Mostly the banks fault.
'created fictitious customer accounts to balance the books'
Mmm did we not hear that before somewhere? I'm surprised he was allowed to deal on a hunch as that was 1980's style of trading. Today there is no need ever to take this kind of naked risk as most systems now days maintain a risk free neutral position and futures only offset the underlying position. This is all done in software and some 25% of all world transactions are now fully automated with algorithms. This can soften the blows in all but the worse cases of what the markets can throw back.
I blame the bank they had the technology never to allow this to happen again and as a trader myself taking such large naked risks is pure suicide. Of course there will always be bad trades but the losses should be manageable. As someone posted before no one though would have said a word if this trade had paid off and thats the life of a trader.
As sure as the sun will come up there will be more institutions in serious troubles in the weeks months ahead. They had leveraged risks against the plateau of stability in the markets between 2005 and late 2007 then the stability snapped across all world markets which started back last September. From gold, oil, stocks, housing, euro/dollar pound/dollar all putting in extreme levels not seen for several decades and they are hedging like mad hoping it will come back to normal. Odds are it wont and there will be more funds throwing in the towel very soon.