Lewis Ranieri

Lewis "Lew" Ranieri (b. 1947) is a former bond trader and former bad habit seat of Salomon Brothers who is credited with promoting the concept of securitization in the financial world. Ranieri's securitization upheaval permitted a wide range of cash flows from debts, (for example, credit cards, mortgages, and so on) to be pooled and moved into bonds.

Early Life and Education

Lewis S. Ranieri was brought into the world in Brooklyn, NY, in 1947, where he went to St. Rita's Elementary School.

As per reports in the media, he wanted to be a culinary expert in Italian eateries, however asthma kept him from working in kitchens where smoke was an issue. A rehearsing Catholic, he began college at St. John's University, exited yet later returned and earned his lone ranger's education, and was awarded a privileged Doctor of Laws degree.

A rehearsing Catholic, Ranieri credits his Catholic education with helping him in settling on choices in life and business.

Respects and Awards

In 2004, Business Week magazine named Ranieri one of "the greatest trailblazers of the past 75 years," after a year, he received the Distinguished Industry Service Award from the American Securitization Forum. He was enlisted into the National Housing Hall of Fame and received the Lifetime Achievement Award from the Fixed Income Analysts Society, Inc. (FIASI).

Since cash flows roll in from different loans or borrowers, any single default shouldn't make any difference in the overall pooled portfolio, hence decreasing risk. The 2008 financial crisis, in any case, demonstrated this to be a fallacy.

Remarkable Accomplishments

In 1977, savings and loans banks were feeling the financial challenges engaged with funding short-term, higher-premium demand deposits with longer-term, low-premium mortgages. Therefore, banks would have rather not held such a large number of mortgages. This limited mortgage issuance and smothered the housing market. Ranieri conceived an original solution where he made five-and 10-year bonds from 30-year mortgages. These new mortgage-backed securities (MBS) assisted Ranieri with drawing in a bigger crowd of investors, taking the mortgages off the banks' books and permitting them to issue new mortgages as the existing ones were cut up and sold off.

Ranieri wasn't the sole psyche behind the creation of the mortgage-backed security, however he was the greatest boss in guaranteeing that the new investment flourished. Notwithstanding the MBS, Ranieri assumed a part in making the collateralized mortgage obligation (CMO), one more complex repackaging of debt.

Notwithstanding, when enunciated, the practice of securitization spread far and wide through the financial world. Right up 'til now, securitization assumes a critical part in all that from credit card debt to the national debts of non-industrial countries. Ranieri passed on Salomon Brothers to found Hyperion Partners before founding his current venture, Ranieri Partners, as an advisor and manager of private investments.

Initially, MBSs were just recognized by a small bunch of states as genuine investments, however Ranieri's activities ultimately prompted federal government measures that upheld these securities as a substantial investment asset class, leading to the development of the bond market. Hence, Ranieri is viewed as the dad of securitization.

Heritage

Ranieri was notable in financial circles for his primary innovation of securitization and his campaigning efforts that saw the MBS become a critical financial instrument for the real estate market. Be that as it may, he was not publicly notable until the film The Big Short (in view of the Michael Lewis book by a similar name; no connection) featured his financial innovation and its job in the mortgage meltdown.

Ranieri mirrored the fault for his job in the crisis back upon Wall Street and the lenders for manhandling the system of securitization to make subprime loans and teaser rates that nearly guaranteed a homeowner would default long term. Time magazine named him one of "25 individuals to fault for the financial crisis" of 2007-2008.

In any case, in a Wall Street Journal interview in 2018, Ranieri communicated regret over what his creation of bundling mortgages into securities meant for Americans losing their homes during the subprime lending crisis during the Great Recession.

Features

• Ranieri assisted with making collateralized mortgage obligation (CMO), a complex repackaging of debt.
• During his tenure, Ranieri advocated and developed different financial products in light of the securitization of cash flows and debt obligations.
• Lewis Ranieri was a fruitful bond trader and afterward executive of the global investment bank Salomon Brothers during the 1970s and 1980s.
• Securitization includes pooling cash flows from comparable instruments and bundling them into single bond-like securities that can be sold to investors.
• The Big Short, written by columnist Michael Lewis, was made into a film, made Lewis Ranieri's name recognizable in the public eye past the world of finance.

FAQ

Is "The Big Short" About Lewis Ranieri?

The Big Short is a verifiable book by Michael Lewis and an Oscar-winning movie directed by Adam McKay. The character Lewis Ranieri appears in the initial segment of the film, however he isn't one of the principal characters.

Who Is the Father of Mortgage-Backed Bonds?

Lewis Ranieri is credited with being the dad of mortgage-backed securities, which assumed a big part in the Great Recession.

Why Is Lewis Ranieri Famous?

Lewis Ranieri is credited with advocating the concept of securitization in the world of finance.