Archive for June 2012

  • 27 Jun 2012 at 12:31 PM

Libor Was Whatever Barclays Wanted It To Be

Good lord are these Barclays settlements juicy. Basically every day for two years one Barclays trader or another would send an email to their Libor submitter saying “hey let’s commit crimes, tons of crimes, hahahaha” and then they did. In pathetically colorful language:

Trader C requested low one month and three month US dollar LIBOR submissions … “If it’s not too late low 1m and 3m would be nice, but please feel free to say “no” … Coffees will be coming your way either way, just to say thank you for your help in the past few weeks”. A Submitter responded “Done … for you big boy”.


on 5 February 2008, Trader B (a US dollar Derivatives Trader) stated in a telephone conversation with Manager B that Barclays’ Submitter was submitting “the highest LIBOR of anybody […] He’s like, I think this is where it should be. I’m like, dude, you’re killing us”.

Or tons more, but I found this one particularly poignant:

Submitter: “Hi All, Just as an FYI, I will be in noon’ish on Monday […]”.
Trader B: “Noonish? Whos going to put my low fixings in? hehehe”
Submitter: “[…] [X or Y] will be here if you have any requests for the fixings”.

Like … Trader B was kidding right? I mean, in this one single case? He was making a joke about how he was constantly asking for low fixings and the submitter took him seriously? When you joke around about committing fraud and people take you seriously, that’s maybe a sign you should stop committing so much fraud. Read more »

Hand to god, he’d sooner die. Read more »

Opening Bell: 06.27.12

Germany’s Credit Rating Slashed By Egan-Jones (Reuters)
The credit ratings agency on Tuesday downgraded its credit rating for Germany to “A+” with a negative outlook from “AA-,” noting the need to watch for fallout should Greece exit the euro zone. Whether or not Greece or other euro-zone members exit the monetary union, Germany will be left with “massive” additional, uncollectible receivables, Egan-Jones said in a statement.

Spain Considers Sweeping Tax Hikes to Please EU (Reuters)
Spain’s current VAT rate is 18 percent, one of the lowest in Europe, but many products are charged at a reduced 8 percent or a “super-reduced” 4 percent. “The ministry is studying reclassifying certain products and services that have reduced or super-reduced VAT,” a spokesman for the ministry said. Madrid is also considering eliminating tax breaks on housing after reintroducing the measure as one of the first decrees the center-right government announced after being sworn in December. It is also considering introducing a so-called “green tax” on gasoline, following recommendations by the European Union, Treasury Secretary Marta Fernandez Curras said.

New Plan Sees Closer Euro-Zone Ties (WSJ)
Several of the proposals—such as joint bond issuance and the effective veto powers on national budgets—raise red flags for many governments. If all 27 EU leaders, or at least those from the euro zone, accept the report’s basic principles at their summit scheduled for Thursday and Friday, the decision will set the currency union off on what is likely to be a long period of wrangling.

Accused Manhattan ‘madam’ posts bail (NYP)
Pattis and Gristina faced the microphones briefly before the family sped off to her 200-acre pig rescue farm in upstate Monroe.

Singapore Pastor Charged For Funds For Wife’s Pop Career (Bloomberg)
The founder and senior pastor of Singapore’s City Harvest Church was charged with three counts of dishonestly using the charity’s funds to finance his wife’s singing career. Kong Hee, whose wife Ho Yeow Sun has performed with artists like Wyclef Jean, conspired with others to conceal the diversion of the funds, prosecutor Christopher Ong told a Singapore Subordinate Court today. Financial irregularities of at least S$23 million ($18 million) from the charity’s funds were discovered, Singapore’s Commissioner of Charities said in a statement on its website yesterday.

