-----Original Message-----
From: 	Mack, Iris  
Sent:	Friday, May 18, 2001 9:47 AM
To:	Kaminski, Vince J
Subject:	General Observations during my London trip
Importance:	High

Hi,

	Below is a summary of my trip to London.  I can supply more details if you like.

	See you at 10:30 am.

Regards,
Iris






Mismatch of skills and resources
?	2-3 quants managed by many non-quant managers (lots of nepotism - more like the "PG&E Alumni Club")
?	Data team expanding - but no data
?	Head quant not a quant

Lots of problems with current version of the models
?	Models based on ECT traders' biased estimation of CDS prices - which later the traders admitted were wrong
?	Used less than 692 inaccurate CDS prices (made up by the traders) to estimate the CDS prices for 10,000 names on the EC website 
?	Mapping of ratings onto numerical values (no hard-core analysis of mapping nor sensitivity analysis of parameters)
?	Confidence intervals "made up by traders" (no hard-core analysis of mapping nor sensitivity analysis of parameters)
?	Quants confess that there are major flaws in their modeling process 
?	Ben admitted to fudging models - due to time pressure from traders and unrealistic deadlines set by non-quant managers who simply do not understand the technical issues and data requirements.  More specifically, the quants are very concerned about the July 30th deadline to price 1000 firm and 4000 indicative names based on the current versions of their models (which the quants thought they were initially developing as prototypes).
?	On 5/10/01 one of the traders (Nick) informed the quants that the current version of the asset swap model is wrong.
?	Each morning a trader (Ilyan) overwrites the results from the FMC models.  Quants also admit to problems in this model.

Large Marketing Budget and Massive Marketing Effort
?	New marketers constantly being hired.
?	They are beginning to attend tons of events (New York, Chicago, Seattle, etc.).
?	In one on one conversations with these marketers they seem to be very nice folks but don't seem to have a clue about the products they are hired to market, the potential risk exposures, legal and regulatory issues concerning their products, etc.  (I thought that Enron prides itself on looking more and more like an investment bank.  Derivatives marketers at investment banks are quite savvy - they have securities licenses, know their products, many of them are former quants, structurers, traders, etc.  EC might want to take note.)

Extremely unprofessional behavior on trading floor!!!!!
?	Verbal & physical assaults - especially directed toward individuals that question the current EC strategy and process.