Here are some depressing figures: 133, 20, 4, 3 and 1. They are the most recent key counts in what might be the most alarming of all the financial scandals since the 2008 crisis, the sometimes successful efforts of traders to rig benchmark rates.
The first four numbers come from Singapore; they count up, respectively the traders, institutions, years and rates involved in attempted manipulation in the city-state. The one is for Tom Hayes, the first and so far only trader to face criminal charges for messing with the Libor interest rate. Investigations of possible unfair play in energy-price benchmarks are continuing, but it is already clear that too many traders in too many markets tried too often to profit by manipulating supposedly objective readings of market conditions.
In cash terms, the machinations are hardly a problem. In comparison to the hundreds of billions lost and the score of institutions capsized by reckless speculation made before the 2008 financial crisis, any losses – the Singapore authorities say that rates there stayed honest – were microscopic. While the distortions of one-hundredth of a percent were large enough to enrich a few traders, they were too small to make anyone else noticeably poorer, or to add much to the profits of the banks which employed the crooked traders.
The ethical and institutional balance is quite different. The small size of the potential gains reduces the role of intoxicating greed. Greed led banks into risky transactions which seemed to promise huge gains, and helps explain why bosses were not vigilant about rogue traders as long as the rule-breaking produced profit. Greed is not good, but it does less social damage than sober dishonesty. And institutional dishonesty is the best explanation for the tolerance of behaviour which brings such small gains and so much reputational damage. The financial industry suffered from the moral equivalent of total tone-deafness.
The provision of financial benchmarks is basically a sort of public service. These reference rates allow economic actors – borrower and lenders, buyers and sellers – to take advantage of the ability of financial markets to determine a fair price without the inconvenience that comes with actual market transactions.