Arvedlund open secret; the global banking conspiracy that swindled investors out of billions (2014)

PORTFOLIO / PENGUIN Published by the Penguin Group Penguin Group (USA) LLC 375 Hudson Street New York, New York 10014 USA | Canada | UK | Ireland | Australia | New Zealand | India | South Africa | China penguin.com A Penguin Random House Company First published by Portfolio / Penguin, a member of Penguin Group (USA) LLC, 2014 Copyright © 2014 by Erin Arvedlund Penguin supports copyright Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture Thank you for buying an authorized edition of this book and for complying with copyright laws by not reproducing, scanning, or distributing any part of it in any form without permission You are supporting writers and allowing Penguin to continue to publish books for every reader Library of Congress Cataloging-in-Publication Data Arvedlund, Erin, author Open secret : the global banking conspiracy that swindled investors out of billions / Erin Arvedlund pages cm Includes bibliographical references and index eBook ISBN 978-1-101-63576-6 Bank fraud Banking law—Criminal provisions Commercial crimes Global Financial Crisis, 2008-2009 LIBOR market model Interest rate futures I Title K5223.A78 2014 364.16'8—dc23 2014021118 While the author has made every effort to provide accurate telephone numbers and Internet addresses at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication Further, the publisher does not have any control over and does not assume any responsibility for author or third-party Web sites or their content Version_1 To my father-in-law John A Beattie Jr 1927–2014 Cast of Characters Wall Street Journal Mark Whitehouse—journalist Carrick Mollenkamp—journalist Bankers Trust International Evan G Galbraith—inventor of the floating-rate note David Clark—broker U.S Treasury Timothy Geithner—Treasury secretary, 2009–2013 Henry Paulson—Treasury secretary, 2006–2009 Robert Rubin—Treasury secretary, 1995–1999 Jacob Lew—Treasury secretary, 2013–present Robert Steel—Treasury undersecretary, 2006–2008 Manufacturers Hanover Limited Minos Zombanakis—inventor of the formula for LIBOR Citigroup Scott Peng—Interest rate strategist UBS Marcel Ospel—group chair Marcel Rohner—CEO Tom Alexander William Hayes—trader ICAP Darrell Read—broker Daniel Wilkinson—broker Colin Goodman (aka Lord LIBOR)—broker Michael Spencer—founder and chief executive Federal Reserve Bank of New York William Dudley—president, 2009–present Timothy Geithner—president, 2003–2009 Federal Deposit Insurance Corporation (FDIC) Sheila Bair—chair, 2006–2011 British Bankers’ Association (BBA) John Ewan—managing director Angela Knight—chief executive, 2007–2012 Marcus Agius—chair, 2010–2012 Bank of England Mervyn King—governor, 2003–2013 Paul Tucker—deputy governor, 2009–2013 U.S Federal Reserve Benjamin Bernanke—chair, 2006–2014 UK Parliament John Mann—Labour minister Barclays Capital Robert E Diamond—chief executive, 1996–2012 Rich Ricci—co–chief executive officer, 2000–2013 Jerry del Missier—chief operating officer, 2000–2012 John Varley—group chief executive, 2004–2011 U.S Securities and Exchange Commission (SEC) Mary Jo White—chair, 2013–present