‘The Spider Network’ weaves compelling tale about the global financial crisis

To many readers, a non-fiction book about a complex conspiracy to manipulate the London interbank offered rate, or Libor, might sound like fodder for a good nap.

But in the hands of journalist David Enrich, the true tale of former UBS and Citigroup trader Tom Hayes becomes a page-turning crime drama that engages – and educates – readers from beginning to end.

In “The Spider Network,” the author weaves together the vast web of players who blatantly worked to skew the benchmark that is used to set interest rates for everything from home equity loans to complex derivatives. Their goal was to nudge rates in the direction that boosted their trading portfolios – and earn them fat bonuses.

Enrich’s employer, The Wall Street Journal, first broke the news in April 2008 that the key interest rate had become increasingly unreliable. And once the scandal fully erupted, it presented a prime opportunity for prosecutors to slice a pound of flesh from the banking community that many felt avoided the harsh punishment it deserved for nearly destroying the global economy.

Enter Hayes, an obnoxious, anti-social math genius who had hopped around from big bank to big bank collecting huge checks for his trading acumen. Later diagnosed with Asperger’s syndrome, he combined his knack for numbers with a talent for bullying and cajoling colleagues to adjust the data that banks submitted to create various Libor benchmarks.

Hayes soon became Public Enemy No. 1 in the financial crime world, spurring charges from British and U.S. authorities. In 2012, when a police officer who was arresting him incorrectly pronounced Libor as “lee-bore,” Hayes blurted out: “You mean LIE-bore?”

Enrich plunged into the story in 2013, when Hayes began texting him and then meeting with him to discuss Libor, his criminal case and sometimes his increasingly fragile personal life – a goldmine for any reporter. These interactions turned into a captivating 2015 series for The Wall Street Journal, “The Unraveling of Tom Hayes.”

In the “The Spider Network,” published by HarperCollins, Enrich builds on this narrative, fleshing out Hayes’ rocky path to a banking career, his high-flying days as a trader in Japan and then his downward spiral after facing prosecution. At one point, his wife no longer trusted leaving their son home alone with the distraught Hayes.

More broadly, Enrich explores the gray areas where bankers push the envelope – and the disastrous consequences they can face if they’re caught, especially if their conversations are preserved in emails and chat sessions.

Of interest in Charlotte, one of Hayes’ trading partners was Alexis Stenfors, who caused big losses for Bank of America soon after it acquired Merrill Lynch. Bank of America was also one of the many banks that faced lawsuits over allegations that their bankers manipulated Libor.

Some readers will feel sympathy for Hayes as he faces prosecution even as higher-up co-conspirators get off. Others might enjoy seeing the wings melt on a banker who flew too close to the sun.

“The reputation of Libor is important to the City as a financial center and to the banking industry in this country,” the judge says to Hayes in a fateful courtroom scene in London at the book’s conclusion. “The Libor activities, in which you played a leading part, put all that in jeopardy.”

This story was originally published March 16, 2017 at 12:55 PM with the headline "‘The Spider Network’ weaves compelling tale about the global financial crisis."