean a loss of business for Allfirst. It's an interesting echo of the rationale used by Robert Ray, the man to whom John Rusnak reported, who said if there were too many restrictions placed upon Rusnak he would leave the bank and, therefore, it would lose the enormous profits generated by his trading. It would also mean the loss of some back-office jobs.

Now the jobs have gone anyway, along with the imaginary profits! I can't really believe that keeping a person on in a job because they have "connections" or because they are leading lights in the community is particularly good judgment. Either Ms Keating is good at her job or she isn't.

However, crises in business are not always as easily dealt with as the media would have us believe. When you sit down with a copy of The Irish Times and read through the sequence of events at Allfirst and AIB, you feel yourself reeling with shock at all the signs that went unheeded. You shake your head at the laxness of the supervisory system that allowed Mr Rusnak to execute unconfirmed trades and you can't understand how the marking to market of his trades was actually done using rates that he himself had chosen. So you wonder how on earth it was that the situation was allowed to develop.

And yet. . . John Rusnak and Dave Cronin, the (sacked) Allfirst treasurer, seemed to be friends as well as business colleagues. I know that it's easy, in hindsight, to say that friendship shouldn't get in the way of your job but it's easier to take the word of a friend than to think you should be investigating his trades. And you tend to give someone the benefit of the doubt for far too long.

While in the back office suspicions don't automatically get raised when someone casually remarks that you don't need a confirmation for a particular trade and gives an ostensibly valid reason. In the past I remember giving an explanation of a complicated trade to a back-office person who didn't understand it and the guy in question made the payment required despite not having all the paperwork.

He probably shouldn't have, even though if he'd gone to query it with someone else the treasury department would have lost out on a day's interest on a not-insignificant sum, which nobody would have liked. Sometimes in the day-to-day world of business, familiarity with your colleagues and the camaraderie that builds up can blind you to some of their faults.

And although it's almost inconceivable that, over a five- year period, nobody raised the serious questions that should have been raised at Allfirst, there's an element of familiarity breeding contempt as far as the treasury department was concerned. All the more so because it was a small, tightly-knit department.

Dealers are given an immense amount of autonomy in a bank, which is why it's such a great job. Most dealers work within their limits but every dealer will occasionally bust through them, either by accident or design. The people closest to the trading room may not always be the ones to deal with persistent problems since they too get infected by the buzz. That's why senior management should understand what their traders are doing.

Unfortunately many of them don't and are easily swayed by an explanation that includes words like "arbitrage" "option" "hedge" and "profit". It is somewhat extraordinary, though, to think that at branch level someone could get hauled over the coals for a bad debt of a couple of thousand euros while, at the same time, a dealer will look at a loss of a couple of thousand, shrug his or her shoulders, and order another latte.

Staying with the banking theme, I received a note from a reader who was upset by my reference to the British Isles in a recent piece about transferring money between overseas banks. I used the term geographically rather than politically but was actually referring to the sterling zone and was, mentally, excluding the Republic from that equation since we are such happy europhiles.

However, the term is, as the reader suggests, possibly inappropriate these days. And so, if I'm talking about the sterling zone I shall use that term in future which, I hope, keeps everyone happy.

And in another reference to communications from readers, I received a letter from a lady who runs meditation courses for stressed out executives and offered to allow me sit in on a session and report on it to you. Since in the week that the letter arrived, I was going through a pretty stressed time myself (skirting, as I was, very close to a deadline), I used my own patented method of stress release and shredded a pile of papers on my desk. Including her invitation.

So if she wants to write again I'd be more than happy to investigate methods of stress-busting for readers of the column.

I'll even pass them on to high-level banking executives.