Brevan Howard Alan Howard—co-founder Royal Bank of Scotland (RBS) Tan Chi Min—trader Scott Nygaard—head of short-term markets for Asia and Edinburgh-based RBS Paul Walker—head of money market trading Sim Suh-Ting—executive director and head of regulatory risk and compliance (SE Asia) Deutsche Bank Anshu Jain—co–chief executive U.S Commodity Futures Trading Commission (CFTC) Gary Gensler—chair, 2009–2014 Vincent A McGonagle—director of the Division of Market Oversight Stephen J Obie—acting director of the Division of Enforcement David Meister—head of enforcement Bart Chilton—commissioner, 2007–present Jill Sommers—commissioner, 2007–2009 Mark Wetjen—acting chairman, 2013–2014 Timothy Massad—chairman, 2014–present Long-Term Capital Management (LTCM) James G Rickards—Wall Street lawyer and hedge fund investor J.P Morgan Chase Paul Glands—trader Rabobank Piet Moerland—chairman, 2009–2013 New York University Rosa Abrantes-Metz—professor and director in antitrust, securities, and financial regulation practices of Global Economics Group U.S Department of Justice Lanny Breuer—head, Criminal Division, 2009–2013 MF Global Jon Corzine—CEO and chairman, 2010–2011 James Koutoulas—hedge fund manager and MF Global customer Contents Title Page Copyright Dedication Cast of Characters Prologue CHAPTER Is LIBOR a Lie? CHAPTER Yanking the Yen CHAPTER The World’s Most Important Number CHAPTER What Was Really Happening? CHAPTER Hedging the LIBOR CHAPTER The Golden Banker CHAPTER An Open Matter CHAPTER Barclays and Other Bad Banks CHAPTER Trials, Fines, Justice? CHAPTER 10 The Victims Epilogue Photographs Acknowledgments Notes Index Brooks, Robert, 226 Buchwald, Naomi, 222 Buffett, Warren, 136 Buford, Daniel, 224–25 Bush administration, 91 Calhoun, Lucien, 219 Cameron, Johnny, 149, 178 Carleton, Norman, 81 Carli, Guido, 12 Carnwath, Alison, 242–43 Carter-Stephenson, George, 181 Casterton, David, 184 Cayman Islands, 202 Cecere, Christopher, 184, 240 Cerberus Capital Management, 30 CFTC See U.S Commodity Futures Trading Commission Charles Schwab, 101, 229–30 Chase, 78 Chen, Jack, 234 Chernow, Ron, 20 Chicago Mercantile Exchange (CME), 21, 105, 145–46 Chilton, Bart, 204, 205–6 Chrysler, 30, 33 Citibank, 31–32, 77 Citigroup and Citicorp–Travelers merger, 118–19 defense of LIBOR, 78, 79 and derivatives profits, 202 employees implicated in scandal, 240 and government entities as clients, 215, 217, 221 Hayes’s employment with, 3, 36 and Hayes’s implication of co-conspirators, 5–7, 183, 184 and ISDAFIX, 233 manipulation of LIBOR rate by, 36, 56, 62 and WSJ’s follow-up story, 78 Clark, David, 12, 16, 27, 28, 62, 189–90, 238 Clinton, Bill, 136 Clinton, Hillary, 138 Cloete, Alan, 108, 109 Coca-Cola, 236 Coffee, John, Jr., 59 Cohan, William, 69 commercial paper (CP) market, 78–79 Commodity Customer Coalition, 196 Commodity Futures Modernization Act, 136 compensation of investment bank employees, 114–15 consumer losses, 213–15 Contogoulas, Stylianos, 99–100 Cooke, Jeremy, 182 Co-op Bank, 188 Corzine, Jon, 194–97 Coumarianos, John, 216 Countrywide, 186 Cox, Christopher, 91 Crédit Agricole, 106, 107 credit default swaps (CDSs), 54–56, 78–79, 191–92, 200 Credit Suisse Asset Management, 