Friday had been declared day of the great food

In a corner of the room, a young English extended arms on the cross on the floor. Drunk, he deeply, sleeps the hand on the chest and "mouth wide open as in the expectation that a cluster of grapes" (). We are in the room of trainees and apprentices traders Salomon Brothers, in 1985. All dream then to something, integrate the prestigious Department of mortgage bonds of the broker, the most powerful and the most feared Wall Street. Who founded its prosperity on a group of borrowers, individuals, hitherto ignored and neglected by other firms. Since the beginning of the 1930s, the legislature had been constantly encourage to use to access the property. The volume of mortgages jumped $ 55 billion to 1,200 billion between 1950 and 1980. It became the largest financial market in the shares. But, ironically, few financial institutions believed in its future. An exception, Salomon Brothers, which was in 1978, the first Department of mortgage-backed securities.

At the beginning of the 1980s, that mortgages grow, should they leave the balance of savings, which were the only distribute. The idea was to bring together thousands of loans in a single product, and "a small fraction only would not be honored according to the laws of probability." This is the beginning of securitization: make a standardized and negotiable title on the market of a debt. Savings and loan sector experienced in 1980 one of its most serious crises. The Federal Reserve then strongly within its rates to fight inflation and scrub the financial system. Late 1981, when all savings banks wanted to sell their mortgages to take advantage of a tax measure to relieve financially, it remained more than one purchaser in the market, Salomon Brothers. Some banks present on this niche had indeed closed their mortgage departments in the crisis. Step Solomon, who was against the current, reinforced. A shot of winning poker.

State in the State

The market left again, and in 1984, the Department of Salomon Brothers won more money than all the other Wall Street firms combined... He had the lot to its leader, Lewis Ranieri, a former employee of mail, which quickly climbed the ranks. Brilliant, fearless, fast, worker and completely amoral. "I believe in God but I am never beatified," he acknowledged before a journalist disturbed by the fact that he had more boats motor and costumes. This was Ranieri, probably quite smart to sell twice his soul to the devil, to the then buy at half price. He was surrounded by colleagues to his image, Johnny, Ronnie, Manny, Andy... Straight characters out of the "Marx Brothers", which put the fire to the ties of the trainees, and empiffraient beyond all measure. Friday had been declared day of the "great food". "Brings back the most everything" was the instruction addressed to the intern.Another common hobbies, complete of panties lace the suitcase of one who had had the misfortune to leave lying around unattended. BREF, the atmosphere was relaxed, and the Department was untouchable, because it became a State in the State.

Salomon was the price, organized the market as it sees fit, found buyers, embobinait investors. "It bought 12 bonds, even when they in worth 10, simply to control the flow." Our Research Department then left analysis ensuring that those obligations were actually worth 20. "We dominions Wall Street", recalls Andy Stone one of the "hard to cook" Lewis team. This total grip on a market, which will last until the crash of 1987, only another actor of Wall Street it is. Drexel Burnham Lambert will dominate during the same decade another market, that of "junk bonds" or "junk bonds", the titles issued by the riskiest companies. The famous "subprime", sub-prime, will be somewhat "junk bonds" individuals. Growth will come much later, when need to feed the great real estate bubble by access the poorest property. Democratization of access to housing and forced March without safeguards, which will precipitate the first economy in its worst crisis since 1929.

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