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Morning Coffee: Libor $candal Gets Personal

Time for a one-man rule

Want to know why banks are being fined record sums for their role in the Libor rate-fixing scandal? They had the potential to gain, or lose, tens of millions of dollars for the slightest change in the differential of rates, at least as of 2008.

The number comes from a Wall Street Journal analysis of Deutsche Bank, which in 2008 booked profits of $654 million from trades pegged to the interest rates under investigation. The German bank’s ledger could swing upwards of $90 million for each one-hundredth of a percentage point change in the rates.

As the Journal points out, that doesn’t mean the Deutsche Bank profited from illegal trading, but it does provide a clearer window into why banks like UBS and Barclays, firms that have already acknowledged their role in the scandal, went to such lengths to massage the numbers.

In a tensely awkward grilling of former UBS execs in front of the U.K.'s Parliamentary Commission on Banking Standards this week, commission chair Andrew Tyri referred to Libor trading as the “jewel in the crown” of the bank’s fixed income business. Tyri had some other choice words too, calling it “baffling” that the Swiss bank’s executive team, then led by former UBS group chief executive Marcel Rohne, was clueless of the rate manipulation, according to Financial News.

"Either they turned a blind eye or they were totally incompetent. Which was it?" asked former U.K. Chancellor Lord Lawson of Blaby on the day preceding the panel discussion. Tough question to answer when those are your only two options.

What’s the Problem? (eFinancialCareers)

Cantor Fitzgerald, which recently reaffirmed its plans to continue hiring despite having its credit downgraded, is having problems hanging on to its talent. Big problems.

Exit Strategy (Financial News)

Two big names at the Royal Bank of Scotland, Peter Nielsen and John Hourican, chief executives of the firm’s markets and international banking businesses, may be forced out over Libor manipulation claims.

Head Trader Swap (Bloomberg)

James Horrocks, the head trader at Fulcrum Asset Management, left the $1.4 billion hedge fund for personal reasons. Fulcrum has found a replacement but has yet to make an announcement as to whom.

Citi Payday (Bloomberg)

Jamie Forese and Manuel Medina-Mora, the two newly-named co-presidents of Citigroup, raked in a combined $1.2 million in returns from private-equity holdings last year.

Optimism (WSJ)

The number of unemployed workers per job posting dropped to 3.3 in November, the lowest total in more than four years.

Fixed Income Fright (eFinancialCareers)

Those most at risk of losing their jobs in the next round of Morgan Stanley cuts appear to be fixed income professionals.

Buzz Around the Office

Good Effort, Jack (Business Insider)

There will be some ugly dollar bills floating around if Jack Lew, the nominee for Secretary of the Treasury, gets confirmed. His signature, which would find its way on to all new currency, might as well be drawn in crayon.

List of the Day: Interview Mistakes

These interview mistakes seem rather obvious, but apparently they keep being made.

  1. Failure to make eye contact.
  2. Appearing disinterested.
  3. Being negative about a current or former employer.

(Source: AOL Jobs)

AUTHORBeecher Tuttle US Editor

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