70, 77, 233 Credit Suisse First Boston (CSFB), 114–15 Cross, Michael, 74, 87 currency-fixing scandal, 239 Danziger, Neil, 99, 103, 241 Darin, Roger, 48–49 Davies, Brent, 159, 169 Dearlove, Mark, 149, 156–57, 174 Delaware River Port Authority, 220 Del Missier, Jerry and consumer losses, 214 co-president role of, 121–22 on Diamond’s team, 117 knowledge of LIBOR submissions, 130, 174–75, 176 and Lehman Brothers acquisition, 152 on lowballing of LIBOR rate, 149–51 and Mann’s investigation and hearings, 185 on swaps, 152 derivatives and Born, 200 CFTC’s authority over, 200 and Gensler, 131–32, 143, 194, 201–2 and Hayes, and ISDAFIX, 232–34 at J.P Morgan Chase, 162–63 and Long-Term Capital Management collapse, 133–35, 139–40 as motives for LIBOR manipulation, 75–76 profitability in, 152 and Rabobank, 163 regulation of, 131–32, 135–36, 202–3, 205–6 ubiquity of, 32 Der Spiegel, 109 Deutsche Bank and Bittar, 108–10 and Diamond, 117 and gold and silver benchmarks, 236 and government entities as clients, 221 and ICAP, 101 and ISDAFIX, 233 manipulation of LIBOR rate by, 36, 163 and Moryoussef collusion charges, 106, 107 Dexter, Judith, 219 Diamond, Robert E ABN Amro acquisition bid, 124, 125 background of, 113–16 compensation of, 112–13, 120, 124–25, 128 and consumer losses, 214 corporate culture under, 180 and Glass-Steagall Act, 118, 119 and golf, 111–12 impact of LIBOR revelations on, 242–43 knowledge of LIBOR submissions, 171–76, 180 and Lehman Brothers acquisition, 125–27, 151, 152 and Mann’s investigation and hearings, 185–87 public persona of, 119–20 resignation of, 179, 186, 197 successes of, 116–21, 122–25, 151–52 and Tucker, 129–30, 149–51, 171–74 DiStefano, Joe, 217 Dixon, Hugo, 130 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 146, 194, 199, 200–201, 204, 205, 211 Dubow, Rob, 216, 217, 218 Ducrot, Yvan, 240 Dudley, William, 51–53, 57–58, 73, 75, 93 Duffie, Darrell, 56 Dunham, Stanley Ann, 68–69 Eden, James, 127–28 Eisinger, Jesse, 211, 243 Elliott, Brian, 241 EURIBOR Barclays’ manipulation of, 104–8, 156 Gensler on inadequacy of, 198 interest rate swaps pegged to, 146 and Moryoussef collusion charges, 106 Eurodollar market, 18–20, 24, 25–26, 60, 105, 145–46 Euromoney, 121, 127 European Union, 203 Ewan, John, 61, 87, 177 Exchange Stabilization Fund, 91–92 Fannie Mae (Federal National Mortgage Association), 22, 88, 91, 235, 239 Farr, Terry, 181 Federal Deposit Insurance Corporation (FDIC), 239 Federal Reserve Bank of Cleveland, 27 Federal Reserve Bank of New York and AIG bailout, 88–89 and Barclays tipster, 63–65, 66, 170 and BBA’s proposal for LIBOR, 87 concerns and suspicions about LIBOR at, 15, 51–52, 65, 67, 73–74, 83 criticisms of, 94–95 Fannie Mae/Freddie Mac rescue, 88 and “Fixing LIBOR” meeting with Geithner, 57–59 and MF Global, 197 See also Dudley, William; Geithner, Timothy E Federal Reserve Bank of Richmond, 92–93 FinAid, 193 Financial Conduct Authority, 238 Financial Services Authority (FSA), 23, 66, 87, 127, 154, 177 Financial Stability Board, 207 Financial Times, 106, 108, 238, 240 Finch, Gavin, 236–37 fines and settlements, 179, 180, 187, 188, 208, 209, 227–28 Fisher, Mary Beth, 60 Fisher, Paul, 74, 238 Fisher, Peter, 134 