Undercover Reporters Uncover Crimes in the Banking Industry

by Jonah Raskin, March 8, 2017

The tellers at my branch of Citibank take my money and smile politely. “Will there be anything else, Mr. Raskin?” they ask.

“No,” I say politely. I’m out of there as fast as I can, usually with the feeling that I have left a den of thieves.

Most of my suspicions about banks and bankers were confirmed when I read The Fix by two investigative journalists, Liam Vaughan and Gavin Finch who might be described as the Woodward and Bernstein of the 21st Century. Their book is subtitled “How Bankers Lied, Cheat and Colluded to Rig the World’s Most Important Number.”

That sums it up nicely. Unlike their predecessors at The Washington Post, who “followed the money,” Vaughan and Finch, who work at Bloomberg and Business Week, followed the London Interbank Offered Rate or “Libor” for short.

A Greek banker named Minos Zombanakis, now 90-years-old, invented Libor years ago, and then watched in alarm as upstart traders more than half-his-age hijacked it and used it to rig financial markets and reap millions. Zombanakis’s original idea was to facilitate the orderly operation of financial markets by creating a fixed interest rate for bankers who wanted to borrow from one another.

Zombanakis is a character in this book, as is Tom Hayes, one of the new breed of traders, who tried to outsmart the market, but who went to jail after he was arrested and found guilty of fraud. He was the scapegoat, the fall guy. The big bankers got away with millions if not billions.

“I think Hayes was so focused on making money for his employer and himself that he opted to ignore the moral and legal implications of what he was doing,” Liam Vaughan told me. Vaughan is the one who does the talking. Finch is the silent partner.

The Fix gets technical and complicated; after all global financial markets these days are awfully complicated in part to keep ordinary people in the dark. Still, The Fix makes for riveting reading because of colorful characters like Hayes, who might have appealed to Charles Dickens in mid-19th century London, which is still one of the centers of the world’s banking industry.

“The City of London, which serves as the backdrop to our book, has an air of Dickens,” Vaughan told me. “The author of The Pickwick Papers would probably recognize the back-alleys, boozers, working class brokers and grasping senior executives we write about.”

In 2013, Vaughan’s and Finch’s articles about systematic fraud in the financial world sparked investigations that resulted in $10 billion in fines for banks like JPMorgan and Barclays. The Fix recounts the nuts and bolts as well as the melodrama and the romance of the story they uncovered and then revealed to the world. Vaughan and Finch still work as investigative journalists, which explains in part why there is almost nothing about them in their book.

“We're definitely very conscious about keeping information about us to a minimum due to the nature of our work,” Vaughan said. While they were working on their book they read the classics in the genre, including everything by Michael Lewis, the author of Moneyball, Panic and Flash Boys. They’re not yet in Lewis’s league, but give them time. The Fix is their first book and probably not their last.

“At times we were both challenged, but having an ally all through the process far outweighed the problems we faced,” Vaughan said. “We’re still friends which suggests we did something right.” If they made enemies along the way among traders and bankers, that’s probably because their articles offered the right stuff at the right time. If you’re a trader, a broker, or a bank customer who doesn’t like thieves, The Fix could be the right book for you.

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