“The first thing you think is where’s the edge, where can I make a bit more money, how can I push, push the boundaries. But the point is, you are greedy, you want every little bit of money that you can possibly get because, like I say, that is how you are judged, that is your performance metric”
—Tom Hayes, 2013
In the midst of the financial crisis, Tom Hayes and his network of traders and brokers from Wall Street’s leading firms set to work engineering the biggest financial conspiracy ever seen. As the rest of the world burned, they came together on secret chat rooms and late night phone calls to hatch an audacious plan to rig Libor, the ‘world’s most important number’ and the basis for $350 trillion of securities from mortgages to loans to derivatives. Without the persistence of a rag-tag team of investigators from the U.S., they would have got away with it….
The Fix by award-winning Bloomberg journalists Liam Vaughan and Gavin Finch, is the inside story of the Libor scandal, told through the journey of the man at the centre of it: a young, scruffy, socially awkward misfit from England whose genius for math and obsessive personality made him a trading phenomenon, but ultimately paved the way for his own downfall.
Another banking scandal, that followed previous ones, this time involving the manipulation of the Libor rate, or the London InterBank Offered Rate [the benchmark interest rate that banks charge each other for overnight, one-month, three-month, six-month and one-year loans. It’s the benchmark for bank rates all over the world.] As you might imagine the book gets into quite complex terminology almost immediately. The authors do a good job of trying to make sure that it is readable for the non-financial expert reader. Overall the dispiriting feeling is that here, again and again, Banks and bankers invariably are never acting in our best interests. You might say that it is the system that is driving them towards corrupt practices, but coming so soon after ENRON and all the previous (and subsequent) financial corruption scandals. It is hard not to conclude that perhaps the whole ecosystem is fundamentally flawed, and completely incapable of self-policing.
In this book too, apart from the main protagonist, none of the other players involved end up being convicted for their corrupt practices. Many lose their jobs or move on, with welcoming bonuses to new banks, willing to pay for the edge they might bring to their own businesses. Overall the book reads well, though there are a few moments that jar and feel like it is a book written about London by people who are not from there and possibly not even from England. One example, a village having a cricket team is arguably the sign of it being an inclusive rather than elitist place – back in the day many working class people played it to avoid having to work for the Lord of the manor – better 5 days bowling, batting and fielding rather than working the land. Similarly only a minority of pupils at St Pauls are boarders, and it offers scholarships to academically gifted but financially deprived pupils, so to call it an elite boarding school seems like a lazy class war potshot. At times this slight misreading of English society and culture makes you feel the descriptions of some of the characters involved were descending into a slightly Guy Ritchie-eque level of characterisation. Overall however it is an important story to have been uncovered, though the fact that so many people were able to avoid conviction suggests that traditional banking is still fundamentally flawed and perhaps, hopefully, the new Fintech innovators might bring a higher level of honesty and service for us, the people they are supposed to be serving.