DEFINITION of 'Lewis Ranieri'
Former bond trader and former vice chairman of Salomon Brothers who is credited with introducing securitization to the financial world. Initially, mortgage-backed securities (MBS) were only acknowledged by a handful of states as legitimate investments, but Ranieri's actions eventually led to federal government measures that supported these securities as a valid investment asset class, leading to the development of the bond market.
BREAKING DOWN 'Lewis Ranieri'
In 1977, savings and loans banks were feeling the financial difficulties involved with funding short-term, higher interest demand deposits with longer term, low-interest mortgages. As a result, banks did not want to hold onto too many mortgages. By creating five- and 10-year bonds from 30 year mortgages, Ranieri attracted a larger crowd of investors to mortgage-backed securities, which ultimately caused all sorts of debts (such as credit card debt) to be rolled into bonds.