Polling the don't-knows
IN HOLLYWOOD you know business is bad when they start firing the sons-in-law. With the banks, it's the bosses, Bank of America's being the latest. Resourceful as ever in finding new ways to lose money, they could have saved themselves grief by listen- ing to Sir Ian Fraser, who as chairman of Lazards was a scourge of banking follies: `My ancestors, the Medicis, knew better.' A dozen years ago, so he tells me, he polled the deputy chairmen of our High Street banks. He asked them two questions: did they understand their bank's exposure to derivatives and did they think their chair- men understood it? All said No to the first, and all but one said No to the second, the deputy chairman of Lloyds Bank feeling confident that whatever these things were, Sir Jeremy Morse would understand them Not investing in things that you don't under- stand is a principle of my Bad Investment Guide, and would have saved many penPle from losing their shirts at Lloyd's of London.
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