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How I came to Know About Securitization Up Close

  • Broadcast in Finance



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It was pure serendipity. There are three areas of expertise required to understand the current developments in the lending marketplace:

  1. Investment banking and the sale of securities
  2. Accounting and auditing
  3. Trial Law

That has been my life since 1964 when I was just graduating high school. As I moved through careers, I was creating the perfect resume to understand the events that gave rise to the current infrastructure we call securitization. I have found that by recounting the short story of my life in that context, people better understand how and why we are in the third decade of the largest economic crime in human history and why nobody in power wants to do anything about it.

When I first encountered the new reality in 2004, I instantly recognized that the banks were at it again. They were pressuring the marketplace into a bubble that would burst, and they would make money during the pressure and when the market would burst. They were always betting against the market they created.

And my run-ins with banks, starting around 1980 was equally serendipitous dependent wholly upon clients coming to me seeking to obtain results. It was in 1983 that the great PR and advertising plan was launched --- pretty much within the timeline of Purdue Pharma's promotion of pain, break-through pain, and OxyContin. It's all about a national narrative, labels, and addiction to money. 

So tonight I answer the essential question of how and why the current infrastructure came into being. I will take you back to the paper crisis of the 1960s and my role in that, the ascent of the use of “street name,” the creation of a fake regulatory entity for handling certificates, the onset of junk bonds, the Goldman Sachs laddering plan and how that scheme gave rise to the current structures that are used to eliminate and then create the illusion of a loan account.