Fitschen, Juergen, 109 floating-rate notes, 11–12 foreign exchange markets, 235, 237–38, 239 Frank, Barney, 146 Frankel, Alison, 228, 245 Freddie Mac (Federal Home Loan Mortgage Corporation), 22, 88, 91, 235, 239 Fuld, Dick, 126 Gabay, Danny, 70 Galbraith, Evan G., 11–12, 16, 23, 189 Geithner, Timothy E addressing the financial meltdown, 91 background of, 68–69 briefed on LIBOR issues, 56–59 and British inaction, 73 criticisms of, 94–95 and derivatives regulation, 135 and Diamond, 129 on improving governance of LIBOR, 80–82, 85, 94–95 influence and power of, 80–81 and King, 67–68, 72–73, 80–82, 85, 94 and motives for LIBOR manipulation, 75–76 reactions to suggestions of, 82–83 reaction to WSJ article, 77 Treasury secretary appointment, 94 Gellert, James, 196–97 Gensler, Gary background of, 132–33 and Barclays investigation, 179 CFTC tenure, 131, 140, 210, 243 and congressional hearings, 189–90 and cross-border regulation, 202–3, 205–6 and Department of Justice, 194 and derivatives regulation, 131–32, 135–36, 143, 194, 201–2 development of LIBOR case, 143–47 enemies of, 198–99 implications of policies implemented by, 201–2 on inadequacy of LIBOR, 143–44, 188–89, 190–93, 197–98 internal resistance encountered by, 201 and July 2013 deadline, 199 and Long-Term Capital Management, 133–35 management style of, 204–5 and MF Global, 194–97 and recordings of rate fixing at Barclays, 142, 144–45 on reform of LIBOR, 206–7, 208, 243 and regulatory authority of CFTC, 146 transparency emphasis of, 143, 206, 209 Wharton School of Business address, 208–9 GFI, 101 Gilmour, Jim, 181 Glands, Paul, 162–63 Glass-Steagall Act, 118–19, 136 Goldman Sachs and derivatives profits, 202 and Gensler, 132–33, 137, 190 and government entities as clients, 215, 223–25 and ISDAFIX, 233 Goodman, Colin, 37–43, 44, 168–69 government bailouts, 127–28, 129–30, 170, 171, 218 government entities as investors, 215–26 Gramm, Phil, 200 Gramm-Leach-Bliley Act, 119 The Great Mutual Fund Trap (Gensler), 137 Green, David, Green, Stephen, 72 Greenberger, Michael, 139, 203–4 Greenspan, Alan, 135, 200 Guardian Care Homes, 213–14 Gulliver, Stuart, 149 Guttentag, Jack, 59 Gyntelberg, Jacob, 83–84 Halifax Bank of Scotland (HBOS), 78, 79, 92, 127, 170 Hall, Will, 104, 159, 241 Harland, Gary, 213–14 Harrison, Harry, 153, 155 Hayes, Tom Alexander William background of, 2–3 and development of CFTC’s LIBOR case, 145 dismissal of, 6–7 early success of, and extradition threat, hearing and trial for, 1–2, 3–4, 6–7, 181–84, 245 and ICAP, 37–45, 168–69, 184 implication of co-conspirators, 5–7, 183, 184 investigation of, 4–5 manipulation of LIBOR rate by, 37–45, 48–49, 159, 228 and payments to brokers, 103 personality of, 2–3 hedge funds, 14, 96–98, 102–3, 188 Heywood, Jeremy, 170–71 Hilibrand, Lawrence, 134 Hill, John, 238 Hines, James, 99 Hofman, Abigail, 121, 127 Hogg Tendering Advisory Committee, 238 Hosie, Stewart, 187 Hourican, John, 159–60 The House of Morgan (Chernow), 20 Howard, Alan, 96–97 HSBC and gold and silver benchmarks, 236 and ISDAFIX, 233 manipulation of LIBOR rate by, 36 and Mann’s investigation and hearings, 186 and Moryoussef collusion charges, 106, 107 Hurrell, Brad, 238 ICAP and allegations