So hes out sourcing the seeing part of the driving to his wife. Its an arrow, not that way. One area in my life where i can see the generation difference most clearly, when you do a book signing and the end of the book signing, often theres a line of people who get their books signed but they want their pictures taken with you. Everybodys got a picture with the author and this can happen sometimes dozens and dozens of times in a typical book signings over the course of the year ill have this same process repeated thousands of times and theres, heres how young people do it. They hold up the phone and they take a picture. Heres how old people do it. They hold up the phone, its sounds for about 30 seconds. They Say Something like wait, i think its on google. Then they stab at the screen for a while with a forefinger. Then they hold up the phone and say okay, smile. Then they smile again and say wait, i think its making a video. Then a stab at the screen some more and hold up the phone again and say okay, th smile. Then they say wait, i think it took a picture of me. Then they give the phone to a young person who takes the picture. That literally, ive seen that many times. Watch this and other programs online at cspan2. Hears live coverage of the savanna book festival continues now. Its New York Times finance editor david enrich talking about his book the Spider Network. Good afternoon. We are delighted that you are participating in the 11th annual savanna book festival resented by georgia power. David and anthony cintron, the Family Foundation and mark and patty win. Many thanks to jack and mary romanus, our sponsors for this glorious then you the Trinity United Methodist church. We like to extend thanks also to our literati members and individual donors who have made Saturdays Free festival event possible. 90 percent of the revenue for comes from donors just like you so thank you. Are very excited to have a savanna book festival available this year. Look in your program for information on downloading it to your phone. We get started, let me go over a couple housekeeping notes. Immediately following this presentation, ourspeaker , david enrich willbe signing festival purchased copies of his book , if you are your intention is to stay for the next presentation in this venue, please as soon as we are dismissed move forward so that we can allow the crowd outside to come in and be seated as easily as possible. Please take a moment to double check that your cell phones are turned off or are at least silenced so that we wont have interruptions during the course of the talk today and finally, we ask that you take photographs that you not use flash photography. For the question and answer portion, were going to ask that you raise your hand and an officer will bring you a microphone please dont ask the question until the microphone is in your hand. In the interest of time, and in fairness to other attendees, please limit yourself to one question and if you would please make sure that your question actually is a question rather than a story. David enrich is with us ecourtesy of ron and Barbara Coley and we appreciate your support. David enrich is the finance editor at the New York Times and previously was the financial Enterprise Editor for the wall street journal. He had a team of investigative reporters and he has won numerous journalism awards including the 2016 yearold low award or feature writing. So please join me in getting a warm savanna welcome to david enrich. [applause] hello. Its a great crowd. I was standing here getting a little nervous but this is my first time in savanna and this eais a really cool city, im glad to be here and this is without a doubt, i know a lot of you have been published, without a doubt this is the coolest venue. [applause] so its a beautiful day, beautiful savanna weather and i appreciate you guys coming out of the sun listen to me about finance. So i promise you this is not going to be really boring im going to dwell as little as possible on finance. My book the Spider Network is a book about finance but ive tried to make it a book about humans and ecology and things like that as much as about jargon. So im going to tell you a storyabout how i came to write this book. Which is kind of an interesting tale and i think it says a lot about my writing process and journalism which people tend not to find interesting so the story starts in 2008 when a group of wall street journal reporters not including myself were based in the london ymbureau started digging into something called libor and its an acronym that stands for the london interbank offered rate and most people have never heard of libor but its important and thats because it is the thing that determines the Interest Rates that many of us a our mortgages, credit card loans, auto loans. Its what determines the Interest Rates of a big company and you borrow money in a bond market, is the Interest Rate you pay if youre a town or a city that borrows money is often referred to as the worlds most important number and its trillions of dollars of financial contracts all over the world, big number. Libor set every day around lunchtime in london by a ef group of the worlds greatest banks and its done in a way that in hindsight seems really arbitrary and inefficient and kind of stupid but made a lot dof sense of the time. Basically estimates theoretically how much it would cost them to borrow money from another back. And that number is an Interest Rate and thats what those numbers averaged together. I love ones get kicked out and the resulting frest of the day doing average agand thats set every day and its used all over the world. It turns out no one was paying any attention to how this rate was set, the mechanics of it. It was a task delegated generally very lowlevel employees within these facts ti and they would come up with a number, sometimes basically out of thin air. Either it was very hard to figure out no one was getting any attempts, this was not a priority so they would, with this number