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Brighton whizzkid: "I helped cause the credit crunch" (From The Argus)
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Brighton whizzkid: "I helped cause the credit crunch"
11:10am Tuesday 7th August 2012 in News By John Keenan
Jeremy Mabbitt
A Brighton computer whizzkid’s software helped spark the global credit crunch.
Software invented by Jeremy Mabbitt in his Brighton back room helped banks to create the complicated financial instruments that brought the economic system to the edge of self-destruction.
Lehman Brothers collapsed in 2008, sending shockwaves around the world as stocks plunged and investors panicked.
Governments were forced into taxpayer bailouts of the banking system – notably Royal Bank of Scotland, HBOS and Lloyds TSB – as it was widely believed that some institutions could be too big to fail.
Lehman had racked up losses of billions of dollars in the US mortgage market, after being caught out by complicated financial packages called collaterised debt obligations (CDOs) .
In an interview with The Argus, Mr Mabbitt revealed how his company had enabled Lehman and other banks to structure the massive deals.
His Galapagos product was the only software used by giant firms such as JP Morgan and Lehman Brothers to select the CDOs which triggered the financial crisis.
In August 2008 Mr Mabbitt signed a deal with Lehman Brothers to licence the software.
He said: “We must have been one of the last companies paid by Lehman Brothers.
“We usually worked with financial institutions on a fixed fee basis which meant contacts worth seven figures in dollars.
Spectacular
“The relationship with Lehman’s was based on a success fee, so we stood to make many millions of dollars. But the month after we signed the contract Lehman went bust.”
The former University of Sussex graduate and self-confessed geek said he blamed the fund managers, insurance companies and banks for the depth of the crisis.
He said: “I did not make a spectacular amount of money but the software had helped a lot of other people to make a lot of money.
“Galapagos was set up in 2003 and was a major success. I started it from my base in Brighton and by the time I sold it in 2009 we were employing 60 people around the world, with offices in New York and Canary Wharf. I would have made money if the market had continued to boom. We had no reason to think it wouldn’t.
“We were techies. The money men were not expecting the market to go bust, so why should we? It was going great guns.”
He has now launched a smaller computer firm, employing five people in Old Steine, Brighton, called Vidivici, from the Latin meaning “I saw, I conquered”.
The firm is developing packages that allow individuals to weigh up investment opportunities for themselves.
But he added: “It is certainly not my intention to cause a second financial crisis.”
Comments(21)
Duckorange
says...
11:27am Tue 7 Aug 12
Crystal Ball
says...
11:35am Tue 7 Aug 12
The Heretic
says...
11:35am Tue 7 Aug 12
"I've gone off the idea of progress, it's overrated": Arthur Dent H2G2
Actions have consequences, as Mr Mabbitt now appears aware. He's not alone in Tekkie-World in failing to consider just how innovations will get applied in the real world. I've seen it myself first hand.
Still, as long as there's love in the universe...and tea... there's always hope. Let's hope his new software is applied to rather more uncatastropihc effect on the sum total of human happiness than his previous offering !!
Reg's Dad
says...
12:13pm Tue 7 Aug 12
Duckorange wrote:I'm free, I'll bring my pitchfork. ERm, the Argus is really struggling , folks, so please send in you funny pets and children photos. And you anecdotes about famous people someone you knew met
Now, there's no point all of us meeting up at, say, 5pm at the seafront with flaming torches and rakes to sort this out for once and for all. No point at all.
s&k
says...
12:17pm Tue 7 Aug 12
Flippin Burghers
says...
12:42pm Tue 7 Aug 12
inmegarden
says...
12:48pm Tue 7 Aug 12
s&k wrote:Brevis ipsa vita est sed malis fit longior
dolium volvitur
mimseycal
says...
12:58pm Tue 7 Aug 12
inmegarden wrote:Dare pondus idonea fumo
s&k wrote:Brevis ipsa vita est sed malis fit longior
dolium volvitur
RogerWQ
says...
1:03pm Tue 7 Aug 12
and wind up like Lehman's?
Goldenwight
says...
1:07pm Tue 7 Aug 12
1. Why was the man interviewed by the Argus- he doesn't appear to have done anything?
2. Why is this considered news, even if you accept that there may be a tenuous link?
Since I occassionally travel by motor transport which uses oil does it follow that the Argus will write a half page story on me as one of the progenitors of the Gulf War? I was also given morphine once, so am I responsible for the continuing civil unrest in Afghanistan?
Nothing but a disguised advertising feature. And if this guy really did the damage he claims, would YOU want to use his new company?
GordonBennett_III
says...
1:47pm Tue 7 Aug 12
Goldenwight wrote:1. It appears this is taken from a Financial Times article published on Friday - http://www.ft.com/cm
And there was me thinking that this whole recession was the result of irresponsible lending to irresponsible borrowers by irresponsible financial institutions.
1. Why was the man interviewed by the Argus- he doesn't appear to have done anything?
2. Why is this considered news, even if you accept that there may be a tenuous link?
Since I occassionally travel by motor transport which uses oil does it follow that the Argus will write a half page story on me as one of the progenitors of the Gulf War? I was also given morphine once, so am I responsible for the continuing civil unrest in Afghanistan?
Nothing but a disguised advertising feature. And if this guy really did the damage he claims, would YOU want to use his new company?
s/s/2/eda831a4-db70-
11e1-be74-00144feab4
9a.html#axzz22Z5SPsA
w
2. Brighton has a reputable digital scene, probably the biggest outside of London, I suppose this is positive news for Brighton and it's upcoming Digital Festival.
Fight Back
says...
2:19pm Tue 7 Aug 12
MD - "How should we get some free publicity for the business ?"
Marketing Bod - "How about a press release telling people about your weak link to the downfall of an international bank ?"
MD - "Fantastic ! Get it made up and send it to the Argus - they'll print any old tosh."
Roundbill
says...
3:01pm Tue 7 Aug 12
Helena Handcart
says...
4:14pm Tue 7 Aug 12
s&k wrote:Si hoc legere scis, nimium eruditionis habes.
dolium volvitur
Andre Spooner
says...
4:42pm Tue 7 Aug 12
getThisCoalitionOut
says...
5:08pm Tue 7 Aug 12
boblat
says...
5:13pm Tue 7 Aug 12
Rothschilds the next stop??
markUs69
says...
5:56pm Tue 7 Aug 12
anonymous coward
says...
10:01am Wed 8 Aug 12
@The Heretic: Should be "Now I am become death". Shiva isn't associated with death. Oppenheimer was quoting Gita.
The Heretic
says...
12:34pm Sat 11 Aug 12
anonymous coward wrote:Having re-checked the quote, I stand corrected, but would point out that Oppenheimer was quoting from the text of the Bhagavad Gita. I evidently misplaced my towel on this occasion!!
I helped cause the credit crunch too: I signed up for a mortgage I knew I couldn't afford. Hasn't stopped me blaming it all on the "bankers" though. Ha!Ha!
@The Heretic: Should be "Now I am become death". Shiva isn't associated with death. Oppenheimer was quoting Gita.
Archie Bun says...
11:24am Tue 7 Aug 12