Het Libor-schandaal Epub ✓ Paperback

Het Libor-schandaal Epub ✓ Paperback Yesterday, April 6, 2017 the very same Southwark Crown Court that had previously sentenced Tom Hayes to 14 years in prison arrived at a very different decision in the case of his Barclays counterparts, Ryan Reich and Stylianos Contogoulas, making for some very poignant reading as I was finishing The Spider Network.The argument David Enrich builds over 450 fact packed pages could not be simpler on both sides of the Atlantic the justice system is starved of both resources and expertise and has Yesterday, April 6, 2017 the very same Southwark Crown Court that had previously sentenced Tom Hayes to 14 years in prison arrived at a very different decision in the case of his Barclays counterparts, Ryan Reich and Stylianos Contogoulas, making for some very poignant reading as I was finishing The Spider Network.The argument David Enrich builds over 450 fact packed pages could not be simpler on both sides of the Atlantic the justice system is starved of both resources and expertise and has repurposed itself to closing cases by pinning them on the lowest credible perpetrator conversely, recent troubles notwithstanding, the banking giants control billions and deal in trillions When the world went upside down in 2008 and the public was baying for blood, a natural alliance was formed between the justice system and the banks with the simple aim of bigging up and scapegoating an Aspergers sufferer who had been careless about the manner in which he d gone about doing the job his superiors 100% knew he was doing, had fully encouraged him to do and had headhunted him from one bank to another to carry on doing.I totally buy it, and, now there s one guy behind bars to atone for everybody s sins, so do the courts, it seems.And yet, for all its unspeakably detailed portraits, histories and descriptions, for all the evident access the author has had to the main characters in this play, the book is a failure The reason is simple it ducks the main issue, which cannot possibly have been was Tom Hayes framed, much as he undeniably was The big issue, that sadly goes unanswered in this book, has to be is it unethical to mess with LIBOR Disturbingly, it is not only the government and the justice system that lacks basic knowledge of finance, but also, it seems, our corps of financial journalists In summary, the Wall Street Journal s financial investigations editor is not equipped to judge on the merits or otherwise of banks going low or going high in their LIBOR submissions In a 450 page book he devotes a page and a half to a hastily put together, self professed list of potential victims of the LIBOR fraud and not one sentence on whether we should carry on using LIBOR in the future or not.A month ago I read The Fix, which is actually a bad book covering the exact same story as The Spider Network, I d go as far as to say that with the benefit of hindsight it feels plagiarized from the serialized version of this book so I ll copy verbatim what I wrote when I reviewed it To wit, Somebody from inside the market will one day write a book about all this that will be worth reading, and allow me to take you through the main ideas it should contain 1 Markets were once small At that time, the feeling was that they were best left to the people who operated inside them Over the years, however, mainly due to demographic reasons they ballooned in size from roughly 1 GDP around 1980 to roughly 6 GDPs today andimportantly they became very widely held It thus became the job of government not only to sustain them zB via the Greenspan put but also to make sure that an idiot could get involved without getting hurt So Salomon was punished in 1991 for overbidding in auctions pause to think how weird that is , Deutsche some ten years later for forcing suboptimal delivery in the Bobl contract that only professionals can trade and whose rules were on the book for a decade , rule NMS forced everybody to give best execution a few years after that and gave rise to the Flash Boys and some poor bastard went to jail last year for spoofing, believe it or not Imagine if real estate brokers got jailed for that Tom Hayes main crime was that he was doing in year 2005 stuff that stopped being acceptable between us girls around 1995 And UBS was the kind of shop where nobody knew to put him in his place E basta.2 The true crimes of finance in this century, the ones bankers ought to have been punished for, but got away with, came in exactly two flavors i crimes involving the little guy post Edwin Artzt we leave the big guy alone , who was lured into borrowing money he would never be able to pay back to buy assets, goods and services he could not afford, and indeed put in competition with the fellow little guy to buy the house in the good school district, the nice vacation, the boat etc You can say he brought it on himself, but that would be unfair if borrowing is what it will take to send your kids to the better school or to keep your spouse from divorcing you, you are put in a