Libor mastermind Tom Hayes deserves a lot of company in prison

By Nick Summers
Bloomberg News
Wednesday, March 22, 2017

For anyone burning to see financial wrongdoers put behind bars, Tom Hayes might seem like an ideal white-collar villain. As a superstar derivatives trader at a series of investment banks in London and Tokyo, Hayes masterminded a conspiracy to manipulate a benchmark interest rate that underlies hundreds of trillions of dollars' worth of loans. British prosecutors -- armed with gigabytes of evidence showing Hayes caught in the act, plus his own taped confessions -- put him on trial in 2015; he's now serving an 11-year sentence. It was an epic downfall, and David Enrich, an editor at the Wall Street Journal, recounts it well in The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History (HarperCollins, $29.99). One thing readers won't get out of this exhaustively reported tale, however, is schadenfreude.

In Enrich's telling, Hayes is more of a pitiable figure than a master fiend. He certainly never looked the part of a smooth operator: Carelessly dressed and shabbily groomed, Hayes had difficulty interacting with people, preferring the cold logic of spreadsheets. He didn't party or jet-set like a typical overpaid banker, opting for juice or hot chocolate on the occasions he was forced to socialize outside of work. More substantially, Hayes wasn't a top executive, and when he acted to rig the interest rate in question -- the London interbank offered rate, aka Libor -- he often did so with the knowledge of his bosses. The reason Hayes is in jail and his superiors aren't seems to have more to do with his personality, and maybe his mild case of autism, than the severity of his crimes.

Don't get me wrong -- as Enrich makes clear, those crimes were pretty severe. Libor is a set of numbers, published every business day, that reflects what London banks charge each other to borrow money. A handy barometer of risk, it's baked into a vast range of financial instruments, including complicated derivatives contracts as well as more mundane mortgages, car loans, and credit cards. Hayes colluded to nudge Libor higher or lower to benefit his trading positions; when he did, he made ordinary people's interest payments go up and deprived municipalities and businesses of income. What sticks in the mind after reading The Spider Network is not that Hayes doesn't belong in jail, but that he deserves a lot of company. ...

... For the remainder of the review:

https://www.bloomberg.com/news/articles/2017-03-22/libor-mastermind-tom-...