NY Magazine’s Kevin Roose writes: It’s tempting to think of
today’s Wall Street as a technocracy with a thin human overlay. Brokers
flashing hand signals on exchange floors were long ago replaced by humming
server farms. The white-shoe deal-making of years past has given way to a
global, diverse, hardwired marketplace that, in many ways, is more science than
art....
This summer’s LIBOR-rigging scandal shattered that image.
The London Interbank Offered Rate—the critical benchmark used to set interest
rates on trillions of dollars’ worth of financial products, including most
people’s mortgages and student loans—was exposed as a moving target, all too
manipulable by a small handful of opportunistic traders. E-mails revealed a
clique of culprits passing around compliments (“When I retire and write a book
about this business your name will be written in golden letters”) and trading
favors (“Come over one day after work and I’m opening a bottle of Bollinger!”)
in exchange for shifting the LIBOR in each other’s favor.
What appeared to be just another dully named variable
immaculately conceived by some mainframe turned out to be a product of good
old-fashioned boys’-club culture, essentially run on the honor system.…. According
to a confidential International Organization of Securities Commissions paper,
made public last week by Bloomberg News, more than half the world’s benchmark
interest rates—the ones used to issue credit cards in China and mortgages in
Mumbai—are set in much the same manner as LIBOR, with minimal transparency and
plenty of opportunity for exploitation. ..
Read all about it at
http://nymag.com/news/intelligencer/libor-scandal-2012-10/
No comments:
Post a Comment