LIBOR No Mor’, Kavanaugh Inc. & Happy 10th to FinCrisis

Research this week was the hardest ever. It’s hard to ignore the Kavanaugh media juggernaut – every other news was pushed down. While it’s definitely an issue the nation needs to discuss and debate – it’s worrying how polarizing these debates are, and the almost besmirching notes of related social media discussions.  Gloating, Slander and Hatred…Not a great experience by any standards…

On a different but equally disturbing aspect –  the  impact of this media frenzy on the economy. Approx. cost of this media onslaught on business (hours lost)? Upwards of $9 billion….

LIBOR no mor’?

I got an opportunity to spend a couple of days at the SIFMA conference in D.C.  The hottest topic under discussion LIBOR no mor’ (I coined that catchy phase by the way) –  for the longest time, LIBOR has been used as to reflect the cost at which large, globally active banks can borrow on an unsecured basis in the wholesale markets. However, the rapidly  dwindling amount of unsecured borrowings post financial crisis now means LIBOR is increasingly based on expert judgement of panel banks.

The alternative – SOFR (Secured Overnight Financing Rate).

SOFR is based on transactions in the Treasury repurchase market, where banks and investors borrow or loan Treasuries overnight. A group of large banks, the Alternative Reference Rate Committee (ARRC), selected the rate as an alternative to the London inter-bank offered rate (Libor) in derivatives. It cited the depth and robustness of the market where around $800 billion is traded daily.

Here’s how the comparison goes over the last 3 years –

1m-libor-vs-sofr

Sneaky Centralization

A few weeks ago, I wrote about another nail in the coffin of the free market with the takeover of GitHub. Next up – the camera company, Snap announced a tie up with Amazon to take on it’s rivals Instagram. yes, Instagram where the founders just left the company over alleged clashes with Zuckerberg over product changes (the Facebookification of Instagram starts now..).

Watch out for Instagram v/s Snapchat (Read: Facebook v/s Amazon).

Blast from the Past

Anthony Carfang at Treasury Stratergies has been running a fascinating timeline piece on the tenth anniversary of the 2008 crisis. A must read…

Here’s news articles in top financial publications from 10 years back. For all those who were still in their financial career infancy, pause for a second and imagine the impact of this non-stop onslaught on daily financial news. Jobs, futures, savings all wiped out in days…

News Headlines

Sep 21, 2008 – Morgan Stanley Becomes a Bank Holding Company
Sep 21, 2008 – Goldman Sachs Becomes a Bank Holding Company
Sep 29, 2008 – The Commonfund For Educational Institutions Freezes
Sep 30, 2008 – Belgium’s Dexia Bailed Out, Taps $50B From U.S. Fed
Oct 12, 2008 – Wachovia Bank Fails, Acquired by Wells Fargo
Oct 13, 2008 – Royal Bank of Scotland Failure and Bailout

This is a big reason why market infrastructure programs like MIFID, CAT (Consolidated Audit Trails) and CSS (Common Securitization Solutions) have to be at the forefront of the industry’s focus area. And equally, sophisticated regulatory technology needs to assist the financial institutions in the adoption without it being a debilitating experience.

I always look forward to hearing from folks on this topic – drop me a note to exchange ideas and thoughts.

Regulations and Technology

The dissemination of fake news and counter measures against these will be a long drawn out battle. While the countermeasures still are reactive, they are a step in the right direction – this week we had Facebook taking the lead on closing down 200 pages with fake news from a right wing party influencing the Brazilian elections.

I have always been a big advocate of Elon Musk as a visionary. Not always a fan of his gunslinger leadership. I stand firmly behind SEC’s decision – market sentiment cannot be misguided through irresponsible texts and tweets. Now, foreign policy on the other hand…

Personally, I think the smartest things Messers Brin & Page did was to bring in Eric Schmdit early into the Google story.

The Underdog – Fitzmagic

I have always enjoyed watching Ryan Fitzpatrick – and not for his game. Harvard educated, father of 6, awesome beard and probably one of the most unlikeliest football quarter backs.

I can’t help but feel sad the fairytale of Fitzmagic is winding down. When a designated journey man has his moment under the sun, it’s such a great feeling.

On a humorous note, the somebody just trademarked “Fitzmagic” and it was not Ryan. Dolphins rookie Minkah Fitzpatrick has apparently been always called Fitzmagic and he wants the title back.

Leadership Musings…

I had an interesting train conversation with a complete stranger who turned out to be a compliance officer at a financial institution. The gist of the conversation was on how people faked compliance by manipulating the data.

Data has significance when data reflects real business decisions on the ground. Following data is counter intuitive when  business decisions  are made to window dress and keep data within control limits.

More to follow on this but here’s a parting thought – when you view data to get an understanding of your organization and teams, are you in the process of managing them or are you being managed (by your teams)?

The Game Changers

Asia has constantly been the change agent when it comes to technology taking the lead on solving larger welfare state problems. It’s an area I follow closely – a smaller, more efficient technology driven government is the future.

Kudos to med-tech start-up Bloodstream for creating a drone based blood delivery system in India. What a fantastic idea – of course, the sustainability and economics are concerns, but a shout out for combining passion for technology and a burning desire to solve the world’s problems.

..and finally…

Had a great dinner at Hearth. While the food was outstanding – I absolutely loved the  lock box for cellphones. I’ve been responsible for and have experienced too many dinners being spoiled by the constant cell phone checking.

Checklist for romantic dinner – Candles  (check), Wine (check) and now cell lock box (check)….

Last weekend I caught the Billy Joel concert at the MSG. What a showman – I might have gone a tad overboard with my enthusiastic rendition of “We Did’nt Start the Fire!”.  Apologies to all those who experienced the earth equivalent of Vogon poetry.

Good times with @Ed Watson @Eva Pittas @Shana Solomon @Abhi Bhattacharya @Raghavan Damodaran.

billy.jpg

My Saturday mornings cuppa are always accompanied by my friend Jeremy Potter’s blog –  have to attach this amazing musical piece by a 12 year old from JDP’s blog.

And as always – Altius, Citius, Fortius!

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