New Books in Economic and Business History

Mark W. Geiger, "Floor Rules: Insider Culture in Financial Markets" (Yale UP, 2024)

Oct 29, 2024

Mark W. Geiger, an independent scholar of economic history, explores the unspoken dynamics of financial markets in his new book. He reveals that while official rules exist, it's the 'floor rules' that insiders fear breaking the most. The podcast dives into gripping tales like B.P. Hutchinson's daring wheat market corner in 1888 and the shocking LIBOR scandal of 2008. Geiger also discusses how insider culture, marked by aggressive language and personal networks, has evolved, especially after the pandemic, shaping the future of finance.

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Intro

00:00 • 2min

Echoes of the Floor: Finance Through the Ages

01:34 • 9min

The Wheat Wars of 1888

10:30 • 8min

A Strategic Clash on the Trading Floor

18:11 • 4min

Insider Networks in Financial Markets

21:52 • 15min

Unraveling the LIBOR Scandal

36:44 • 10min

Insider Culture in Financial Markets

46:58 • 25min

Are financial markets lawless and irrational? It may seem that way from the outside, but for market insiders there are multiples sets of rules that they break at their peril.

Official rules set by law or by the exchanges exist alongside unofficial rules, or floor rules. Between these, it is the floor rules -- the norms followed by other insiders -- that matter most. Breaking an official rule might lead to a fine or even jail. Breaking floor rules can lead to being ostracized from markets as well as social and financial ruin.

In Floor Rules: Insider Culture in Financial Markets (Yale UP, 2024), Mark W. Geiger tells compelling stories of market disturbances in which insider rules played a key role. He examines the norms, customs, values, and operating modes of insiders at the center of financial markets that trade money, stocks, bonds, futures, and other financial derivatives. These core insiders are a relatively small group who govern the markets.

The book tells the riveting story of Benjamin Hutchinson, who made national news for his dramatic 1888 wheat market corner in Chicago, in which he outsmarted four powerful traders who had joined to force him out of the market, survived a life-threatening physical assault on the trading floor, and almost brought down the Chicago wheat market.

It also unpacks the LIBOR scandal of 2008 in which bankers in major international firms manipulated interbank loan rates to inflate their own profits at the expense of investors and at tremendous risk to the industry.

Geiger analyzes the cultural history of market trading, describes the role of insiders, and suggests where this peculiar, ingrown culture is heading in an era of technological change.

The book releases on October 29, the 95th anniversary of the Black Tuesday crash of 1929, the beginning of the Great Depression.

Related resources:

Mark Geiger's personal website and portfolio of generative AI artwork

Author recommended reading:

Den of Thieves by James B. Stewart
Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof and Robert J. Shiller

Hosted by Meghan Cochran

NOTE: Kluge Fellow at the Library of Congress should have been pronounced with a hard "g" as in kloo-ghee.

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