Laurie Goodman has had a front-row seat to more housing history than the average Stanford University economics Ph.D. With the ghosts of the mortgage meltdown ever by her side, Goodman is, as the saying goes, "using her power for good" as the co-director of the Housing Finance Policy Center at the Urban Institute, a nonpartisan think tank in Washington, D.C.
The entity was created to study, without prejudice, the state of the nation's mortgage and housing finance sector and to create an unbiased database, replete with a range of informed analysis, to guide all sides of the mortgage and housing debate.
For Goodman, as for many currently engaged in the national conversation about housing finance policy, the tightness of credit and a shortage of housing supply are pressing concerns. This, along with the ongoing debate about the ultimate fate of Fannie Mae and Freddie Mac, are the soundtrack to the improvisational theater of post-meltdown America.
Wall Street years
Goodman's early career toggled between trading and research, although for most of her almost 30 years on Wall Street, her forte was research. Over the course of her career, she directly researched mortgage-backed securities (MBS), and directly managed and supervised research across all securities asset classes.
"When you're on Wall Street, traders are at the top of the heap and research people are much more down the food chain," recalls Goodman, "and I always wanted to be a trader because you were at the top of the food chain. But what I figured out is that a mediocre trader makes less and is less revered than a very good research person. I was only going to be a mediocre trader, but I'm a very good research person."
What Goodman will tell you about the world of MBS trading and research in the go-go years leading up to the meltdown matches everything you've ever heard, except she lived it.
No less a figure than the man considered the father of the mortgagebacked security, Lewis Ranieri, chairman and founding partner of Ranieri Partners LLC, Uniondale, New York, holds Goodman in the highest regard.
"Laurie has always been extraordinary, even when she was on Wall Street," says Ranieri. "She may have felt pressure but I doubt she ever gave into it."
Goodman's professional story begins in New York City in the late 1970s. Armed with a Bachelor of Arts in mathematics from the University of Pennsylvania and her Stanford doctorate, she taught for a year at New York University.
Seeking a more active application of her knowledge, Goodman moved on to the New York Federal Reserve Bank as senior economist for four years before joining Citibank in New York as vice president of fixed-income research.
From 1987 to 1989, Goodman moved on to Goldman Sachs, New York, working in futures and options analysis.
A move into the world of mortgages was Goodman's next stop, where she engaged in trading and portfolio management, with a focus on mortgages, at Eastbridge Capital Partners, New York. She returned to research at Merrill Lynch, New York, in 1992, and then joined PaineWebber in New York in 1993, staying until 2008, where she led its securitized products research group.
"I kept my seat during the Kidder-PaineWebber merger," she recalls. "During the UBS merger, I just got new business cards, and eventually I and a co-head sort of took over the entire research group, but I kept the securitized research project that I was always so fond of."
Wall Street research analysts like Goodman were at the command and control center for what ultimately became the Great Recession.
"We saw the bubble emerging very, very clearly--it was just hard to tell when it was going to pop," says Goodman, who recalls that research analysts raising the alarm on the state of the markets were not welcome messengers.
"Every week for about a year, from mid-2006 to mid-2007, I would go negotiate with my boss and the head of the non-agency trading desk as to what percentage of what I wrote we would be able to publish," Goodman recounts. "And we ended up not publishing it all. A lot of times, we cut it in half."
"Obviously, the business area can fire you at any time. You want to keep your job," says Goodman. "At the same time, you want to be as objective as you can for your customers."
Ranieri says the huge sums of money being made from mortgage-backed securities at the time warped the system.
He says he has never read Michael Lewis' book, The Big Short, nor seen the award-winning movie by the same title. In the film, the storyteller, "Jared Vennett," played by Ryan Gosling, is loosely based on then-Deutsche...