Lewis Ranieri

Lewis Ranieri
Born 1947 (age 67–68)
Brooklyn, New York City
Nationality American
Occupation Bond trader
Banker
Employer Ranieri Partners, Salomon Brothers
Known for Securitization
Mortgage-backed securities

Lewis S. Ranieri (born 1947) is a former bond trader and former Vice Chairman of Salomon Brothers and current founding partner and chairman of Ranieri Partners. He is considered the "godfather" of mortgage finance for his role in pioneering securitization and mortgage-backed securities.[1] In 2004, Ranieri was named by BusinessWeek as one of the greatest innovators of the past 75 years.[2] He received the Distinguished Industry Service Award from the American Securitization Forum in 2005 and has participated on the National Association of Home Builders Mortgage Roundtable since 1989. Ranieri has also been inducted into the National Housing Hall of Fame and received the Lifetime Achievement Award given by the Fixed Income Analysts Society, Inc. He was also named in TIME magazine's list of "25 People to Blame for the Financial Crisis."[3] Currently Ranieri serves as the chairman and founding partner of Ranieri Partners Management LLC,[4] a real estate firm.

Early life

Lewis S. Ranieri was born in Brooklyn, NY in 1947. Ranieri had sought to be an Italian chef before finding that his asthma prevented him from working in smoky kitchens. He began college at St. John's University but left before completing his degree. Ranieri later returned to school and completed his Bachelor of Arts in English in 1986. In 1987, St. John’s University awarded him an honorary Doctor of Laws degree.[5]

Career

In 1968, Ranieri took a part-time job in the mail room of Salomon Brothers. He worked his way from the mail room to the position of Vice Chairman of Salomon Brothers, the full story of which is captured in Michael Lewis's bestseller Liar's Poker.[2][6] 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 formed Hyperion Partners, a successful investment firm, in 1988. In 2000, Ranieri and his partners at Hyperion sold Bank United, a firm they acquired in the late 1980s.

After mortgage-backed securities came under scrutiny for their role in the subprime mortgage crisis the United States housing bubble and the financial crisis of 2007-2010, critics took aim at Ranieri. In March 2007, at a time when it was unknown whether or not the over-extension of leverage inherent in subprime mortgages could lead to a financial crisis, Ranieri commented "I think [the risk] is containable. I don't think this is going to be a cataclysm."[7]

Ranieri commented on the situation in a 2009 interview. "It wasn't the concept of securitization that created the problem", argued Ranieri.[8] Rather, he blamed Wall Street for misusing securitzation to create mortgage products that homeowners were unable to afford over the long term, such as those with low 'teaser' rates that became unaffordable when they reset. In the same interview, Ranieri also explained his firm's ongoing efforts to rehabilitate the US housing market by purchasing delinquent mortgages, working with the original homeowners to establish consistent payments, and then selling the newly stabilized loans.

Philanthropy

In 2005, Ranieri was appointed by Roman Catholic Bishop William Murphy of the Diocese of Rockville Centre, to form Tomorrow's Hope Foundation, a nonprofit organization whose mission is to provide assistance to the Catholic elementary and secondary schools of the diocese.[9] The foundation has provided scholarships to thousands of families seeking Catholic education for their children. In 2012, St. John's University awarded Ranieri the Spirit of Service award for his work with Tomorrow's Hope Foundation and his dedication to serving others. Ranieri continues to serve as chairman of the foundation.[5]

References

  1. ↑ The Guardian, 26 January 2009 Twenty-five people at the heart of the meltdown ...
  2. ↑ 2.0 2.1 2.2 2.3 2.4 BusinessWeek, 29 November 2004 Lewis S. Ranieri: Your Mortgage Was His Bond
  3. ↑ http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877342,00.html
  4. ↑ http://www.ranieripartners.com/ranieri-senior-executive-team-1/lewis-s-ranieri
  5. ↑ 5.0 5.1 http://www.stjohns.edu/about/president/dinner/honorees/2012/ranieri.stj
  6. ↑ New York Times, 27 January 2002, UPDATE/LEWIS RANIERI; A Mortgage Man Charts New Seas
  7. ↑ CNN Money: The Risk in Subprime
  8. ↑ http://money.cnn.com/2009/12/08/real_estate/lewie_ranieri_mortgages.fortune
  9. ↑ http://www.tomorrowshopefoundation.org/about_us.asp

External links