The real estate blog.

Struggling homeowners who can now refinance due to favorable short term interest rates can thank French fraudster JГ©rГґme Kerviel for their new found fortune.

The Fed has made two huge rate cuts in the last six months based on misleading information. In September the Fed made a huge .5% cut based on August’s employment numbers that turned out to be more favorable than originally stated. Tuesday the Fed made a .75% cut based on U.S. stock market futures that predicted huge losses after Monday’s holiday. Most world markets suffered losses on Monday that were mostly attributed to reactions to the deteriorating credit and real estate markets in the U.S.

Today we found out the real reason for those losses…Mr. Kerviel -

In one of the banking world’s most shocking

disclosures, France’s SociГ©tГ© GГ©nГ©rale said Thursday that Mr. Kerviel had cost the bank €4.9 billion ($7.2 billion) by allegedly making huge unauthorized trades that he hid for months by hacking into computers.

The company’s attempts to recover the losses have contributed to the volatility in the international equities exchanges -

The size of the loss, and the bank’s frantic efforts to unwind the bad trades over the past 72 hours, may even have contributed to the tremendous volatility that shook European markets this week, some analysts said. SociГ©tГ© GГ©nГ©rale joins Citigroup Inc., Morgan Stanley and others in seeking outside capital to ensure their survival after suffering financial knocks.

Mr. Kerviel now joins Nick Leeson as an example of rogue traders who have caused enormous losses with Leeson sinking England’s oldest investment bank; Barings.

I thought the Fed should have kept rates steady in August, but considering the write downs by lenders since then, I believe the Fed’s action has maintained confidence in the markets. I suppose I’m a little bit Machiavellian in thinking that despite the real cause for the latest rate cut, the Fed’s action was the right one in reducing foreclosures and stimulating refinances.