ORGS 2010 Lecture Notes - Lecture 1: Donnie Green, Bastion, Lewis Ranieri

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A Brotherhood of Hoods
- Mortgage department made trainees realize that they were lowest of all god’s creations
- Mortgage traders treated the trainees like slaves; ask them to get food for them
- American mortgage market was growing faster than any other capital market; one of the best jobs
on the trading floor in 1985
- Gutfreund does not fool around with low people
- After Matty broke down; he has stolen food from the company cafeteria and Gutfreund played a
joke on him
- Stone chases after Matty to ensure to ensure that he was safe and calm
-Matty was bound by the “golden handcuffs” to the mortgage trading department
- Between 1978 and 1981, homeowners were the fasted growing group of borrowers; tax
deductibility of interest payments policies as well as savings and loans industry stimulated growth
in this market
-On the Wall Street, savings and loan president was typically a leader in a tiny community
- When mortgages were standardized, the piece of paper could be traded; like a bond
- William Simon (secretary of US treasury) was king, as the treasuries were the benchmark for all
bonds and he was the benchmark for all traders
o Argued that money invested in mortgage bonds was normally returned at worst possible
time for the lender
- Traders at Salomon wanted to put their fingers on the pulse of the market
- Bob Dall convinced Gutfreund to establish a mortgage department
oWith this, there were new job opportunities opened to other employees to carry on some of
the more specialized tasks; traders, financiers
oAt Salomon, if you are allowed to leave then it’s for the reason that they wanted to
get rid of you
oIf you wanted someone from another department, you would get those who you
don’t want
oDall for Lewis Ranieri; utility bond trader
Lewis was a leader; tough minded, he did not let morality get in the way
At Salomon revenues meant power
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Document Summary

Mortgage department made trainees realize that they were lowest of all god"s creations. Mortgage traders treated the trainees like slaves; ask them to get food for them. American mortgage market was growing faster than any other capital market; one of the best jobs on the trading floor in 1985. Gutfreund does not fool around with low people. After matty broke down; he has stolen food from the company cafeteria and gutfreund played a joke on him. Stone chases after matty to ensure to ensure that he was safe and calm. Matty was bound by the golden handcuffs to the mortgage trading department. Between 1978 and 1981, homeowners were the fasted growing group of borrowers; tax deductibility of interest payments policies as well as savings and loans industry stimulated growth in this market. On the wall street, savings and loan president was typically a leader in a tiny community.

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