Wedding Party Soaked After Dock Breaks (WTV)
A bride, groom and their entire wedding party fell into Gun Lake after the dock on which they were having photos taken gave way. It happened Saturday at Bay Pointe Inn at the wedding reception of Eric Walber and Maegan McKee (now Walber) of Bryon Center…”We were out there for probably 30 seconds, standing on the dock, and it started to lean and tilt,” groom Eric told 24 Hour News 8. “We went right under.” Eric said he knew just a split second before the dock collapsed what was about to happen. “I saw the thing starting to tilt, and I’m like, ‘Oh, yup, this is going to happen,'” he said. Read more »

Write-Offs: 06.26.12

$$$ Plans to Ease Euro Crisis Are Ambitious but Long-Term [NYT]

$$$ European fiscal union and adverse selection [Scott Sumner]

$$$ The twilight of the central banker [Economist / Ryan Avent]

$$$ Best Buy Founder Weighs Buyout [WSJ]

$$$ The crown prince of Dubai came to New York and ate a $1,000 ice cream sundae [NYP]
Read more »

Click Here
  • 26 Jun 2012 at 6:36 PM

Libor Can Be Whatever You Want It To Be

There is much to ponder in the continuing saga of Libor but this sounds like an excuse:

The U.K. bankers and regulators charged with reviewing Libor in the wake of regulatory probes are resisting calls to overhaul the rate because structural changes risk invalidating trillions of dollars of contracts. … [They] won’t propose structural changes such as basing the rate on actual trades or taking away oversight of the benchmark from the BBA ….

Any substantial changes could affect existing contracts that reference Libor, according to Simon Gleeson, a partner at law firm Clifford Chance LLP in London. … “There’s a tail of contracts that may take 10, 20, 50 years to run off which use Libor as an undefined term, because nobody felt it needed defining,” Gleeson said. “The more changes you make, the more likely it is that somebody will be able to argue this is a material change to their contract.”

Is this true? I mean, it’s probably true, whatever, I am not a London lawyer, but it’s really tempting to take the other side here. Here is a pretty normal and alphabetically privileged credit agreement: Read more »

It’s easy to read the News Corp. story in conjunction with Phil Purcell’s piece in the Journal this morning arguing that big banks should split off their capital markets and investment banking businesses from their commercial/retail banking and asset management businesses. The parallels are eerie: large conglomerates run by rich yet loathed CEOs could enhance shareholder value by splitting their risky businesses – which face uncertain growth prospects, are constantly caught doing shady things, have uncomfortably close and dysfunctional relationships with government, and yet are beloved by senior management for personal reasons – from the more stable cash cow businesses. Splitting them up would de-risk one chunk of the business without really raising risk on the other one, and the market would value the two chunks separately more than it values them together.

It looks like News Corp. is actually doing this – splitting the dodgy low-growth newspaper business from the more profitable entertainment-and-Fox-News* juggernaut – whereas Purcell has yet to persuade the big banks: Read more »

  • 26 Jun 2012 at 5:02 PM

Boaz Weinstein Finished Having His Way With Big Fish

Saba Capital Management’s Boaz Weinstein recently exited a now famous and profitable credit derivative bet against JPMorgan, according to sources familiar with the trade. In May, JPMorgan reported a $2 billion trading loss in its chief investment office, due to large bets on an obscure group of indexes that track the performance of corporate bonds, including the Markit CDX NA IG Series 9 index. Weinstein’s Saba, among other funds, bet against that trade. Saba, which has liquidated its position in its entirety, “exited directly to JPMorgan’s CIO office,” according to a source familiar with the hedge fund. Weinstein, a former Deutsche Bank trader, was one of the early proponents of a trade that involved buying Investment Grade Series 9 10-Year Index CDS, discussing it at the Harbor Investment Conference in February. Ironically, the conference was held at JP Morgan’s Madison’ Avenue offices. [Reuters]

  • 26 Jun 2012 at 3:34 PM

UBS Not Done Showering People With Gifts

Yesterday afternoon we noted that in commemoration of its 150th anniversary, UBS had given out special edition watches to all of its employees. We’re not sure where the bank came up with the money to do so but it was a nice gesture nevertheless. Now we’ve been informed that free boat rides are also for the taking, assuming you can answer some simple geography questions correctly and reside in Switzerland, a condition we were unaware of until after scoring 100 percent without consulting any guides.