tragic position We all know how that ended, with home ownership in the US first rising to 69% and then falling to 61% And with Spanish families being sweet talked into buying the sub debt of their home lender etc etc ii post Glass Steagall, crimes involving the discounting of decades of receivables that were to be found in the loan books of banks using the mark to mark methods found at the investment banks they were allowed to merge with and the conversion of this spurious PL into bonus, resulting in the urge to source even , often dubious, receivables.The two above trends fed into each other, rather famously, and the crash in the market for CDOs, CLOs and the squares thereof, SIVs and side pockets has only really resulted in three convictions thus far, the rather interestingly named Lee Farkas the email shy Karim Serageldin, and now the hapless Tom Hayes, who had zilch to do with it, but had confessed to a completely unrelated misdemeanor, had spent some of his employers money on petty bribes and rubbed the judge the wrong way with his curt answers 50k fine and an industry ban would not have been terribly lenient, if you ask me.Meanwhile, the people whose fiduciary duty it was to make sure the abolition of Glass Steagall did not result in this mess not only walk the streets, but are regularly invited to tell us where it s at.3 There is no free lunch If you are going to buy a valuable service, you will have to pay for it Either i it works like it does for goods, where there is a wholesale price between professionals and a retail price for customers and you don t care that the shoes you paid 100 for cost the merchant 30, or alternatively ii you pay what is advertised as the wholesale price, but in reality the wholesale price moves around and it s higher when you are paying it If it s not one of those two, then the guy who is selling you the service will go out of business and you won t be able to buy that service again That is, for example, the business model behind the New Zealand time zone It is the time when FX trades the least, so you can move the price against your customers orders Significantly, customers know this It is a convention they accept With this rather large parenthesis out of the way, and since the author has decided to dodge it, allow me to opine on the main issue here, namely is it unethical to mess with LIBOR I will do so in three parts and I will start with the bond math 1 A swap has two legs, fixed and floating When you first enter a swaps trade, the fixed leg has a rate that is equal to a blended average of the fair price you would pay for the expected value of all the future LIBOR fixings of the floating side.2 A basis point change in the fixed side changes the mark to market value of the entire swap A basis point change in the LIBOR fixing only changes the accrued interest of the very next three month or six month payment.Conclusion Tom Hayes crimes have zero to do with the type of activity that brought us the financial crisis They belong to the accrual column rather than the mark to market column of the ledger It is an absolute triumph of the banking industry that it managed to deflect the scrutiny of the authorities and the ire of the general public to an issue that is pretty much at right angles with the crash of 2008.Second, derivatives transactions between banks at anywhere between 500 trillion and one quadrillion dollars are a large multiple of transactions between banks and their real world clients at well under 30 trillion This is actually a protection for clients Because they borrow money against LIBOR, clients collectively pay LIBOR fixings The fact that all these derivatives exist means the banks incentive that would normally have been to always set LIBOR high is mitigated by the fact that transactions with corporate clients are a small part of every bank s book The author does pick on this when he mentions that in Tom Hayes catalog of trades not a single one was with a non bank, non hedge fund Bottom line, banks are so busy trying to cheat each other on the first coupon of their derivatives that this activity actually provides cover to the corporates that borrow against LIBOR.I d go one further and say corporates fully know this, and that s how come they are comfortable fixing their issues off of LIBOR And of course, they also benefit when in times of crisis banks low ball their submissions to look solvent.So we have established that cheating on LIBOR i has zero to do with the financial crisis and ii by and large benefits, rather than hurts, clients, but I still need to get to the third point I promised is it wrong to mess with LIBOR When my friend Andrew Hulme first joined the traders on the arb desk at Salomon in the early nineties, they started him on the Danish book Rates worldwide were coming off, so he picked up the phone to a Danish bank and, Salomon style, received fixed in a billion DKK Rates came off, as expected, and a few days later he closed it out with a tidy profit, paying fixed on a billion DKK A short six months later, there was