Interesting semi-insider account of part of the Libor scandal, namely the only person to receive a jail sentence for it. Although it plays up a bit too much how the one character is an autistic savant, and some others had no formal education and came up the hard way and blah blah blah. It's obvious just from the material included in the first half which is supposed to portray the success before the storm that they knew, but they didn't care. Even the guy the blurb and book cover portray as a semi-victim is very clear in the recorded messages/e-mails/etc. from the time that he knew what he was doing and he was manipulating the brokers and his own bank as much if not more than they were supposedly manipulating him into this cabal.
The book also hits on but scurries away from the WHY aspect of how the "scam" worked, no one had a prior interest in it because it was effectively working as intended just not how they claimed it was intended, and this was because most people didn't care as long as it "worked" from their point of view.
The money was being made on the fringes of deals, like the Office Space scam, and would have continued to operate arguably just fine. Except you know, the banks collapsed, which exposed the fraud and more importantly removed the countepressures within the system. It notes a few times that Hayes couldn't get Libor moved in the direction he wanted because others banks were moving it against him, and later he even pisses off the employee in his own bank so that guy moves
it against him, and it goes even further to note that the favors he was calling in, especially with brokers, were often ignored and they didn't actually know who to call or how to pressure Libor in a direction and more importantly they knew that Hayes wouldn't know this. (This is actually how the brokers avoided jail, by arguing that they didn't actually do anything but lie to their clients, which is a key part of their job.)
So again the problem was when the banks collapsed, Libor was exposed, especially because many of the banks who would have been countermanipulating it ceased to exist or at minimum stopped lending to other banks. So the difference between many variables went from explainable as noise to evidence of deliberate manipulation attempts. Which people knew was happening for years, and was complained about for as long.
This is probably an odd complaint from me of all people, but the book seems especially hard on the regulatory bodies and governmental oversight bodies. Even as the book explains how Libor existed and how it was never tied to any of those, where even the banks themselves didn't know or care how it operated. Amusingly, it seems the only significant country with a regulatory arm that could have legitimately claimed oversight was the United States, but that our banks assumed it was being regulated elsewhere. When the UK regulators actually ran interference against both the US government and US banks from trying to get involved or investigate or prosecute, and the entire system placed significant pressures on the branches US banks were operating in London to not tell the motherland banks anything. (Even though they in many cases arguably couldn't.)
One of the ball rolling moments was when a lowly official at a US branch of a smaller German bank contacted the Fed of New York about how this was being manipulated by non-US banks to the detriment of all kinds of people, and the Fed just forwarded it on to another agency and eventually it wound up at the CFTC who had to fuck everything up by starting an investigation after later reading about a WSJ story and tying it to this report they had sitting around. And when the private industry ran UK BBA (which owned Libor) got requests from the CFTC for basic information on how it works they forwarded it on to British regulators (who were headed by a man who had all his e-mails printed out for him into 2010, the real crime of this story) the UK regulators told the BBA to shut the fuck up about this and organized with all the banks to basically tell the CFTC to stick to the colonies, thanks.
Favourite paragraph maybe:
"If Goldmans can get it wrong, maybe there's a complete lack of public understanding?" Fisher wrote to Ewan. "If so, I would start by putting the official definition on the BBA website. And then get someone's son or daughter to edit Wikipedia [which had the wrong definition Goldmans used in their internal report]." A week later, someone corrected Wikipedia's definition. It was perhaps the only time that the BBA actually addressed a grievance about Libor.
Also nearly everyone involved apparently has "ruddy" cheeks. Unless they're a fee-male, then they all have high cheekbones and/or are pale. Someone should investigate the strange coincidence of that.
