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Jerome Kerviel, 31, allegedly ran up $7.2 billion in losses before anyone caught on in his former company, privately held French bank Societe Generale, The New York Times reported Saturday.

Kerviel was in custody Saturday on charges of fraud, Sky News of Britain reported, noting police left with two cases after searching Kerviel's apartment in Paris.

Societe Generale, in an attempt to undo some of the damage, Monday dumped the bad bets on stocks placed by Kerviel and that panicked the European markets, the Times reported. The chaos prompted the U.S. Federal Reserve to announce a three-quarter point cut in interest rates Tuesday.

"I have little doubt that Societe Generale's unwinding of those positions absolutely pressured indexes worldwide", said Barry L. Ritholtz, chief executive of FusionIQ, a New York-based investment research and money management firm.

The market downdraft also was spurred by fears of a recession in the United States and the spread of subprime mortgage collapse, the Times reported.

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