| Lewis Ranieri | |
|---|---|
| Born | 1947 Brooklyn, New York City |
| Nationality | American |
| Occupation | Bond trader Banker |
| Employer | Salomon Brothers |
| Known for | Securitization Mortgage-backed securities |
Lewis S. Ranieri (born in 1947) is a former bond trader and former vice chairman of Salomon Brothers. He is considered the "godfather" of mortgage finance for his role in pioneering securitization and mortgage-backed securities.[1] In 2004, Ranieri was considered by BusinessWeek one of the greatest innovators of the past 75 years.[2]
Ranieri had sought to be an Italian chef before finding that his asthma prevented him from working in smoky kitchens. A part-time job in the mail room of Salomon Brothers in 1968 then turned into a trading career.[2][3] In the late 1970s, Ranieri joined the new mortgage-trading desk of Salomon Brothers where he contributed to creating the innovative practice of securitization, a word he is said to have coined.[2] BusinessWeek said that in 1977, with the creation of mortgage-backed securities (MBS), "Ranieri's job was to sell those bonds—at a time when only 15 states recognized MBS as legal investments. With a trader's nerve and a salesman's persuasiveness, he did much more, creating the market to trade MBS and winning Washington lobbying battles to remove legal and tax barriers."[2] Ranieri also declared that "mortgages are math," hiring PhDs who developed the collateralized mortgage obligation, repackaging mortgages into more attractive bonds.[2]
After leaving Salomon in 1987, Ranieri bought BankUnited in 1988, selling it in 2000.
After mortgage-backed securities came under major scrutiny for their role in the subprime mortgage crisis the United States housing bubble and the Financial crisis of 2007-2010, however, critics have taken aim at Ranieri. In March 2008, for example, Nobel Prize laureate in Economics Robert Mundell inserted Ranieri among the "Five Goats Who Contributed to the Financial Crisis" of 2008 with President Bill Clinton, former AIG head Hank Greenberg, Ben Bernanke, and Henry Paulson.[4]
In November 2008, Franklin Bank in Houston, TX, failed after taking large real estate loan losses. The bank was founded by Ranieri, who served as the bank's chairman and took over the CEO duties in May 2008.[5]