Global investment banks, gathering in a hastily arranged call, needed a swift truce to deal with Bill Hwang’s Archegos Capital Management if they were to head off billions of dollars in losses for banks and a potential chain reaction across markets. Yet by Friday, it was everyone for themselves.

The forced liquidation that sent bellwether stocks tumbling last week and continues to send shock waves across capital markets, was preceded by bickering in the highest rungs of international finance that quickly devolved into finger-pointing and now fury, according to people with knowledge of the situation. Banks are just starting to tally the carnage.

So far, Credit Suisse Group AG and Nomura Holdings Inc. have told shareholders their businesses face “significant” losses. Goldman Sachs Group Inc., ahead of the pack on unloading positions, is telling investors the impact on its financial results will probably be immaterial. Deutsche Bank AG said it escaped too. Morgan Stanley, another big player that was still shopping blocks of stock as late as Sunday night, has yet to specify any toll.

Emissaries from several of the world’s biggest prime brokerages tried to head off the chaos by holding a call with Hwang before the drama spilled into public view Friday morning. The idea, pushed by Credit Suisse, was to reach some sort of temporary standstill to figure out how to untie positions without sparking panic, the people said.

But any agreement was elusive, and by Thursday night, some banks had shot off notices of default to Archegos to seize collateral and potentially shop it to buyers to contain the banks’ potential losses, the people said. Yet even then, it wasn’t clear when terms with Archegos would allow sales to proceed, one of the people said.

Soon came the finger-pointing over who was breaking ranks, the people said. Some emerged from the talks suspicious that Credit Suisse wasn’t fully committing to freezing sales. By early Friday, rival banks were taking umbrage after hearing that Goldman planned to sell some positions, ostensibly to assist Archegos. Morgan Stanley began drawing public attention with block trades.

Representatives for the banks declined to comment.

The worries over Archegos had begun mounting earlier in the week after a series of wrong-way bets exposed its fragility. The firm, little known outside finance circles, had amassed tens of billions of dollars in stock bets, much of it using opaque derivatives and borrowed funds, the people said. It included some giant bets on a small group of stocks. Then came ViacomCBS’s announcement this month of a $3 billion stock sale, which prompted a share slide that hurt Archegos.

While block trades are common, the size of Archegos’s positions and their disposals rocked the market, as a $20 billion selling spree gained momentum Friday. Goldman Sachs and Morgan Stanley led the way, the people said. Other banks were left to follow, selling positions at a potential disadvantage.

Given Archegos’s size, unwinding its positions could generate losses of around $2.5 billion to $5 billion for the industry, depending on how hard it is to liquidate holdings, JPMorgan Chase & Co. analyst Kian Abouhossein wrote in a note to clients.

Archegos itself broke days of silence on the episode late Monday in New York.

“This is a challenging time for the family office of Archegos Capital Management, our partners and employees,” Karen Kessler, a spokesperson for the firm, said in an emailed statement. “All plans are being discussed as Mr. Hwang and the team determine the best path forward.”

Credit Suisse and Nomura warned investors earlier Monday that they may face “significant” losses after an unnamed U.S. hedge fund client defaulted on margin calls. Goldman told investors and clients that any impact from Archegos is likely to be immaterial, a person familiar with the matter said.

Oversight Questions

The blowup has prompted questions about oversight, particularly because Archegos amassed tens of billions of dollars in stock bets without disclosing its positions to other market participants.

Hwang’s family office did so by entering into derivative transactions with banks that gave him exposure to companies without buying actual shares. He also maximized his wagers by borrowing significants amount of money from his brokers, increasing risks to banks. Among stocks sold starting March 26 were GSX Techedu Inc. and Discovery Inc.

The episode has rekindled fears of earlier hedge fund failures that blew holes in lenders’ balance sheets. Still, the industry is arguably much better equipped to handle such meltdowns because of rules implemented after the 2008 financial crisis that forced banks to hold significantly more capital as a buffer against losses.

Administration Monitoring

The fallout reached the highest corridors of power in Washington, with White House Press Secretary Jen Psaki telling reporters that the Biden administration was monitoring the situation. She referred specific questions to the SEC.

Hwang is no stranger to the Wall Street regulator, which joined prosecutors in accusing him and his former hedge fund, Tiger Asia Management, of insider trading in 2012. In resolving the case, the firm pleaded guilty and paid more than $60 million in penalties. Hwang started Archegos after the SEC barred him from managing money on behalf of clients as part of the settlement.