Time Magazine
The New Service Class
by John Greenwald

It sounds at first like another cruel tale from the world of corporate layoffs. Young IBM personnel specialist, 36, loses his job last July in cutbacks at the troubled computer giant. In dismay over leaving IBM -- the company where both his parents spent their careers -- young man plunges into the harsh job market. But there the miraculous happens: after a flurry of interviews, he is hired by Electronic Payment Services, a start-up Delaware company that processes credit-card transactions, for substantially more than his old salary. "I never knew how marketable I was," says Peter Dychkewich, the hero of this story. "But then I floated my resume, and the job I have now came up rather quickly."

His good fortune reflects the astonishing strength and diversity of U.S. service industries, which account for 70% of the country's economic activity. Even as manufacturers such as IBM and General Motors shed workers by the tens of thousands, service providers from banking to health care are taking on new employees. Just last week the Labor Department reported that service companies created 153,000 new jobs in October. That dwarfed the 40,000 positions that manufacturers added and helped reduce the unemployment rate to 5.8% -- the lowest in four years. Read More...

Securities Operations
Reviewing Risk After Barings
by Securities Operations Letter

Securities firms continue to pull evidence from the wreckage of the collapse of the Barings at the end of February. The debacle has brought into focus the often inadequate controls in place to contain the risk posted by derivatives and other complex instruments. For those in operations, Barings may be an object lesson in the role of the back office in keeping an organization honest. Securities Operations Letter spoke to Timothy F. Scala, president and chief executive officer of Treasury Resources Consulting and Investigating, and a former trader. TRCI is a consulting firm that helps clients better understand the risks of trading and develop safer policies and procedures. Scala, who racked up 25 years in the financial industry, has provided expert testimony and consulting services for some of the world's leading international law firms active in securities litigation. He was formerly on the board of directors of FOREX USA, a foreign exchange and money market industry group.

SOL: As someone who has built a business around educating firms and their traders about the nature of risk, what went wrong at Barings that brought this top-notch firm down?

TS: In a word, it is control. As you know, Leeson was in charge of the back office as well as the front office. This flies in the face of every known auditing principle. Firms need a fire wall between the two whereby one person can at least confirm what someone else claims to have done. Read More...