Synopses & Reviews
and#147;Gaming the LIBORand#151;that is, fixing the price of moneyand#151;had become just that: a game. Playing it was the price of admission to a club of men who socialized together, skied in Europe courtesy of brokers and expense accounts, and reaped million-dollar bonuses.and#8221; In the midst of the financial crisis of 2008, rumors swirled that a sinister scandal was brewing deep in the heart of London. Some suspected that behind closed doors, a group of chummy young bankers had been cheating the system through interest rate machinations. But with most eyes focused on the crisis rippling through Wall Street and the rest of the world, the story remained an and#147;open secretand#8221; among competitors.
Soon enough, the scandal became public and dozens of bankers and their bosses were caught red-handed. Several major banks and hedge funds were manipulating and misreporting their daily submission of the London Interbank Offered Rate, better known as the LIBOR. As the main interest rate that pulses through the banking community, the LIBOR was supposed to represent the average rate banks charge each other for loans, effectively setting short-term interest rates around the world for trillions of dollars in financial contracts.
But the LIBOR wasnand#8217;t an average; it was a combination of guesswork and outright lies told by scheming bankers who didnand#8217;t want to signal to the rest of the market that they were in trouble. The manipulation of the and#147;worldand#8217;s most important numberand#8221; was even greater than many realized. The bankers kept things looking good for themselves and their pals while the financial crisis raged on.
Now Erin Arvedlund, the bestselling author of Too Good to Be True, reveals how this global network created and perpetuated a multiyear scam against the financial system. She uncovers how the corrupt practice of altering the key interest rate occurred through an unregulated and informal honor system, in which young masters of the universe played fast and loose, while their more seasoned bosses looked the other way (and would later escape much of the blame). It was a classic private understanding among a small group of competitorsand#151;you scratch my back today, Iand#8217;ll scratch yours tomorrow.
Arvedlund takes us behind the scenes of elite firms like Barclays Capital, UBS, Rabobank, and Citigroup, and shows how they hurt ordinary investorsand#151;from students taking out loans to homeowners paying mortgages to cities like Philadelphia and Oakland. The cost to the victims: as much as $1 trillion. She also examines the laxity of prominent regulators and central bankers, and exposes the role of key figures such as: and#160;
- Tom Hayes: A senior trader for the Swiss financial giant UBS who worked with traders across eight other banks to influence the yen LIBOR.
- Bob Diamond: The shrewd multimillionaire American CEO of Barclays Capital, the British bank whose traders have been implicated in the manipulation of the LIBOR.
- Mervyn King: The governor of the Bank of England, who ignored U.S. Treasury secretary Tim Geithnerand#8217;s repeated recommendations to establish stricter regulations over the interest rate.
Arvedlund pulls back the curtain on one of the great financial scandals of our time, uncovering how millions of ordinary investors around the globe were swindled by the corruption and greed of a few men.
Review
"Arvedlund has bragging rights: her story in Barron's in May 2001 was an early warning.... Her account will delight those more interested in the scam than in the man." Time
Synopsis
Despite all the headlines about Bernard Madoff, who pleaded guilty to running a $65 billion Ponzi scheme, he is still shrouded in mystery. Why (and when) did he turn his legitimate business into a massive fraud? How did he fool so many smart investors for so long? Who among his family and employees knew the truth?
The best person to answer these questions — and tell the full story of Madoff's rise and fall — is Erin Arvedlund. In early 2001, she was suspicious of the amazing returns of Madoff's hedge fund, which no one could explain. Her article in Barron's, based on more than one hundred interviews, could have prevented a lot of misery, had the SEC followed up.
But almost no one was willing to believe anything bad about 'Uncle Bernie' — so nice, so humble, so generous to charities. As Arvedlund shows, Madoff was no ordinary liar, but a master of the type of lies people really wanted to believe. He kept his clients at a distance and allowed handsomely paid friends to solicit new ones for him; playing hard to get created an irresistible mystique.
Now, Arvedlund tackles the tough questions that are still unanswered in the wake of Madoff's collapse:
Did he start off as a legitimate money manager or was he a fraud from the beginning? Were there indications of larceny at the very start of his career?
Why did Madoff's biggest supporters within the industry, such as Walter Noel of Fairfield Greenwich and Ezra Merkin of Gabriel Capital, ignore the warning signs that were so apparent? Did they choose to remain ignorant as long as their commissions rolled in?
Why did SEC investigations fail to catch Madoff's Ponzi scheme even though several people had voiced concerns about his operation?
Who else helped Madoff carry out his scam? His family and close associates have denied any involvement, but was it possible for one man to engineer a heist of such scope?
With her keen investigative eye, Arvedlund presents a sweeping narrative of Madoff's career — from his youth in Queens, New York, to his early days working for his father-in-law, to his time as chairman of the NASDAQ exchange, and finally to infamy as the world's most notorious swindler. She offers a riveting glimpse of Madoff the man — an indifferent student with little ambition who transformed himself into a star with a talent for trading, a reputation for innovation, and an unmistakably erratic nature.
Readers will be fascinated by Arvedlund's portrayal of Madoff, his empire, and all those who never considered that he might be too good to be true.
Synopsis
The untold story of the Madoff scandal, by one of the first journalists to question his investment practices
Despite all the headlines about Bernard Madoff, he is still shrouded in mystery. How did he fool so many smart investors for so long? Who among his family and employees knew the truth?
The person best qualified to answer these questions is Erin Arvedlund. In early 2001, she was suspicious of the amazing returns of Madoff's hedge fund. Her subsequent article in Barron's could have prevented a lot of misery, had the SEC followed up.
Arvedlund presents a sweeping narrative of Madoff's career-from his youth in Queens, New York, to his early days working for his fatherin- law, and finally to infamy as the world's most notorious swindler.
Readers will be fascinated by Arvedlund's portrayal of Madoff, his empire, and all those who never considered that he might be too good to be true.
Synopsis
A bestselling financial reporter exposes the decades-long banking conspiracy that swindled ordinary investors out of billions Following her national bestseller Too Good to Be True, the inside story of the Bernie Madoff scandal, Erin Arvedlund brings her reporting chops and deep financial expertise to the first book to tell the full story of the Libor scandal.
In 2012, news broke that a group of young, chummy bankers had, for years, been colluding to manipulate the London Interbank Offered Rateand#151;the interest rate that determines how money is borrowed and lent throughout the world. They set the Libor higher or lower to suit each othersand#8217; needs, while ordinary savers and investors suffered without even knowing it. It was a classic and#147;open secretand#8221; among competitors that cost countless victims as much as $1 trillion.
Arvedlund takes us behind the scenes of elite firms like Barclays Capital, where twenty-something masters of the universe played fast and loose, while their bosses looked the other way. She also examines the failures of prominent regulators and other officials.
About the Author
Erin Arvedlund is an investigative journalist who has written for Barron's, the Wall Street Journal, the New York Times, TheStreet.com, and Portfolio.com. In 2001, she wrote the first skeptical article about Bernard Madoff for a major publication. This is her first book.