Reading the explosive emails which implicate Barclays traders in the crime of fixing Libor rates brought back memories of the days when this five-letter acronym meant financial life or death to me.
In the late 1990s, I worked for an American investment bank in London, effectively taking bets on whether I thought interest rates (in my case, US and Canadian interest rates) would go up or down. I would gamble that, for example, the three-month Canadian base rate would be above 5 per cent on a given date in the future. When the date arrived, the value of my bet (how much money it had made or lost) was determined by the Libor fix on that day.
So 11am, when the Libor rates are revealed every day, was a nervous time. I would sit glued to my screens as, one by one, the banks which between them calculated the fix came up with their numbers. Even then the process stank. The rates would bear little relationship to what was going on in the real market. One could only assume that they were skewed to suit the trading positions of these banks. If you weren't one of the institutions setting the rate, you were going to be disappointed.
The damage to my position would – on the very worst days – amount to hundreds of thousands of pounds (of my employer's money, that is). Larger-scale traders could lose (or make, if they worked for the right bank) millions on the stroke of 11. Which may explain why dealing rooms in my day tended to have adjourned for lunch by half-past.
Now, clearly, as a former City trader who saw the light, I'm not looking for sympathy. The real victims of this crime are not market professionals but the variable-rate mortgage borrowers and others who have now joined the ever-growing list of innocents who have been conned by the banks. What's interesting, though, is the fact that all of us in the dealing room where I worked knew this went on, but simply accepted it. Perhaps we just set the morality bar pretty low. But when this practice is exposed to the public gaze, it betrays a world where cheating was – and probably still is – institutionalised.
Dan Gledhill is deputy editor of 'The Independent' and a former trader with Bank of America