Who Is Lewis Ranieri?

Lewis "Lew" Ranieri (b. 1947) is a former bond trader and former vice-chair of Salomon Brothers who is credited with popularizing the concept of securitization​ in the financial world. Ranieri's securitization revolution allowed all sorts of cash flows from debts (such as credit cards, mortgages, etc.) to be pooled and rolled into bonds.

Early Life and Education

Lewis S. Ranieri was born in Brooklyn, NY, in 1947, where he attended St. Rita’s Elementary School.

According to reports in the media, he wanted to be a chef in Italian restaurants, but asthma prevented him from working in kitchens where smoke was an issue. A practicing Catholic, he started college at St. John's University, dropped out but later returned and got his bachelor's degree, and was awarded an honorary Doctor of Laws degree.

A practicing Catholic, Ranieri credits his Catholic education with assisting him in making decisions in life and business.

Honors and Awards

In 2004, Business Week magazine named Ranieri one of "the greatest innovators of the past 75 years," A year later, he received the Distinguished Industry Service Award from the American Securitization Forum.  He was inducted into the National Housing Hall of Fame and received the Lifetime Achievement Award from the Fixed Income Analysts Society, Inc. (FIASI).

Notable Accomplishments

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 too many mortgages. This limited mortgage issuance and suppressed the housing market. Ranieri devised a novel solution where he created five- and 10-year bonds from 30-year mortgages. These new mortgage-backed securities (MBS) helped Ranieri attract a larger crowd of investors, taking the mortgages off the banks' books and allowing them to issue new mortgages as the existing ones were sliced up and sold off.

Ranieri wasn't the sole mind behind the creation of the mortgage-backed security, but he was the greatest champion in ensuring that the new investment prospered. In addition to the MBS, Ranieri played a role in creating the collateralized mortgage obligation (CMO), another complex repackaging of debt.

However, once articulated, the practice of securitization spread like wildfire through the financial world. To this day, securitization plays a critical role in everything from credit card debt to the national debts of developing nations. Ranieri left Salomon Brothers to found Hyperion Partners before founding his current venture, Ranieri Partners, as an advisor and manager of private investments. 

Legacy

Ranieri was well known in financial circles for his primary innovation of securitization and his lobbying efforts that saw the MBS become a critical financial instrument for the real estate market. However, he was not publicly well known until the movie The Big Short (based on the Michael Lewis book by the same name; no relation) highlighted his financial innovation and its role in the mortgage meltdown.

Ranieri reflected the blame for his role in the crisis back upon Wall Street and the lenders for abusing the system of securitization to create subprime loans and teaser rates that almost guaranteed a homeowner would default long term. Time magazine named him one of "25 people to blame for the financial crisis" of 2007-2008.

However, in a Wall Street Journal interview in 2018, Ranieri expressed regret over how his creation of packaging mortgages into securities impacted Americans losing their homes during the subprime lending crisis during the Great Recession.