More Bankers Coming Clean About Hidden Fees

boston-reviewWe’re seeing more and more former derivatives bankers coming out in the press to discuss some of the tricks and high jinks they employed to build extra bank profit into interest rate swaps. Recently, Swap Negotiators swap advisors had the opportunity to speak with one of these converts—Omer Rosen. In February, Omer’s article “Legerdemath” (see pdf below) was published in the Boston Review, in which he discusses some of the misleading practices he witnessed regarding hidden swap fees.

When Omer and Swap Negotiators first got on the phone, we exchanged the usual pleasantries before diving deeper into the details of these practices. It was interesting to compare the two sides of the coin in the negotiation process– he shared perspective from the banking side, while we shared the experiences of our clients. Not surprisingly, these stories meshed well. We’re finding fees that the borrower never knew they were paying. In fact, our clients often come to us defiant, almost challenging us to find a misstep on behalf of their friends, the bankers. Meanwhile, the bankers were often deliberately (or even out of sheer ignorance to their existence) hiding these fees. In some cases, we both knew the banks had gone so far as to encourage the borrowers to execute a trade when the gain was purely in the bank’s favor.

The point remains clear: even if you think you got the best possible deal while negotiating your swap, you probably didn’t if you didn’t have a swap negotiator on your side. Talk to us today about your swap and we’ll see how we can work together to keep your money in your pocket.

Attachment: Legerdemath pdf