of underquoted rates, 29 Barclays’ trader on, 89 daily LIBOR email of, 37–44 on discrepancy in rates, 60 employees implicated in scandal, 241–42 and Hayes, 37–45, 168–69, 184 and ISDAFIX, 233–34 manipulation of LIBOR rate by, 36–45 middleman role of, 101–2 self-censoring at, 43–44 ICE, 234, 238–39 Independent, 179 interbank brokers, 61–62 International Financing Review, 201 International Monetary Fund (IMF), 16–17, 28, 82–83, 169 International Money Market (IMM), 100 ISDAFIX (International Swaps and Derivatives Association benchmark), 210, 232–34, 237–38 Jain, Anshu, 108–9 Japanese yen rate, 36–45, 228, 240 Jenkins, Antony, 243 Johnson, Lyndon B., 18–19 Johnson, Peter, 99–100, 214 J.P Morgan/J.P Morgan Chase and Bear Stearns acquisition, 14, 48 crisis in 2013, 203–4 criticisms of, 77 defense of LIBOR, 78 and derivatives profits, 202 fines paid by, 228 and government entities as clients, 215, 217, 221, 223 and ICAP, 101 and ISDAFIX, 233 manipulation of LIBOR rate by, 36, 56, 156, 162–63, 230 and U.S dollars, 20 and WSJ’s follow-up story, 78 Kalaris, Thomas, 117, 121 Kalotay, Andrew, 225–26 Kantrowitz, Mark, 193 Kengeter, Carsten, 184 Kennedy, John F., 17–18 Kenney, James, 220 Kernighan, Pat, 225 King, Mervyn background of, 69–71 at Bank of England, 70, 71–72 and Geithner, 67–68, 72–73, 80–82, 85, 94 and Mann’s investigation and hearings, 186 reaction to WSJ article, 79 response to LIBOR problem, 80–82 testimony before Treasury Select Committee, 148 Knight, Angela, 67, 78, 79, 85–87 Konstam, Dominic, 77 Koutoulas, James, 196 Kraten, Michael, 232 Kvalheim, Grant, 121–22 Lacker, Jeffrey, 92–93 Lagarde, Christine, 82–83 Lazard Frères, 69 Lee, Dong Kun, 153 Lee, Quan Hui, 157 Lehman Brothers Barclays’ acquisition of, 125–27, 129, 151, 152 collapse of, 86, 88, 91, 92 and ICAP, 101, 168 size and activity of, 210 Leonard, Deborah, 67 Levine, Matt, 193 Levitt, Arthur, 135, 200 Lew, Jacob, 199, 201, 203–4, 207 Lewis, Michael, 55 Liddy, Kevin, 104 Lloyds, 129, 170, 227 London Interbank Offered Rate (LIBOR) acknowledgment of problems with, 93 American control of, 238 back-up protocols for, 50–51 and bank failure fears, 83 BBA’s proposal for, 85, 87–88 breaking story of (see under Wall Street Journal) British control of, 87–88 calculation of, 29–30, 49–51, 58–59, 193 concerns and suspicions about, 15–16, 20–21, 48, 59–60, 65, 73–74, 83–84 and consumer losses, 213–15 creation of, 10–13 current state of, 238–39 customers’ influence on, 97–98 denial about problems with, 88, 91 “dislocation” explanation for, 157, 158 Dudley’s assessment of, 51–53 and fines paid by banks, 180, 187, 188, 227–28 formalization of, 25 formula for, 24 ICAP’s daily email on, 37–44 importance of, in banking industry, 21–22, 32, 34, 50–51 importance of, to American citizens, 143–44 inadequacy of, 143–44, 188–89, 190–93, 197–98, 212 and interbank brokers, 61–62 and “Is LIBOR Broken?” report from Citibank, 31–32 lack of oversight for, 22–23 manipulation of, revealed by Barclays employees, 60, 63–65, 66, 84–85, 170 and Mann’s investigation and hearings, 185–87 and motives for manipulation, 62, 67, 75–76, 89 openness of manipulation, 15, 100, 101, 158 recommendations for, 80–82, 85 reform