Matt Taibbi reveals a new scam
Fans of Rolling Stone financial writer and Wall Street critic Matt Taibbi are in for a treat.
Taibbi calls it Libor's twin brother. This in reference to the monumental Libor scandal—involving some $500 trillion of financial instruments—that revolved around the manipulation of interest rates.
Here's a snippet of what Taibi has written in his newest article:
Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.
Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.