some screaming from across my desk CIBOR had fixed 30 count em basis points higher Out of the blue Did not really cost him a bomb Even on a yard, the fifteen cents that corresponded to the 30 basis points of 6m fixing was a mere 1.5 million DKK, which only really registered with poor Andrew.Next morning, the CIBOR fixing was straight back down to where it had been the day before The thieving Danish banks had all put up their fixing by 30 basis points as a favor to Andrew s counterparty The message was clear stay out of our market.Andrew knew what to do, his bosses did not need to tell him Had he left things as they were there would be no immediate impact to his book, but every time he had a fixing, the Danes would collude to take 30bp from him He called up his original counterparty, with whom he s luckily done both trades, and asked what it would cost to cancel them both When the guy on the other side of the phone sucked air through his teeth and said it would cost us money, Andrew made the correct decision that he would pay up and look big Did he stop trading DKK Hell, no But from that day onward he played in smaller size that would not make it sensible for people to gang up on him He stopped being the brash American investment bank and played Danish rules Profitably, too.In short, we investment banking side dealers have long had to pay tribute in terms of shifting LIBOR fixings to the rate setting banks and the problem first got weaponised when banks and investment banks merged after 1999, before innovation came in and diffused it all in the form of fixing matching services But it s never been anything muchthan a cost of doing business Which brings me to my conclusion Tom Hayes was a killer trader He played all the angles He left nothing on the table And that included the LIBOR fixings That he carried on doing so in 2008 shows he had a tin ear for politics, but most certainly does not make him a criminal Merely a guy who did not realize the rules of the game had changed This is the true story of a young man, Tom Hayes, who may or may not have understood that manipulating stocks was wrong He apparently had Asberger Syndrome and, with an ability to hyper focus, bordering on obsession, Hayes was out to achieve success by any means possible.Why might he not have understood that manipulating a stock to go up or down to get people to invest or not is not ethical, moral, or even legal Because apparently it was the norm for many stock brokers and investors And with This is the true story of a young man, Tom Hayes, who may or may not have understood that manipulating stocks was wrong He apparently had Asberger Syndrome and, with an ability to hyper focus, bordering on obsession, Hayes was out to achieve success by any means possible.Why might he not have understood that manipulating a stock to go up or down to get people to invest or not is not ethical, moral, or even legal Because apparently it was the norm for many stock brokers and investors And with Asberger s he was a concrete thinker.In The Spider Network we get a close up view of the people who work for banks and large companies and how they massively profit from stock market investments We also get a personal view inside one eccentric man s world to gain an understanding as to how he was able to operate and profit for so many years by nudging functionaries to reap big profits for their trading portfolios.Anyone interested in how banking investments and stock markets work and how the people who run them get fabulously wealthy will find this book interesting The most disturbing thing about this book wasn t the fraud It was the culture that incentivized and looked the other way while the fraud was committed I lived in this world the world of Wall Street forthan 20 years I saw the culture from the inside and Enrich absolutely nailed what it felt like Customers are dopes to be taken advantage of human value is determined by how much money you make and ethical values are a sign of weakness It is insidious and takes a toll on how one view The most disturbing thing about this book wasn t the fraud It was the culture that incentivized and looked the other way while the fraud was committed I lived in this world the world of Wall Street forthan 20 years I saw the culture from the inside and Enrich absolutely nailed what it felt like Customers are dopes to be taken advantage of human value is determined by how much money you make and ethical values are a sign of weakness It is insidious and takes a toll on how one views the world That is not to suggest that there is no one in financial services with morals I m sure there are some But the culture of big money banks provides ample incentive to ignore the rules created to assure fairness in the marketplace If someone isn t smart enough to avoid being cheated, the unwritten rule states, then they deserve what they get It is appalling how widespread the LIBOR fixing fraud was and how few were held to task for defrauding the average Joe Yet, that has been the recurring pattern in all of the major