proposals for, 189–90, 191, 202, 206–7, 208, 243 self-regulation of, 81 senior management’s knowledge of manipulation, 170–76, 191 stability of, during financial meltdown, 92 ubiquity of, 32–33 and U.S Federal Reserve, 92, 93–94 utility of, for banks, 21–22, 26 vulnerability of, to manipulation, 23, 33, 47, 66–67, 74 and widespread levels of misconduct, 191 See also specific banks, including Barclays, Rabobank, and UBS London Metal Exchange, 236 London School of Economics, 227 London Times, 121 Long-Term Capital Management (LTCM), 133–35, 139 Lowe, Gretchen, 146 Lucas, Chris, 174–75, 214 Mack, John, 114, 117 MacKenzie, Donald, 49, 50–51 Mandelson, Peter, 186 Mann, John, 149, 185–87, 188, 242 Manufacturers Hanover Limited, 24 Marshall, George, 17 Massachusetts Bay Transportation Authority, 220–21 Massad, Timothy, 210–11 match fixing, 34 Mathew, Jonathan, 99–100 Mayer, Martin, 17–18, 20 McAndrews, James, 58, 59 McCarthy, Sir Callum, 68 McConnell, Meg, 57, 75 McDermott, Tracey, 164 McGonagle, Vincent A., 136–37, 140, 145 McGraw, Patricia A., 28 Meister, David, 146–47, 193–94 Mendocino County, California, 222 Menendez, Robert, 65–66 Mentel, Lothar, 116 Merchant, Jay V., 153, 155 Merrill Lynch, 91, 202, 215, 217 Metropolitan Transportation Authority (MTA) of NYC, 221 MF Global, 194–97 Mickelson, Phil, 111–12 Mizuho, 233 Moerland, Piet, 229 Mohideen, Jezri, 104, 241, 244 Mollenkamp, Carrick background of, 10, 13–14 breaking the news of LIBOR, 9, 34–35 follow-up story by, 78 impact of LIBOR story, 227 and “Is LIBOR Broken?” report from Citibank, 31 pursuit of LIBOR story, 15–16, 20–21, 22–23, 30, 31, 32 and reactions to LIBOR article, 66, 79, 136–37 money market funds, 12, 92, 100–102 Moore, Paul, 92 Morakis, Todd, 159, 241 Morgan Stanley, 113, 114, 221, 233 Morse, Stephen, 175 mortgages, 33, 143 Moryoussef, Philippe, 106–8, 145 NakedCapitalism, 201 nationalization of banks in the UK, 170 National Journal, 243 Natsis, Trifon, 96–97 New Republic, 139 New York City, 221 New York Federal Reserve See Federal Reserve Bank of New York New York magazine, 225 New York Times on Diamond, 119, 129 on King, 69, 72 on LIBOR controversy, 193 on Massad, 211 on regulation of derivatives, 205 Nicholls, David, 109 Nishimura, Nanci, 222 Nixon, Richard, 19 Nomura, 233 Nygaard, Scott, 98, 102, 103, 104, 241 Oakland, California, 223–25 Obama, Barack, 68–69, 94, 131, 207, 210, 212 Obie, Stephen J., 137, 141–42, 144, 146 Occupy Wall Street movement, 224 Organization of Arab Petroleum Exporting Countries (OPEC), 19 Ospel, Marcel, 161 Pabon, Alex, 153, 155 Page, Walter, 20 Pal, Ritankar “Ronti,” 153, 155 Parker, Bob, 70 Paulson, Henry, 91, 129 Peng, Scott, 31–32, 34, 47 Peregrine, 196–97 Philadelphia, City of, 215–18, 220 Philadelphia Inquirer, 217 Pieri, Michael, 183–84 Pike, Ian, 157 Preece, Rhodri, 60 President’s Working Group on Financial Markets, 83 prime rate, U.S., 27–28 Prot, Baudouin, 72 Rabobank, 163–68, 187, 197, 228–29 Racketeer Influenced and Corrupt Organizations Act (RICO), 230 Radhakrishnan, Ananda, 205 Rapid Ratings, 196 Raskin, Matthew, 75 Ravazzolo, Fabiola, 63–65 Read, Darrell, 37–45, 168 Reed, John, 119 Reich, Ryan, 153, 155 Rendell, Ed, 215 Ricci, Rich, 