Receiving Wide Coverage ...
Email Hijinks: Embarrassing trader emails are always our favorite part of regulatory settlements, and the missives uncovered by regulators investigating Barclays in the Libor-manipulation affair are pure gold. Some of our favorites:
"This is between you and me but really don't tell ANYBODY."
"This is the way you pull off deals like this chicken, don't talk about it too much."
A trader complaining about the Barclays employee who was apparently submitting realistic quotes of the bank's cost of funds to the Libor survey, rather than what the trading desk wanted him to report: "He's like, 'I think this is where it should be.' I'm like, 'dude, you're killing us.'"
And this exchange between a Barclays LIBOR submitter and a trader: "Just as an FYI, I will be in noon-ish on Monday." "Noonish? Who's going to put my low fixings in? Hehehe."
The lesson: Don't write anything in a work email account you wouldn't want to explain to your boss, your regulator, or your mom when she reads it in the newspaper. But we could have told you that a decade ago. In fact, we did. You can find round-ups of all the salacious Barclays correspondence in FT Alphaville, Dealbreaker, Huffington Post
Barclays Basics: You can find straight news stories about the British bank's $453 million settlement with U.S. and U.K. regulators over the aforementioned manipulations in the Wall Street Journal, Financial Times, New York Times, Washington Post
Will Diamond Get Crushed? The papers imply that the scandal could cost Barclays CEO Bob Diamond his job, without quite saying so (the Journal and FT use variations of the journalese euphemism "mounting pressure"). As you can see from our headline, the media focus on Jamie Dimon the last few months has not exhausted the supply of gemological puns on CEO names. Wall Street Journal, Financial Times, Daily Telegraph (U.K.)
What It All Means: Speaking of wordplay, we tip our hat to the Journal's "Heard on the Street" for this wicked pun: "Lie Bores Into Credibility of Barclays and the City." ("The City," with a capital "c," is the old financial district in London, and the Brits use the phrase to connote the financial sector the way we Yanks talk about "Wall Street." Otherwise that headline's self-explanatory.) Beyond the reputational hit to Barclays and to British bankers in general, the FT's "Lex" column says that the way Libor is calculated needs, erm, "fixing" (the use of that synonym for "reform" is yet another in-joke for trans-Atlantic finance nerds). "Whenever possible," the column says, "benchmark rates should be based on actual interbank lending rates. … Estimates should only be used when hard data are not available and these should be routinely cross-checked against other data on bank-risk, with corroboration sought from other banks, so as to identify who is cheating." Keep in mind that these abstractions — banks' quotes of their hypothetical borrowing costs to the British Bankers Association's survey, and the averages produced — had real-world consequences, since the interest rates on everything from adjustable-rate mortgages to corporate loans are pegged to LIBOR. And if you're wondering who gets hurt by artificially low rates (if not the borrowers), think of the parties paying fixed rates in interest-rate swap agreements. That could be your company. And finally, this just in from the FT: the BBA has asked the British government to regulate the way LIBOR is set. When industry participants beg to be regulated, it can't be a good sign.
New York Times
JPMorgan's internal models have recently indicated the bank's loss on credit derivative trades may swell to $9 billion from the previously disclosed $2 billion, the paper reports, citing anonymous sources. (The $9 billion shocker was reported a few days ago by the freelance journalist Teri Buhl on her blog.)