The Spider Network
The Wall Street Journal's award-winning business reporter unveils the bizarre and sinister story of how a math genius named Tom Hayes, a handful of outrageous confederates, and a deeply corrupt banking system ignited one of the greatest financial scandals in history. In 2006, an oddball group of bankers, traders and brokers from some of the world’s largest financial institutions made a startling realization: Libor—the London interbank offered rate, which determines interest rates on trillions in loans worldwide—was set daily by a small group of easily manipulated functionaries. Tom Hayes, a brilliant but troubled mathematician, became the lynchpin of shadowy team that used hook and crook to take over the process and set rates that made them a fortune, no matter the cost to others. Among the motley crew was a French trader nicknamed “Gollum”; the broker “Abbo,” who liked to publicly strip naked when drinking; a Kazakh chicken farmer turned something short of financial whiz kid; an executive called “Clumpy” because of his patchwork hair loss; and a broker uncreatively nicknamed “Big Nose.” Eventually known as the “Spider Network,” Hayes’s circle generated untold riches —until it all unraveled in spectacularly vicious, backstabbing fashion.
Stats for nerds
7recommend
9mentions
7people
2017–2022years
89% recommend11% neutral
Mentions per year
What Hacker News says
- Would highly recommend the book, The Spider Network, which gives an in-depth view (perhaps slightly dramatised) of how one trader manipulated Libor.
- Spider Network by David Enrich is a good book to dispel you of such quaint notions.
- The Spider Network by David Enrich
- I read The Spider Network (fantastic look into how bank prop trading worked) and came to mostly the same conclusions. The idea of just prosecuting "rouge traders" is a complete injustice, as trying to adjust the rate submissions was apparently a widely known practice in banks. Tom Hayes, a mildly autistic savant just doing what everyone else was got 14 years, essentially a murder sentence in the UK. Fire the traders and maybe ban them from trading for a few years.
Of course the investing public with LIBOR based loans wants blood, and they just believe the headlines that a few traders "conspired" to fix rates. In reality the entire system was built on a profoundly flawed incentive structure of trusting banks with positions that profit from LIBOR moves to not alter LIBOR submissions to make themselves money. But LIBOR is too big to fail at this point so they chose to scapegoat a few traders instead of admitting the whole system is corrupt.
- There's a book written about this entire subject which just came out late last year: The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History.
It was well written and very interesting if folks are more interested in the folks involved and how all of this went down and their personalities etc.
- This list ommits "The Spider Network" - to me, one of the best books of 2017. It tells the inside story of the LIBOR scandal in a riveting manner.
