First, the National Bank of Canada announced yesterday that its Chief Operating Officer for the banking and wealth management division, Michel Tremblay, has "decided to pursue his career in another sector of the financial services industry." Tremblay's place will be temporarily taken over by the bank's CEO, Louis Vachon.

Why is Tremblay leaving? As it turned out, Canada's sixth-biggest bank is another one that has dabbled in the asset-backed commercial paper (ABCP) market and must be regretting this decision deeply. Of course, the bank is far from actually admitting anything. In fact, the bank's official stance is, "There is no link with ABCP. He [Michel Tremblay] decided to leave. I think he got an approach from another financial institution."

It is quite likely that Tremblay has left of his own volition. But one has to wonder why he left. Could it be that he simply couldn't refuse the new job offer or could it be that he decided to find something else first before the smelly stuff hits the fan? My bet is the latter for one simple reason. Tremblay was the leading dealer for ABCP issued by Coventree Inc., one of financial institutions at the thick of the ABCP woes in Canada.

National Bank sold about CDN$2.25 billion worth of that...stuff to its clients, and last month, since no one wanted to buy the rollovers, the bank had to write off about 25% of that sum in immediate losses (CDN$575.0 million). This is bound to make a dent in the bank's fourth quarter income statement, while its shares are already suffering.

Then there is CIBC, which has already warned that its first quarter results will take a beating, too, because of ACA Financial Guaranty Corporation, a troubled bond insurer that is begging for help because of all those complex asset-backed derivatives it insured for CIBC and other Canadian financial institutions. Just to give you an idea of how "troubled" ACA is, Standard and Poor's cut the company's credit rating from A to CCC yesterday. Ouch!

And then there is the Federal Reserve. While Canada's central bank is still not exactly rushing to join the melee, the Fed has gone and made an unprecedented move on Wednesday by setting up a $20.0-billion auction loan facility for banks so that they can keep on lending money to consumers. The grand idea is for banks to go directly to the Fed to borrow cash needed to deal with the credit crunch. Oh sure, printing more "funny money" is really going to help! Duh!