117, 119, 121, 130, 152 Rickards, James G., 133, 134, 136, 138 Robin Hood Foundation, 126 Rohner, Marcel, 126, 161 Rokos, Chris, 96 Royal Bank of Canada, 215 Royal Bank of Scotland (RBS) and Brevan Howard, 98–99, 102–3 and cash injection from British government, 92 and CFTC-requested internal audit, 170 and credit default swaps, 55–56 employees implicated in scandal, 240–41, 244 fines paid by, 187, 227, 228 and government bailout, 127, 129 and ISDAFIX, 233 management of, 104 manipulation of LIBOR rate by, 36, 56, 59, 98–99, 100, 102–4, 158–60, 169–70 nationalization of, 170 and SEC, 244–45 wash trades of, 169 RP Martin, 36, 101, 103 Rubin, Robert, 131, 133, 135–36, 139, 200 Ruffley, David, 81 Sacramento County, California, 222 Salmon, Felix, 78–79 Sander, Didier, 107 Sants, Hector, 68 Sarbanes, Paul, 137 Sarbanes-Oxley Act of 2002, 137 Schaaf, Libby, 225 Schat, Sipko, 229 Scotiabank, 236 screening, 235, 237 Seger, Holger, 240 Shapiro, Peter, 218 Sharbrough, John, 193 Sherretta, Steve, 208–9 Smith, Don, 34 Smith, Yves, 201 Snider, Connan, 62 Société Générale, 106, 236 Sommers, Jill, 204–5 Southeastern Pennsylvania Transportation Authority (SEPTA), 220 Spencer, Michael, 241–42 Spilman, Darin, 103 Sprecher, Jeff, 205 Steel, Robert, 57, 125, 126, 127 Stein, Kara, 244 Sterling Money Market Liaison Group, 61 Stewart, Justin Urquhart, 124 Stone, Ray, 51, 80, 156–57, 214 Storey, Miles, 214 stress tests, 127 “Study Casts Doubt on Key Rate” (Mollenkamp and Whitehouse), 78 subprime mortgages, 27, 186, 245 Summers, Larry, 200 swaps market and AIG bailout, 202 Born’s interest in, 200 Dudley on, 52–53 and government entities as investors, 215–26 and ISDAFIX, 232–34 and July 2013 deadline, 199 LIBOR as reference rate for, 26, 190 and Massad, 210 and New York Fed’s concerns, 83 Rickards on, 138 Taleb, Nassim, 190 Tan Chi Min “Jimmy”, 98–99, 100, 102, 240–41 TED spread (three-month Treasury bill rates), 60 Telegraph, 88, 157 Term Asset-Backed Securities Loan Facility (TALF), 94 Thakkar, Ashish, 242 Thomson Reuters, 29, 50 Ting, Sim Suh-, 241 Tokyo Interbank Offered Rate (TIBOR), 103 Tradition, 89, 101 Treasury Select Committee, 148, 171, 186 Troubled Asset Relief Program (TARP), 93–94, 211, 218 Tucker, Paul and BBA’s proposal for LIBOR, 87 and Diamond, 129–30, 149–51, 171–74 and Heywood, 170–71 impact of LIBOR revelations on, 243 and lowballing LIBOR submissions, 61 and Mann’s investigation and hearings, 185 and memo on confidence in LIBOR, 74 and New York Fed’s concerns, 73, 85 on potential for dishonesty with LIBOR, 177 and reaction to WSJ article, 79 on warnings from Federal Reserve, 94–95 Tullett Prebon, 89, 101, 103 Tyrie, Andrew, 242 UBS and Barclays, 125–26 employees implicated in scandal, 228, 229, 240 fines paid by, 187 and government entities as clients, 221 Hayes’s employment with, 3, 36 and Hayes’s implication of co-conspirators, 6, 183–84 and ISDAFIX, 233 manipulation of LIBOR rate by, 36, 56, 59, 89, 160–62, 229 speculation about LIBOR issues in, 90–91 and WSJ’s follow-up story, 78 UK dollar market, 28 UK Financial Conduct Authority, 164, 168 UK Financial Services Authority, 106 Unitech, 213–14 U.S Commodity Futures Trading Commission (CFTC) and