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Libor, long the most important number in finance, dies at 52

nytimes.com

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Re: Libor, long the most important number in finance, dies at 52

#101

Post by santoshalper »

throwmeaway666 wrote: post #58
decafninja wrote: post #23

I was working at an investment bank (as a developer) when this scandal hit. My entire department was laid off as a result. Not because we were involved or complicit in the scandal, but because the scandal indirectly caused a big financial hit to the bank and we were part of the cost cutting measures. It was a traumatic and tragic moment for me at the time. But in hindsight it was the event that lead to my eyes being…

>we were part of the cost cutting measures. >the event that lead to my eyes being opened to the world of Silicon Valley tech companies I found that being aware of whether you will be part of the cost center or profit center in a company is very useful when deciding where you should work.

This one really hit me personally. When I was young, my father advised me that in my career I should stay "close to the money". It made a lot of sense, and I tried, but I ended up moving increasingly into financial services technology.

Now, 25+ years later, I am the head of technology (C-Level) for a large financial services firm (Fortune 200). I report to the CEO, I lead thousands, I am handsomely compensated, but I am professionally lonely.

Over the years, I have become very, very good at explaining technology concepts to non-tech peers (I think it was an intrinsic skill that got me here), but honestly, I am exhausted. I don't think I have it in me to explain technical debt, or the importance of investing in our platform, or how to run a build/buy process or why having an engineering culture is so important. I long to work at a company where my work is intrinsically respected. My peers are polite, but treat the work my team does like magic. It felt deferential at first, but now it feels condescending. I think I've done a great job of creating a real technology culture, but in the last year I realized I am never going to turn us into a technology company, no matter how hard I try.

The lesson is - if you want to work at a technology company (revenue is directly generated through licensing or SaaS fees), then don't compromise. You won't be able to change the nature of your employer no matter how high up the ladder you climb.

My litmus test is this: If you couldn't imagine a company installing a former engineer as their CEO, don't consider it a tech company no matter what the leadership claims.

Re: Libor, long the most important number in finance, dies at 52

#102

Post by codebolt »

hardtke wrote: post #6

I have an adjustable rate mortgage based on LIBOR and the lender still has not said what they plan to do. The presumed replacement rate (SOFR) seems to be pegged near 0% which would be good.

Note that when SOFR starts to fluctuate, you wont know your actual interest payment before the end of each payment period, since these rates are applied on a daily basis, in arrears.

Re: Libor, long the most important number in finance, dies at 52

#103

Post by NoboruWataya »

codebolt wrote: post #98
gadders wrote: post #16

Earlier quoted context omitted.

If you're in the US and the mortgage is dollar-based I would expect you to be transitioned to a SOFR-based loan, possibly with a credit adjustment spread.

What about SONIA, isn't that the dollar based equivalent?

SONIA is the Sterling Overnight Index Average, an overnight rate for pound sterling.

Re: Libor, long the most important number in finance, dies at 52

#104

Post by NoboruWataya »

gadders wrote: post #50
tomc1985 wrote: post #18

Man I'm glad I don't work for a fintech right now, there's a lot of very complicated code with LIBOR as an input

Or an actual real bank...

Most banks are relatively okay now, as by now they have already spent thousands of man-hours to migrate their trades. The transition has been a major talking point for the last two years.

Re: Libor, long the most important number in finance, dies at 52

#105

Post by sokoloff »

cromulent wrote: post #88
fanzhang wrote: post #45

When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.

The Corruption Index is similar - it’s based on how corrupt people think a nation is. Nothing to do with how much actual corruption exists.

It seems overwhelmingly likely that "how corrupt people think a nation is" does have "[something] to do with how much actual corruption exists".

Re: Libor, long the most important number in finance, dies at 52

#106

Post by postalrat »

stanleydrew wrote: post #93
javajosh wrote: post #57

Earlier quoted context omitted.

Why is this purely up to the lender? And if it is, of course they'll add something. You can't have individuals borrowing money interest free now, can we? (Institutions...that's more than fine, its expected.)

It's not "purely up to the lender." It's agreed upon in a mortgage contract, which the borrower signed. Both parties decided that it was a good idea, otherwise there wouldn't have been an agreement.

How do you know all mortgage contracts have a clause for if libor isn't available?

Re: Libor, long the most important number in finance, dies at 52

#107

Post by r00fus »

whatshisface wrote: post #67
outside1234 wrote: post #60

Earlier quoted context omitted.

It is a literary device to make a very boring topic interesting for mainstream readers.

A giant London banking scam touching on something that may even have been involved in the reader's mortgage contract, is not exactly a boring topic.

There's concern fatigue these days, plus LIBOR scandal was old news even years ago. The fact that LIBOR now dead is not really surprising.

Re: Libor, long the most important number in finance, dies at 52

#108

Post by CraigJPerry »

fanzhang wrote: post #45

When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.

>> I was surprised that the number is just based on a survey of bankers

The numbers that LIBOR is measuring ultimately represent a human’s opinion. Well, it’s the opinions of several humans then the highest and lowest opinions get discarded and the rest averaged.

It’s not measuring a value derived deterministically from some inputs, so how else could you capture it?

Re: Libor, long the most important number in finance, dies at 52

#109

Post by grahamm »

decafninja wrote: post #94
willcipriano wrote: post #82

Earlier quoted context omitted.

I have one primary question that I'm trying to figure out during job interviews. "Will my boss understand what I produce and the difficulty involved in producing it?" if the answer is no, the job is going to suck.

It's not just one level though. You can ask the same about whether your boss's boss will understand, and so on and so forth up the food chain. The problem with many tech-as-a-cost-center companies is that you will quickly run into a person on that hierarchy who doesn't (often at or near the intersection between tech departments and the profit center business departments).

And if your company wants to "flatten the structure" running into that person is more likely and you will run in to them.

I also have a problem with ex-developers who work their way up the structure with time. Generally they drift away from the tech and what tech takes and end up serving their higher masters. So you end up with someone who thinks they know what it takes but hasn't actually done it for many years. Literally had this again the other day when I gave an estimate for a piece of work one of the devs had done a decent bit of investigation on. Bluntly told that was too much time from someone who had really no much more info than the subject line of the bug report. Of course who had the weight to get their estimate across.....(not me)

Re: Libor, long the most important number in finance, dies at 52

#110

Post by csdvrx »

erosenbe0 wrote: post #89
csdvrx wrote: post #32

Earlier quoted context omitted.

I think the parent poster meant that the actual going prices on multiple exchanges could be used for data inference. While there are rumors of wash tradings on some exchanges, the price at which such trades would be going will be constrained by the larger network, and the risk of triangular trade will limit the possible divergences to a larger spread (instead of going one direction only) Add enough data, and you may…

Ummm the whole point is that it is a measure of relatively unregulated dollar for dollar transactions not subject to any clearinghouse, exchange, or blockchain regulation or visibility. LIBOR is supposed to be the benchmark of dollars anywhere, so to speak. So you're talking about apples and oranges

Well, you do with what you have (and the prices of apples may be correlated enough with the price of oranges to act as a proxy if you can't get the price of oranges), and the pros of "resilient to rigging" might be worth more than the cons.
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