Open Secret: The Global Banking Conspiracy That Swindled Investors Out of Billions

The LIBOR Fixing Scandal Gets A Conviction And A Book via cfaille, AllAboutAlpha.com

This month began rather badly for Tom Hayes. A jury found him guilty of eight counts of conspiracy to defraud in connection with the manipulation of the London Interbank Offered Rate. He was then sentenced to 14 years, half of which will be spent in prison before there is any possibility of release.

Hayes had defended himself by trying to kick responsibility up the ladder. His superiors have thus far managed more successfully to do the same in reverse: they’ve kicked responsibility down the same ladder, blaming everything on rogues.

“Well, that’s why you’re the boss.”

Next month may bring Hayes at least a small sense of vindication to clutch to his heart as he begins serving that term. Portfolio/Penguin is bringing out Open Secret…

I have often noted the existence of a primitive tribal taboo shared by virtually all economists against using the “f” word – “fraud.”  I have found a new example that sums up many of the pathologies of economics and economists.  It is an article entitled “Going for Broke: New Century Financial Corporation, 2004-2006.”  Given that New Century was a classic accounting control fraud, the use of the long-discredited gambling metaphor (our “autopsies” of S&L failures refuted it in 1984) demonstrates the crippling power of the taboo.  The three economists who authored the September 2010 article are Augustin Landier (Toulouse School of Economics) David Sraer (Princeton University) David Thesmar (HEC & CEPR) (collectively, “LST”).

The Office of the Comptroller of the Currency (OCC) has published a list of the “worst of the worst” – the ten worst lenders in the ten worst markets for nonprime mortgage foreclosures.  The absolute worst…