in an arbitrary way, omitted this industry break trade group, and lobbyist organization that compiled the number and then send it. Starting about 20 years ago, a bunch of banks realize that since no one was paying attention, there was a lot of opportunity , a lot of potential. There was not necessarily illegal but certainly not very honest and they realize ma that they were making, they were placing huge wagers on trades that were connected to libor, essentially betting on whether or not libor was going to go up or down, and your increments in the future whether it was over the next 24 hours or the month and they had a lot to gain or lose based on this. They realize that since no one was paying any attention to how this rate was set, if they moved their submissions, their libor data of a fraction of a percentage point, that could be hugely influential in moving the overall rate so over the next 10 years, by mid 2000, by the dawn of the financial crisis, have become common industry practice for banks to not nudge it up or down by small se amounts. Thats where the story starts. In 2008 a couple of my predecessors of the wall street journal digging into this number and realized quickly something was terribly wrong with it. The number, libor is supposed to be a reflection of how much it costs to borrow from each other and that would mean in times of Financial Stress , that number would go up because banks would charge each other more to borrow money because thats this year and that doesnt make a trend. It really, the point is banks were manipulated with numbers to give themselves and some of amy predecessors realized this was going on and they wrote a couple of very big page exposes about this practice and the great thing about working for a big newspaper like the wall street journal is that when you do one of these new frontpage stories, people take notice and its a very good way to set the chance. Thats why i got into the term because its some things that you see the power of the media. You write and people take action. In this case, these guys this very powerful, i thought very powerful stories and nothing happened. The world basically didnt react no one knew about libor cared about and so nothing happened. I was ovin new york at the time and moved with my wife to london to be the finance correspondent for the wall street journal in london in 2010 and i really didnt care about it either, like most of us. And i continue to not care about it until 2011 when word started trickling out that a number of governmentagencies , the us and in britain had opened an investigation based on this wall street journal article and it was a secret that was leaking out into the press because some of the banks and received subpoenas and were under investigation and theres nothing journalists love more than government investigations because we love bad news in general and your stories more prominent and the great thing about government investigations, we can just report lies or investigating and its much easier than going and approving the misconduct yourself. So i and my other colleagues in the british media at the time aggressively reporting on libor. It was a matter of the wall street journal because it was something we felt like we had started. But again, there are a few topics in the financial world like the real world cause peoples eyes to glaze over faster than the mention of libor the stories while exciting to nerds like me were not texciting to people like you. And to most of our readers. And through 2012 we kept trying to write these stories about libor and they fell flat until the middle of 2012 when ldone of the worlds biggest banks artemis which is based in london announced that it reached an agreement with the british prosecutors which admitted trying to manipulate libor. And they paid a big penalty, but the more interesting ha thing was the ceo of that bank had to fall on his sword and resign and this is one of the first times since the financial crisis we seen an example of a human being being held accountable or misconduct at his institution. The guy in question was a powerful character, an american mob guy and he was kind of a brash, very quintessential American Banker in london. I dont know if you guys know london. But those types of people dont generally go over very well there. The british dont like the brash American Bank district so bob diamonds resignation was a cause for celebration in the uk and it was finally the thing that got them on the front page of the american newspapers in the wall street journal. So that was a very exciting one for me. No one really understood how this libor thing happened. Diamond wasnt really involved, it was just overseeing corrupt culture and needed to go as a result. One of the things i have been trained to do over a few years as a financial journalist is you try to tell stories as human beings, the human, not institutional actors, clearly not numbers. You want the way to make note stories is compelling is for them to have a narrative, or that you have an accident and a nonmetaphorical sense so that people walking along, theyre doing things and rather than than talking about nameless faces or institutions. So rthats really still like that. Until the very end of 2012 when the us and british prosecutors arrested and criminally charged a guy. And tom hayes, very little is known about him. We knew his age, so its about 34, 35 years old. We knew where he lived which was in a nice house in southeastern england. We knew the date of his employment and the number of Financial Institutions in london he worked for some of the biggest banks including ubs, any group and the us banks. And we knew it from prosecutors that he had engaged over several years in a series of what can best be described as incredibly corruptive email messages, Text Messages, recorded phone call where he said in a very breezy and unequivocal terms, move libor higher for me, ill pay you this for doing it. Use colorful language, seemed like not a very nice guy from the