What do I know about mortgages, cheap money and subprime crisis?

In 2000 I graduated from NYU with a Masters in Mathematics in Finance. I was eager to go to Wall Street and make money. I cared less about mathematics and more about real life.

At NYU we were given plenty of formulas. Our everyday language included: derivatives… random walk… stochastic processes… Monte Carlo simulation… Black-Scholes model… I was intrigued, but skeptical. “How can I make money with it?” – was my signature question those days.

After a graduation, I interviewed for multiple positions, but leaned toward returning to Credit Swiss First Boston where I had summer Internship.  During the ten weeks rotation program within Fixed Income, I got attracted to Credit Derivatives and Mortgages.

Back in 2000, Credit Derivatives were a relatively new market with lucrative opportunities, while mortgages were as old as my husband’s grandparents could remember, yet had a fresh start in a developing area of CMO (collateralized mortgage obligations), IO (interest only) and PO (principal only) structured products.

Both of my picks tightly connect to the current Subprime defaults and Mortgage crisis. Ironically, I actually went to work as a Trader of Weather derivatives – another exotic product – at Williams Company, that was later struck by an “after Enron” liquidity crisis and barely escaped bankruptcy by borrowing from Warren Buffett at 30% annual rate. Now, I run my own Luxury Real Estate business, which in a wild twist is also related to the mortgages – the lifeblood of many real estate transactions.