Trader Betting On Securities He Made A Fortune Betting Against During Crisis

The New York Times:

Some Wall Street investors made money as the mortgage market boomed; others profited when it fell apart.

Having reaped big gains during both of those turns, Greg Lippmann, a former star trader at Deutsche Bank, is now catching the next upswing: buying the same securities built from mortgages that he bet against before the financial crisis erupted.

Read the whole story: The New York Times

Comments

[Payd Troll]

12:40 PM on 02/21/2012

they always have a win/win situation and we as taxpayers are always on the losing end. when is enough, enough?

[aacme]

09:23 PM on 02/20/2012

Pretty sweet deal. Start low, rig the market with relaxed lending practices, get rich on the way up, then sabotage it, bet against it, get richer as it goes down, then oh, wow, big bargains to be had, and do it all over again. Can't worry about collateral damage.
Is this a great country?
Or what?

[aforbes808]

02:11 PM on 02/20/2012

Place your bets.

[spinotter11]

06:17 PM on 02/20/2012

I bet that the rich will become richer. As they deserve to.

[aforbes808]

08:45 PM on 02/20/2012

Hmmm? meh

[ibsteve2u]

11:17 AM on 02/20/2012

Betting on American mortgages requires a fundamental assumption: The 1% and their political pawns - the Republicans and neoliberal Democrats - have suddenly decided that "shared prosperity" is not just "good" but "better" than them taking all of America's wealth for themselves.

I have seen no sign...no suggestion...no hint...that that is true; to the contrary, the fact that the right's PACs and superPACs are being inundated in so much of the 1%'s money that their handlers are in physical danger of suffocation screams that the contrary is true.

[vinyl1]

09:23 AM on 02/20/2012

Price is all. As an investor, I will buy a pretty doggy stock if I can get an absolute steal of a price. Sure, the company is no good, but it's not worth nothing, either.

The problem with this kind of deal is that there may be no fast exit, because the market is rather illiquid. He has to be ready to hold long-term and collect whatever payments come in. There are probably many ways to lay off the risk, thought.

[aacme]

09:25 PM on 02/20/2012

Yes, I'll bet there are.

[ur2nutty4me]

12:47 AM on 02/20/2012

For thirty years they have systematically wiped out anything that had any source of locked up value, dismantled it and stripped it of any material value leaving a shell behind. In the end that only left 2 things to get their greedy hands on, those things being homeowners equity,and control of Social Security Funds. They will now steal our homes for 10 cents on the dollar and continually press for ways for the Financial industry to take control of Social Security funds. Everything they have done had the effect of stopping the average american from accumulating any wealth or any chance of inheriting any wealth. Even your parents biggest asset their home will not be left to survivors since they now have to reverse mortgage it to survive their remaining years and even those terms are a raping of our citizens that should be investigated.

They have left us with nothing, not even a country that can protect us......... .

[AbstractImp]

08:10 AM on 02/20/2012

Good description of these banksters.

[spinotter11]

06:19 PM on 02/20/2012

It's a tough world, and we the 99% are not grouping together or doing anything about it. Did you ever see a flock of sheep led to the slaughterhouse? That's us - and we deserve it for being so passive and supine.

[nopilikia]

11:44 PM on 02/19/2012

Still a bankster.

[Matt12]

11:15 PM on 02/19/2012

Leave it to the Smart corrupt chosen! Can you say CHUTZPA?

[gomezrules]

08:59 PM on 02/19/2012

Why not? We know that no matter what actions these big financial institutions take, they will be bailed out by the taxpayers if they encounter a rough patch. Real estate and the housing market is one of the easiest manipulated 'markets' there are as far as price and costs. Nothing has changed really in that. As we've seen the govt has stepped in to try to arrest the actual market corrections involving them. Nothing has really changed in any of that..

[JPETERB]

12:04 AM on 02/20/2012

Also, the commodities markets have been rigged by Phil Gramm, our Duopoly Congress and Clinton.
How else do free marketeers explain how the price of gasoline goes up, up, up; even when the demand for gasoline goes down.
"As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington's most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street. He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far."

Read more: http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877330,00.html #ixzz1mtZYWUZ3

[marinemomof3]

11:11 AM on 02/20/2012

All while his wife was in banking !

#386

[Artamentous]

08:50 PM on 02/19/2012

The Capitalists will sell us the rope with which we will hang them.

[Olderandwiser55]

02:53 PM on 02/20/2012

Definitely

[spinotter11]

06:20 PM on 02/20/2012

Empty boasting will make you feel better, perhaps, but it will have no other effect.

