Once upon a time there was an investment banker. He was hardly today’s stereotypical WASP smoothie, but an overweight, sweaty trader from the Bronx who shouted a lot, ate pizza at his desk when he wasn’t standing on it, and treated colleagues as imbeciles.
Once upon a time there was an investment banker. He was hardly today’s stereotypical WASP smoothie, but an overweight, sweaty trader from the Bronx who shouted a lot, ate pizza at his desk when he wasn’t standing on it, and treated colleagues as imbeciles. Lewie Ranieri was, according to Michael Lewis in Liar’s Poker (1989), a fat slob.
He was a hugely industrious slob, though, and made piles of money for Salomon Bros, his employer. He traded US government bonds, or derivatives of those bonds, then and now the biggest securities market in the world. But one day he noticed a market that nobody else had looked at — the millions of domestic mortgages which, while individually much too small to attract attention among investors trading billions of dollars every day, added up to serious money.
Why not, he thought, bundle them and sell them in packets which would be big enough to interest the big boys? Instead of simply sitting on the books of the bank that had lent the money, here was an asset that could be sold, freeing up the lender’s capital to make further advances.
Get Britain's best politics newsletters
Register to get The Spectator's insight and opinion straight to your inbox. You can then read two free articles each week.
Already a subscriber? Log in
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in