Wall Street based financial fraud cases Someone is singled out as the scapegoat and all the senior managers, who are aware but look the other way, get off without even a slap on the wrist My career never crossed paths with the legions of traders and brokers who played the game of fixing LIBOR, but I recognized them all I have seen their counterparts in other areas of the business Part of the culture is the disturbing, but ubiquitous thinking that if everyone is doing it, it must be ok Reading this book brought back all of those memories and was a disturbing reminder of why I ultimately left that field Yet, I would take exception with one aspect of Enrich s story He makes Tom Hayes the trader at the center of the LIBOR fixing prosecution something of an innocent He is portrayed as someone whose Aspergers made him trust the wrong people and blinded him to the ethical right and wrong of his actions I do not doubt that Hayes was the scapegoat in this story the fall guy for a system and culture that wanted his gains and ignored his methods But he is no hero He committed fraud on a large scale Perhaps, as Enrich suggests, he was the fly in the spider web rather than the spider Perhaps he was the victim of others rather than the mastermind of the strategy Nonetheless, he was guilty He never once asked himself whether what he was doing was wrong I don t think he deserved the sentence he received oraccurately, I think others deserved his harsh sentenceBut there is no excuse for his actions What is most disturbing is that the victory party at the end of the book reinforces the reality that nothing changed Somewhere on Wall Street, someone is committing financial fraud by bending or ignoring the rules Somewhere someone is telling themselves, well if everyone is doing it, it must be ok I fear that the system will never change And perhaps that is the most frightening thing of all Ugly, ugly, ugly..the underbelly of the finance world and the practices to makeandmoney are revealed in this book by Wall Street Journal Finance Editor, David Enrich And if not illegal, these practices certainly walk a very fine line.Tom Hayes overheard some classmates at the University of Nottingham discussing trader internships available at the London offices of the Swiss bank, UBS Hayes, a math genius who suffered from Aspergers Syndrome decided to look into it and was surpri Ugly, ugly, ugly..the underbelly of the finance world and the practices to makeandmoney are revealed in this book by Wall Street Journal Finance Editor, David Enrich And if not illegal, these practices certainly walk a very fine line.Tom Hayes overheard some classmates at the University of Nottingham discussing trader internships available at the London offices of the Swiss bank, UBS Hayes, a math genius who suffered from Aspergers Syndrome decided to look into it and was surprised to be accepted From a part time job, it turned into his profession as his mathematical skills were recognized by the bank s higher ups He soon discovered that there seemed to be little or no rules regarding LIBOR, which determines the interest rates on trillions of dollars world wide He also discovered that those who set those rates were lower echelon employees who were ripe for a little You scratch my back and I ll scratch yours business The traders could then offer incentives to these functionaries to nudge the LIBOR up or down and make millions for their portfolios This practice, although seldom talked about, was commonly used throughout most of the world s largest banking institutions So Tom Hayes jumped on board and became the man with whom everyone wanted to deal The story provides detailed information about Hayes s rise and fall and his trial for fraud His defense was that everyone was doing it and why was he suddenly the fall guy An engrossing tale which makes you think twice about where you want to put your investments and is your friendly banker really friendly Recommended Full disclosure I didn t finish reading this book As a business school academic, I ve read a lot of the literature that has been spawned by financial scandals, in the hope of finding books to engage my students Some authors Michael Lewis, for example manage to spin a really gripping story out of often unpromising material The journalist David Enrich an oddly resonant surname doesn t pull it off.The over exuberant title gave me pause before I d even started reading when I requested the Full disclosure I didn t finish reading this book As a business school academic, I ve read a lot of the literature that has been spawned by financial scandals, in the hope of finding books to engage my students Some authors Michael Lewis, for example manage to spin a really gripping story out of often unpromising material The journalist David Enrich an oddly resonant surname doesn t pull it off.The over exuberant title gave me pause before I d even started reading when I requested the ARC from Netgalley I was not aware of the part after the colon The lengthy dramatis personae at the start was also a bit