[Artamentous]

01:45 AM on 02/21/2012

Well observations of fact, often find a way to proven themselves true. I wonder how long the inequality in this country will last before there is a backlash?

[raphaelbonee]

06:10 PM on 02/19/2012

You got to wonder, why do people keep buying these tickets. The answer is having been fooled into buying a ticket no one wants to be the man left holding the bag. You start talking your ticket up, talking their ticket down. Your horse has more wins, stands taller at the shoulder, loves the mud. Or in company speak returns more on investment, has better cash flow, glows in the dark. By sheer will you make someone else believe your piece of paper that has nothing to do with that shining city on the hill is worth more than you paid for it. A whole language springs up around what you’ve done.

The sheep are always out there.

[raphaelbonee]

06:10 PM on 02/19/2012

Imagine yourself at a horse race. You pick up a program look it over then go up to a window and buy a ticket. That ticket entitles you to a “share” of all the money bet at the window if your horse wins. Note I said “all the money bet at the window” not “money won by the horse”. You will not get one red cent of the money won by the horse.
The distinction is important because what we are talking about is the stock market not a horse race. Companies line up their new IPO’s at the gate. Buyers pick up an annual report and buy a ticket. That ticket entitles you to a “share” of all the money bet on the success or failure of the company you bet on.
In the purest case of no dividend, you will not get one red cent of the money earned by the company unless it goes bankrupt and even then it is after everyone else is paid off and only 20 cents on the dollar at best. The company is a bright shiny city on a hill you will never get to live in, the illusory earnings gone like mist in the morning if anyone ever catches on.

[jflorish]

08:18 PM on 02/19/2012

Buy dividend stocks, then it nullifies your whole post.

[Artamentous]

08:43 PM on 02/19/2012

Not really, since many stocks are NOT dividend stocks. Most tech companies don't do dividends right?

[raphaelbonee]

09:41 PM on 02/19/2012

dividends are just a teaser to keep you watching the race

[janetislight]

05:45 PM on 02/19/2012

And THAT my friends what deregulation does and why more regulation is needed. Hedge funds should be illegal. Period. Oh, and throw in derivatives while you are at it.

[Olderandwiser55]

03:04 PM on 02/20/2012

Although, I'm on the regulation side, it seems Dodd-Frank regulations are largely ignored by Democrats. DF does a lot to regulate, very far reaching. Which is the reason, right wingers dislike it so very much.

Frankly, he was correct the bubble was about to burst..."That optimism is an about-face from 2006 and 2007, when Mr. Lippmann and others told investors that housing was a bubble ready to burst. On Wall Street, Mr. Lippmann became known as “Bubble Boy,”

Lastly, you can sell absolutely anything in the US if you price it low enough. Lippman wouldn't pay the inflated price, now prices are cheap. It's no different than seeing a car for $20k, then later for $5k. You know $20k is too much, but at $5k....

[janetislight]

03:08 PM on 02/20/2012

They are largely ignored, because the regulators and banks ignore them. My source, Mike Mayo.

[Konnie]

05:01 PM on 02/19/2012

and this is still not illigal because? and this man has not been held accountable because? and he is not in jail because? disgusting.

[Artamentous]

08:51 PM on 02/19/2012

What did he do wrong? Nothing. Hate the game, not the players. Capitalism at it's finest.

[slsimpson]

09:41 PM on 02/19/2012

Just because it is legal does not mean it is ethical or moral.
FDR said "Old truths have been relearned; untruths have been unlearned. We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays. We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.
Although our country is built on capitalism, wise American business leaders have recognized the danger of the "free hand" of unregulated open markets. Adam Smith, the father of capitalism believed that unrestricted businesses tend to engage in "conspiracy against the public." John Kenneth Galbraith said "Capitalism left to its own devices, doesn't work properly; it excludes the poor, ruins the environment, and fails to deliver enough collectively produced goods, such as roads, reservoirs, schools and hospitals."

[Konnie]

11:01 PM on 02/19/2012

ah yes, hate the sin. well if i remember my act of contrition there is something in there about being sorry and promising to sin no more................not bet on the other side.

[DannyMcDance]

08:44 AM on 02/20/2012

What law did he break? Is it illegal to make offend your feeble and moronic sensibilities? Is it illegal to make you jealous and envious?

[Janzee12000]

04:48 PM on 02/19/2012

I don't have a problem with this. As long as these investments are rated true to what they are, not the AAA they got before the crash. If it's junk, rate it as such so investors know there risks. But I ask too much...

[jflorish]

08:19 PM on 02/19/2012

Agreed

[Artamentous]

08:51 PM on 02/19/2012

You don't ask too much, you are hopelessly naive about the nature of capitalism. Sad.