By David Enrich
In 2006, an oddball team of bankers, investors and agents from a number of the greatest monetary associations made a startling cognizance: Libor—the London interbank provided cost, which determines the rates of interest on trillions in loans worldwide—was set day-by-day by means of a small staff of simply manipulated directors, and they might achieve large gains by means of nudging it fractions of a percentage to fit their buying and selling portfolios. Tom Hayes, an excellent yet stricken mathematician, grew to become the lynchpin of a wild alliance that integrated a prickly French dealer nicknamed “Gollum”; the dealer “Abbo,” who beloved to publicly strip bare while ingesting; a anxious Kazakh bird farmer referred to as “Derka Derka”; a dealer referred to as “Village” (short for “Village Idiot”) who racked up large price account money owed; an government known as “Clumpy” due to his patchwork hair loss; and a dealer uncreatively nicknamed “Big nostril” who had as soon as been a semi-professional boxer. This staff generated significant riches —until all of it unraveled in spectacularly vicious, backstabbing style.
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Extra info for The Spider Network: The Wild Story of a Maths Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History
Example text
In Manufacturers Hanover’s newly opened London offices, the bankers celebrated the milestone with flutes of champagne and trays of Iranian caviar. Zombanakis and his colleagues couldn’t have imagined it at the time, but their brainchild would soon become a crucial piece of the world’s financial plumbing, an interest rate woven into countless financial contracts. * * * On the trading floor at RBS, Hayes noticed that it wasn’t the biggest clients who elicited enthusiastic laughter and applause when they called.
Tom can sometimes come across as arrogant about his abilities,” a teacher wrote in 1992. ” his English teacher said on another occasion. Hayes acknowledged the problem: “I need to improve my attitude in that I respect ideas I disagree with,” he wrote in a self-assessment. Buffeted by strife at home and unpopular at school, it wasn’t surprising that Hayes sought refuge in things he could easily understand. From his bedroom window, he could see the floodlights over Loftus Road, the stadium that was home to the Queens Park Rangers professional soccer team.
One was that regulators in the United States, Britain, and elsewhere, lulled by the lack of a recent financial crisis and swayed by the industry’s enormous political clout, had taken a hands-off approach to overseeing this sort of speculative activity. In the United States, a law imposed in the wake of the Great Depression that prohibited commercial banks from partaking in investment banking activity was repealed, paving the way for the creation of megabanks like Citigroup whose trillion-dollar balance sheets allowed the placement of massive wagers with the banks’ (or, more precisely, its investors’ and customers’) own money.