worrying the idea that I would need to keep referring back to identify members of the cast suggested that the author might not have done a very good job of characterisation But the most off putting aspect for me was that the author never seemed to make up his mind about his audience How much knowledge of the context could he assume How much explanation did he need to provide He never seemed to decide on this The complexity of LIBOR and the banking culture and processes surrounding it demands some level of explanation,than a journalist probably needs to provide in a short news article but the balance here tended to the didactic, which I found irritating And I m not at all keen on footnotes which in this case were particularly distracting.If you want to read about the machinations of bankers, I recommend the work of Joris Luyendijk This is a story about how prosecutors bankers can go wrong When the entire system is involved in corruption as was obvious with LIBOR and people find out about it and get mad, someone has to go down Who do you pick Usually someone vulnerable, sometimes that person was a particularly bad offender This book pairs nicely with Black Edge where someone went to jail and the rest of the industry stayed put There s a problem here with the system and people want bankers to pay, but do these criminal This is a story about how prosecutors bankers can go wrong When the entire system is involved in corruption as was obvious with LIBOR and people find out about it and get mad, someone has to go down Who do you pick Usually someone vulnerable, sometimes that person was a particularly bad offender This book pairs nicely with Black Edge where someone went to jail and the rest of the industry stayed put There s a problem here with the system and people want bankers to pay, but do these criminal prosecutions work to deter wrongdoing Probably not De Libor is de rentevoet waarop wereldwijd ontelbare leningen zoals bijvoorbeeld hypotheken en creditcardkredieten gebaseerd zijn Inkwam er een schokkende bankfraude aan het licht een groep handelaren bleek al geruime tijd de Libor te manipuleren Dat deden ze door kunstmatig hoge of lage rentestanden door te geven Daarmee boekten ze zelf enorme winsten, ten koste van ontelbare bedrijven, instellingen en particulierenTom Hayes, een ietwat autistische whizzkid, werd naar voren geschoven als de zondebok Het Libor schandaal onthult wie er nog meer achter de fraude zaten en hoe het mogelijk was dat de handelaren zo lang hun gang konden gaan The Rest of the Story Since this book s publication, the following related events have taken place Libor will be phased out in 2021 Two Barclays traders acquitted of Libor related charges in the UK I believe these are the prosecutions mentioned in a footnote at Kindle location 7082 Two other traders, from Dutch Rabobank, had their US convictions overturned The convictions are mentioned in this book at location 5917 Tom Hayes, the Math Genius of the title, has complained to police th The Rest of the Story Since this book s publication, the following related events have taken place Libor will be phased out in 2021 Two Barclays traders acquitted of Libor related charges in the UK I believe these are the prosecutions mentioned in a footnote at Kindle location 7082 Two other traders, from Dutch Rabobank, had their US convictions overturned The convictions are mentioned in this book at location 5917 Tom Hayes, the Math Genius of the title, has complained to police that a government witness at his trial misled the court.Also, the Tom Hayes Support Group crowdfunding for a new appeal has a Twitter feed, website, and a fundraising site The website calls author David Enrich s Wall Street Journal account of the Hayes Libor scandal upon which this book expands the most accurate printed version to date.Book Review This book s strength is also its weakness.A book like this is a witness, and as a witness this is a great book The author explains that, in an instance of good fortune which tends to find people who work hard, he got both Hayes and his wife, after the conviction of Hayes, to put an enormous pile of previously off the record communications on the record He also acquired another journalistic gold mine l 5976 evidence amassed by the Britain s Serious Fraud Office in their investigation of Hayes and others.That s a lot of information, and Enrich does a good job sorting and explaining it Sometimes you have to go flipping back and forth to the cast of characters in the front, when for example somebody who hasn t been mentioned for 30 pages suddenly pops back into the story But, on the whole, the story was easy to follow, not as easy as a novel perhaps but well within the ability of anyone with the average amount of patience.However, a book like this is also a story, and as a story this is only a good book The book s portrayal of virtually everyone involved, including Hayes and to a lesser extent his wife, is damning Everyone involved with this scandal traders and their supposed regulators, lawyers and clients, executives