Exactly 12 years ago I wrote about a Greek disappearing act: how in 2001 the country concocted a swap deal with Goldman Sachs to conceal almost €3 billion of debt from its national accounts, to help meet Maastricht ratios. This story refuses to die: a former Goldman banker recently suggested that Greece sue the bank … Continued
A few weeks ago, I was with Channel 4 Dispatches reporter Antony Barnett speaking to Sheffield Labour MP Clive Betts. We were on a park bench in some gardens next to the Houses of Parliament and we briefed Betts about our findings on Lender Option Borrower Option (LOBO) loans to UK councils – findings that … Continued
For Channel 4 Dispatches, we used Freedom of Information requests to build a database of 46 UK councils with details on almost 600 individual contracts, accounting for £7.3 billion of LOBO loans – almost half the UK total. Working with derivatives expert Abhishek Sachdev, I calculated the value of the derivative embedded inside each contract … Continued
In my research for Channel 4 Dispatches, I broke through Newham council’s wall of secrecy and learned that the council had at least £150 million of inverse floater LOBOs (believed to be with Royal Bank of Scotland), along with other councils such as Cornwall, Edinburgh and Newcastle that disclosed these RBS products in response to Freedom of … Continued
Blackrock, the world’s biggest asset manager, is on a “mission” to save the credit default swap market, according to Bloomberg News. In particular, CDS on single names – as opposed to index trades – have declined in volume, as big dealers like Deutsche Bank have decided to exit the market. Now you might think that … Continued
I wrote this article before the UK General Election but Channel 4 asked me to keep it under wraps so not to give away what I was working on. Now that my documentary on LOBO borrowing has been broadcast, the article provides a broader perspective. The premise is that at the local government level, there … Continued
In a world of information, the way we measure combinations of words or ideas is important. Some people say it might even save humanity. Last year, economists Eric Brynolfsson and Andrew McAfee suggested that increasing combinations of business ideas could save us from being supplanted by intelligent machines.
Like any powerful algorithm, combinatorics is … Continued
Last week’s Federal Reserve stress test results produced a surprise: under a ‘severely adverse’ scenario, a key Goldman Sachs capital ratio came within shouting distance of its regulatory minimum. The scenario may be hypothetical but performing worst among the biggest American bank holding companies is more than a slight embarrassment for Goldman. It could put … Continued
They rated every deal, including the ones structured by cows. But were they fraudulent? Until last Tuesday, when Standard & Poor’s parent company McGraw Hill paid $1.3 billion to settle a US Department of Justice lawsuit, there existed the tantalising possibility that this question about S&P’s structured finance ratings business might be answered in court.