, Columnist
The End of Libor and Non-Voting Stock
Also Martin Shkreli, Fed dividends, lottery scams, marine insurance fraud, safe assets and a bitcoin Moriarty.
So long Libor.
Back in the 1960s, a Greek banker in London wanted to find a way for banks to make syndicated floating-rate loans. He found a very simple answer: The banks would lend money to a company, charging their cost of funds plus a spread, and every three months, you'd go out and ask the banks what their cost of funds was, and you'd average their answers, and that (plus the fixed spread) would be the new interest rate on the loan. This was a simple product for the banks: They could pass their costs on directly to the customer, and make a fixed profit (the spread). And by surveying all the big banks and throwing out outlier submissions, you could get a pretty fair approximation of the overall funding cost for banks.