and working level folk seemed to behave abominably I guess the author called it the way he saw it He certainly had enough evidence But it s hard to read hundreds of pages of relentlessly awful behavior, even if it s all true If I wanted that, I d payattention to the news.At one point, Michael Lewis gets a shout out as one of Hayes favorite authors and there are obvious parallels here with The Big Short Inside the Doomsday Machine the autistic main character, the rampant greed, and self serving regulatory stupidity, to name a few But Lewis managed to extract a few characters including the autistic man who, while occasionally irritating, are clearly on the right side of history and are, in their own small way, heroic, which was a welcome relief from the rest of the book Nothing like that here Everyone is, simply, greedy, ungenerous, and short sighted No one is interested in fairness and justice except occasionally as cloaks to advance their narrow interests I think it s important to read about things like this to stiffen my resolve against the hellish chorus of those who say black is white, up is down, and leaving everyone to act in their self interest is best for society But resolve stiffening can sometimes be a little like taking medicine you know it s good for you, but you don t always like it while you are doing it This is a great work of journalism that reads like a thriller I enjoyed it all thebecause I had previously read David Enrich s reporting on Tom Hayes and his trial in the Wall Street Journal two years ago Here s the central question if a trader rigs Libor the rate that determines your mortgage payments and credit card bills would you blame him or his bosses who expect that of him, or the system where everyone who can is rigging it to make millons What Tom Hayes did was wrong, but h This is a great work of journalism that reads like a thriller I enjoyed it all thebecause I had previously read David Enrich s reporting on Tom Hayes and his trial in the Wall Street Journal two years ago Here s the central question if a trader rigs Libor the rate that determines your mortgage payments and credit card bills would you blame him or his bosses who expect that of him, or the system where everyone who can is rigging it to make millons What Tom Hayes did was wrong, but he was made a scapegoat while the people who rewarded him for rigging Libor rates went scot free Everyone who colluded with him turned around when investigators closed in and threw Hayes under the bus The saddest part is that Hayes, a mathematical prodigy and one of the best financial traders, never realized that people he thought of as friends would not hesitate to turn on him.That doesn t mean what he did was right a lotof that in the book , but it does force us to question the measures taken by governments after the 2008 financial crisis Banks paid a lot in fines, but almost all of its top brass not just escaped jail but made millions off the crisis Something similar happened with the Libor rigging scam, where Hayes was portrayed as the ring leader of a vast criminal conspiracy when in reality he was one among many mid level traders and brokers who were actively working to rig Libor This book is definitely one of the best works of investigative business journalism, in the same league as Barbarians at the Gate or Den of Thieves And thanks to Enrich s excellent writing, you don t even need to know a word of financial jargon to understand it An interesting look at the Libor scandal from an American investigative journalist lens.The book charts the story of how the Libor rate the London interbank lending rate that many variable rate products such as credit cards depend on was manipulated, thus affecting many unsuspecting individuals worldwide.This is a book for those that don t have much understanding of the financial workings that underpin the financial sector, with simple to understand explanations and examples to illustrate th An interesting look at the Libor scandal from an American investigative journalist lens.The book charts the story of how the Libor rate the London interbank lending rate that many variable rate products such as credit cards depend on was manipulated, thus affecting many unsuspecting individuals worldwide.This is a book for those that don t have much understanding of the financial workings that underpin the financial sector, with simple to understand explanations and examples to illustrate the issues For those that do, there are some fascinating snippets of the history of financial instruments and the characters behind them, although you d have to like I had to grin and bear the at times over zealous banker bashing that the author occasionally gets drawn into Overall, an interesting mix of investigative journalism and history that would have been brilliant had it not viewed every person and action from a bitterly critical perspective Thank you to the publisher for my free review copy via NetGalley

Leave a Reply

Your email address will not be published. Required fields are marked *