In article ,
"John R. Carroll" wrote:

Then came Salomon Brothers Inc. and a short, fat little Italian who was
dying to get out of the back room. IIRC we are up to 1984.
His idea, and what he did, was to take bundles of mortgages that S&L's were
desperate to unload and package them for sale as bonds. Salomon Brothers
would generate a fee, the S&L's would reap their tax benefit in huge chunks
and money would then flow back into the new mortgage market. He and a small
team hit the road to promote their new product and after nearly running out
of gas, they sold the first $25 million of bands to Bank of America. Half
way through the champagne and caviar one of the lawyers piped in that what
had been done might not be legal. He was right. Laws had been written to
protect the baking industry and these sorts of securities couldn't be sold
to federally insured institutions without having first been "franked" by
either Freddie Mac or Fannie Mae. Fannie was the lighted touch due to
competitive reasons - they were the junior GSE at the time and were
suffering a big case of penis envy.

The book "Liar's Poker" is an excellent and entertaining study of these
events. The author, Michael Lewis, had a first-hand view, as he worked
at Salomon Brothers.

--
Jedd Haas - Artist - New Orleans, LA
http://www.gallerytungsten.com