By David Enrich
In 2006, an oddball team of bankers, investors and agents from a number of the biggest monetary associations made a startling awareness: Libor—the London interbank provided price, which determines the rates of interest on trillions in loans worldwide—was set day-by-day by way of a small workforce of simply manipulated directors, and they may well acquire large gains by way of nudging it fractions of a percentage to fit their buying and selling portfolios. Tom Hayes, an excellent yet mathematician, turned the lynchpin of a wild alliance that incorporated a prickly French dealer nicknamed “Gollum”; the dealer “Abbo,” who loved to publicly strip bare whilst ingesting; a fearful Kazakh bird farmer often called “Derka Derka”; a dealer referred to as “Village” (short for “Village Idiot”) who racked up large cost account accounts; an govt known as “Clumpy” as a result of his patchwork hair loss; and a dealer uncreatively nicknamed “Big nostril” who had as soon as been a semi-professional boxer. This team generated outstanding riches —until all of it unraveled in spectacularly vicious, backstabbing model.
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Extra info for The Spider Network: The Wild Story of a Maths Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History
Sometimes the edge was simply pushing the envelope just a little bit further than anyone else. Hayes landed in a subgroup of the interest-rate team that specialized in products derived from Japanese rates. At first, one of his main tasks was to rewrite the computer models that RBS used to figure out how much its derivatives were worth. It was a monstrously complex task. Hayes needed to come up with intricate models to predict not only the future direction of Japanese interest rates, but also the prices of a variety of instruments that were underpinned by those interest rates, as well as their likely interactions with interest rates elsewhere in the world.
From outside, the school looked grand. Inside, it was a different matter: High ceilings created a cavernous, intimidating vibe, paint was peeling from the walls, and cold air drafted in through ragged insulation. The small campus, just down the street from the Goldhawk Road Underground station, was in a part of London marked by tracts of similar-looking, century-old houses and down-on-their-luck convenience stores, pubs, and Laundromats. Brackenbury’s student body, drawn from the surrounding neighborhoods, was primarily working class.
His mandate was to push the already risk-hungry Citigroup into brave new financial frontiers. That wasn’t all Cecere was pushing. This snowy night, he was practically pouring shots down the throat of his subordinate, a disheveled British thirty-year-old named Tom Hayes. Slim and nearly six feet tall, Hayes was a brilliant mathematician, one of the most prolific, aggressive traders in Tokyo, if not the world. As with Cecere, he didn’t look or act the part. Bespoke suits and expensive shoes were found nowhere in his wardrobe.