Libor Villains and Risky Options

Tom Hayes.

One would have to say that former UBS swaps trader Tom Hayes was pretty guilty of manipulating Libor, insofar as he gave 82 hours of recorded confessions in which he said things like "I probably deserve to be sitting here because, you know, I made concerted efforts to influence Libor." Still it is not clear to me that that is a sufficient reason to send him to prison for 14 years? Here is a fascinating Bloomberg Businessweek story about Hayes's rise and fall, from his childhood with Asperger's, through his "light-bulb moment" at UBS when he realized that he could manipulate Libor through interdealer brokers, to his disastrous efforts at Citi -- when he arrived, he told the rate setters "Nice to meet you. You can help us out with Libors," and immediately offended a risk manager -- and the strategic miscalculations that led to his trial and conviction. And the Wall Street Journal is running a five-part series this week about Hayes, if you just can't get enough of his downfall.