tenor of the emails, kind of a bully and he just seemed like the quintessential wall street corrupt trader out of central casting. Its a human being doing bad things that we can write stories about him. And so we did. And i was very pleased with myself and 2012 ended and i came back to london, eager to take on and move past libor and start writing things that didnt make peoples eyes glaze over to one of the things i did is the beginning of each year he would go and, with figures, schematic listen stories that youre going to pursue and your ambitions for the following year. I had a great one. My idea was a series of stories that i already entitled to and it was called dirty london and it was going to be about all the malfeasance and shady stuff happening all over london and i was kind of a bunch of halfbaked stories. And i really thought my boss would be excited, he was going to pat me on the back and say go get them and i went in and he was like, that was fine but first, you need to do the definitive profile of tom hayes. We dont know anything about him. And ive thought this sounds like a miserable task. The guys been arrested in london, criminally charged and the attorney general at the time i got up at an election and, theres no way that i ever be able to talk to desire his family and those are the crucial things of the story. And nothing is known about him. Nobody knew what he looked like. I didnt want to go down this radical. So my boss said yes. And i said no, he said yes. I threw a small tantrum and stomped out of his office and went back to my desk and was like im going to get it over with. Im going to put in a days work and be done with it. The first thing you do in a situation like this Google Search so i did a Google Search for, hayes and libor and it printed out all the dozen stories about the guy, not a whole lot there was nothing interesting about him really, nothing that wasnt already in the Public Record except for one story in the daily telegraph. One of britains kind of , i wont even say it. Its one of the british newspapers. It was a short story, 200 or 300 words long and insinuated that tom hayes had sold this at Technology Company he owned to his wife and insinuated it in a way that he was trying to hide assets from the t government or Something Like that and it didnt mention his wifes name or the companys name but in the uk its easy to track this down so i went into whats called the Company House and sure enough, there was a Company Called title X Technologies and sure enough, hayes who had the same address and created a company a couple years earlier and recently sold it to someone, a woman named jennifer and i thought to myself well, thats, hayes wife and thats a good starting point. I Googled Jennifer ophir he and she was not, hayes wife. She was very tclearly an american and i could tell this cause she put pictures all over the internet of herself in various degrees of undress draped in an american flag. Gh the good thing about that is i love living in london but at least until the very end i never learned to talk to british people and i dont think they liked me either though it was always a struggle. Im very direct and they are not and but its all, this woman is clearly my type of person. Shes american and it was very important to know i had an american i could talk to. I started asking her, who is this guy . Who is tom hayes. I know his dates of employment and he sounds like a not nice guy from the out of context Text Messages within. Jennifer open my eyes this guy in a way i didnt expect to turns out tom hayes is mildly autistic, hes incredibly socially awkward, completely incapable of maintaining eye contact during conversation. He has some personal hygiene problems, notf the type of banker, he earned aoi tremendous amount of money but he was up, guys i was going out to fancy dinners or clubs. He was known in financial circles for going out to kfc to get a bucket of fried chicken, a bottle of orange juice and go watch seinfeld. Right away g this guy seemed a t more interesting than i expected because you want someone whos not just head of a cookiecutter naperville and not so predictable. Then i got better because jennifer gave me what to this day is maybe the best, im overselling this but it wasas areally good quote about what e has done. She said his defense was that basically everyone was doing this, his bosses know about it, sometimes participated, the entire industry was trying tote manipulate it. He said it was like spanking children in the 70s, everyone was doing it and no one considered it wrong. Anytime you can get the word spank into a business story, that is a big win. So i was feeling really good and in a slight euphoria. At the end the conversation i said jennifer, the thing i really need to make the story good is i need to talk to tom or get someone in his family to talk to me or his lawyers but they were refusing to talk to me. She was obviously with, all time. I said why dont you pass on my phone number, say i am an honest, openminded guy, which i am but im also a journalist. She said absolutely not. You will laugh me out of the room. Then she finally agreed with the caveat that i probably would never hear from him. At least i could go to a bosses office and say im really trying. That night, i went home and i was sitting on the sofa with my wife and we were watching tv and i dont hope you were here for the previous speaker, but she really doesnt like people using cell phones when this post be talking to people. I had my cell phone on my lap the way i always do and sure enough my phone buzzed and it was a text message from an unknown number and it said im willing to talk to you i need to make sure iea can trust you. This goes much higher than me, not even the Justice Department knows the whole story. It was tom hayes. I couldnt believean it. If youre ever in criminal trouble, do not talk g to journalists. I hate to say it, but that is not a good plan and dont, if the Justice Department is coming after you, dont poke them in