The Libor scandal is not only not going away, but a story that was first broken by the Journal four years ago has mushroomed in the past month. The investigation now spans three continents and includes at least 15 of the world’s biggest banks.
Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won’t hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you’re probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government’s massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony “Tony Ducks” Corallo.
Derivatives are complex financial instruments that have leveraged the underlying economy to the hilt. This excellent visual depiction of the derivatives holdings of some of the largest banks will open your eyes and make your head spin.