My commentary is at the end.

Italease blow-up stokes derivatives fears
By Ambrose Evans-Pritchard
Last Updated: 1:47am BST 05/07/2007

A derivative blow-up at the Italian bank Italease has sent tremors through Milan’s banking fraternity and exposed the hidden dangers of exotic credit instruments.

The bank has paid off 610 million euros (£419m) in recent days to counter-parties in what amounts to a massive margin call after interest rate rises in Europe caused hedging and derivative losses by clients to mushroom out of control.

The share price has tumbled 9pc so far this week, and is down 64pc since the troubles first began to emerge in April.

“These derivatives were very complex and suddenly turned against us,” said Pierantonio Arrighi, the bank’s spokesman.

…

Think about that last statement. They are saying that they do not understand the instruments that that they are investing in.

This is a freaking bank, and they do not understand the instruments that that they are investing in.

Jeebus.

Would someone put adults in charge?