What do you do after losing $9 billion?
After leading a trading unit at Morgan Stanley that lost the bank $9 billion in bets on the subprime mortgage market, Howie Hubler has returned to the mortgage business, this time with a start-up that offers incentives to prevent struggling homeowners from defaulting. In a rare interview with the Wall Street Journal, Hubler said he's trying to move on from his checkered past.
The New York Observer reported in March that Hubler had opened Loan Value Group in his native New Jersey, a business that offers cash incentives to borrowers who would otherwise walk away from a mortgage when the value of the property drops below the value of the loan. Reuters' Felix Salmon called it "one of the best ideas I've seen in the housing crisis so far." But as to whether the start-up is somehow an act of contrition, Hubler would only say, "We have a view that, this time, we can help."
"I'd rather focus on Loan Value Group," he continued, to the Journal. Frank Pallotta, the executive vice president, said Hubler's bad bets, which Michael Lewis exposed in his book "The Big Short", haven't hurt Loan Value Group's business. "We're comfortable with whatever anybody is able to find out," Mr. Pallotta told the Journal.
Hubler, whom Lewis describes in his book as having an "overbearing manner, which was interpreted as both admirably direct and a mask," and who at Morgan Stanley was given to betting on how many chicken nuggets a colleague could eat in an hour, keeps a Wayne Gretzky quote in his office: "100% of the shots you don't take don't go in," notes the Journal.