At Bear Stearns, Tom Marano gained industry fame and amassed a fortune leading the team that pegged billions of dollars of subprime mortgage bonds. The historic implosion of these risky, low-quality bonds ruined Bear Stearns and helped fuel the worst financial crisis since the Great Depression.
However, this has little impact on your career or earning potential. In fact, Marano leveraged his long history of mortgages and relationships in a lucrative second act. The executive restructures and sells troubled mortgage companies affected by the housing crisis.
In his most recent role, completed last month, Marano advised mortgage firm Ditech Holding on the reorganization and sale process. The buyer of most of the assets was a company run by a former Bear Stearns colleague. Prior to that, Marano oversaw a similar judicial recovery process under Chapter 11 for Residential Capital LLC, known as ResCap. Ironically, part of the loans his group securitized at Bear Stearns ended up with ResCap and Ditech.
Marano's career and connections show how, even a decade after the collapse that left millions of people unemployed and evicted from their homes, the same executives who created risky loan-related products continue to benefit from it. Critics fret over injustice, while others say people like Marano are adequate to conduct restructuring processes because of their experience.
"It's like someone who works at a nuclear power plant, causes a disaster and then works cleaning," said Jared Ellias, professor of bankruptcy law at the University of California Hastings. "It may seem a bit morally ambiguous, but it's really just capitalism. People who have specific skills will be hired to use them."
In an e-mail interview, 58-year-old Marano said it was not surprising that he was hired to restructure mortgage companies.
"I have a lot of experience disarming these over-leveraged financial companies," he said.
Marano said the financial crisis was the result of systemic failures, while acknowledging some "slips in industry standards" by packaging mortgages of people with low credit scores.
"Everywhere I've worked, such as Bear Streans, ResCap and Ditech, I've established policies and practices to enforce standards and protect consumers to help them keep their property."
Marano has worked at Bear Stearns for over 25 years, becoming one of the company's key figures in the effort to accelerate the sale of risk-backed securities. With Marano as head of the mortgage bond unit, the bank was selling tens of billions of dollars of these investments each year.
(Original text: Subprime Mortgages Keep Minting Cash for Former Bear Stearns Banker)
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