Holding Bankers to Account: A Decade of Market Manipulation, Regulatory Failures and Regulatory Reforms

The book "The Great Illusion: How Fraud and Deception Shaped the Financial Crisis" provides a compelling account of the rigging of benchmarks during and after the financial crisis of 2007-08. It explains how and why these benchmarks need to be reformed in the face of rapid technological changes in markets and makes concrete recommendations for improving the security of the financial services industry and holding bankers to account.

Format: Hardback
Length: 304 pages
Publication date: 01 March 2019
Publisher: Manchester University Press

This book offers a compelling account of the rigging of benchmarks during and after the financial crisis of 2007-08. Written in clear and accessible language, it provides the historical context necessary for understanding the key benchmarks, such as LIBOR, FOREX, and the Gold and Silver Fixes. It sheds light on how and why these benchmarks need to be reformed in the face of rapid technological changes in markets. While banks have faced fines and some traders have been jailed, the author argues that true justice will not be served until senior bankers are held accountable for their actions. The book is provocative and rigorously argued, making concrete recommendations for improving the security of the financial services industry and holding bankers to account.

Introduction:
The financial crisis of 2007-08 was a devastating event that had far-reaching consequences for the global economy. One of the most significant aspects of this crisis was the rigging of benchmarks, which played a crucial role in the valuation of financial instruments and the pricing of derivatives. This book aims to provide a comprehensive account of the rigging of benchmarks and its impact on the financial services industry.

The Rigging of Benchmarks:
The rigging of benchmarks occurred during and after the financial crisis, with the most notable cases being the LIBOR, FOREX, and Gold and Silver Fixes. LIBOR, the London Interbank Offered Rate, is a benchmark used to determine the interest rate at which banks lend money to each other. FOREX, the Foreign Exchange Market, is a global marketplace for the trading of currencies. The Gold and Silver Fixes are benchmarks used to determine the price of gold and silver.

The rigging of benchmarks involved the manipulation of the data submitted to the benchmarking institutions by banks and other financial institutions. This manipulation was done to influence the benchmark values and benefit the institutions involved. For example, in the case of LIBOR, banks would submit false data to the benchmarking institution to lower their borrowing costs. In the case of FOREX, banks would collude to manipulate the exchange rates to their advantage.

The rigging of benchmarks had significant consequences for the financial services industry. It led to the mispricing of financial instruments, such as derivatives, which were based on the benchmark values. This mispricing resulted in significant losses for investors and financial institutions. It also undermined the trust in the financial system industry, as investors and consumers lost confidence in the integrity of the financial system.

The Need for Reform:
The rigging of benchmarks highlighted the need for reform in the financial services industry. The first step in reforming the financial services industry is to increase transparency and accountability. This can be achieved by implementing stricter regulations and enforcement mechanisms to ensure that banks and other financial institutions are held responsible for their actions.

Another important step in reforming the financial services industry is to improve the regulation of benchmarks. This can be achieved by establishing independent oversight bodies to monitor and regulate the benchmarking process. These oversight bodies can ensure that the data submitted to the benchmarking institutions is accurate and reliable and that the benchmarking process is fair and transparent.

In addition to these measures, it is important to increase education and awareness about the importance of financial integrity and transparency. This can be achieved by promoting financial literacy and ethics in schools and universities and by providing consumers with access to information about financial products and services.

Conclusion:
The rigging of benchmarks was a significant event that had far-reaching consequences for the financial services industry. It highlighted the need for reform in the industry to increase transparency and accountability, improve the regulation of benchmarks, and increase education and awareness about financial integrity and transparency. By implementing these measures, we can help to restore trust in the financial system and ensure that the financial services industry is stable and secure for the future.

Weight: 522g
Dimension: 150 x 223 x 26 (mm)
ISBN-13: 9781526119438