aluminum price fixing investigation, 236 and Barclays investigation, 179 Born’s tenure at, 135–36 budget of, 192, 208, 211 development of LIBOR case, 141–42, 143–47 enforcement division of, 146–47, 193–94 fines collected by, 208, 209 Gensler’s tenure at, 131, 140, 210, 243 Massad’s tenure at, 210, 211 and MF Global, 194–97 and Moryoussef collusion charges, 106 previous cases of, 140–41 and recordings of rate fixing at Barclays, 142, 144–45 and reforms, 146, 201, 202, 203, 205–7, 208, 210, 211–12 regulatory authority of, 146, 190, 192, 197, 199 and Royal Bank of Scotland, 170 and the Securities and Exchange Commission, 192 and Wall Street, 209–10 See also Gensler, Gary U.S Congress, 189, 204 U.S Department of Justice, 4–5, 106, 154, 194, 236 U.S dollars, 17–18, 28 U.S Federal Reserve, 20, 53, 59–60, 92, 93–94 U.S Securities and Exchange Commission (SEC), 192, 203, 224, 237, 244–45 U.S Treasury addressing the financial meltdown, 91–92 and AIG bailout, 93–94 and Barclays–UBS discussions, 126 and briefing/questioning LIBOR, 65 and concerns about LIBOR, 83 and Gensler, 140 and Lehman Brothers, 125 See also Geithner, Timothy E.; Lew, Jacob Vander Weyer, Martin, 116 Varley, John, 117, 125, 127, 172, 174–75 Vaughan, Liam, 236–37, 240 Vernon, James, 96 Verstein, Andrew, 66–67, 187–88 Volcker, Paul, 20 Volcker Rule, 211, 212, 243 Wachovia, 215 Wagner, Jack, 218 Walker, Paul, 102, 103, 241 Wall Street Journal breaking of LIBOR news in, 9, 34–35, 46–47, 136–37 and development of CFTC’s LIBOR case, 145 follow-up story on LIBOR in, 78–79 Hayes’s text message to, impact of LIBOR story, 51–52, 53, 77, 227, 231 See also Mollenkamp, Carrick; Whitehouse, Mark Warren, Elizabeth, 206 Washington Mutual, 91 wash trades, 169–70 Wells Fargo, 215, 233 WestLB of Germany, 78 Wetjen, Mark, 205 Wheat, Allen, 114–15 Wheatley, Martin, 178 Wheatley Review, 238 White, Mary Jo, 203, 244–45 White, Paul, 169, 240 White, Weld & Co., 24 Whitehouse, Mark background of, 14, 54 breaking the news of LIBOR, 9, 34–35 on credit default swaps market, 54–56 follow-up story by, 53–54, 78 impact of LIBOR story, 227 on LIBOR rates after story broke, 46–48 pursuit of LIBOR story, 20–21, 22–23, 30, 32 and reactions to LIBOR article, 79, 136–37 Wiley, Stewart, 162 Wilkinson, Daniel, 37–45 Winkler, Nancy, 216, 218 Withers, Colin, 78 Wooldridge, Philip, 83–84 Wright, William, 174, 175, 176 Wrightson, 29, 60 Wuffli, Peter, 72 Yassukovich, Stanislas, 24, 62–63 Youle, Thomas, 62 Zombanakis, Minos, 23–24, 26 Zrihen, Michael, 107 * http://william-wright.com/2012/07/04/a new-conspiracy-theory at barclays/three-scenarios ... every reader Library of Congress Cataloging-in-Publication Data Arvedlund, Erin, author Open secret : the global banking conspiracy that swindled investors out of billions / Erin Arvedlund pages cm... accentuated the sense that the paper’s main offices on the other side of the Atlantic resembled a hungry beast, always ravenous for another batch of copy The night of April 14 promised to be another... and Bank of America), and the dominance of European banks on the rate-setting panel could explain some of the fear: They didn’t have a central bank to bail them out The majority of the banks