Michael Osinski | |
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Born | 1954 |
Occupation |
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Years active | 1980s–1990s |
Michael Osinski (born 1954) is a former Wall Street computer programmer who developed a software that played a role in the subprime mortgage-fueled crisis from 2007 to 2009.[1] The software allowed the bundling of home mortgages into bonds, which precipitated the subprime loans collapse that sparked the global economic meltdown.[2]
Osinski was born in 1954 and grew up in Mobile, Alabama.[3] Prior to his work on Wall Street, Osinski was first involved in data entry.[4] He became a lead programmer for a telecommunications company in the early 1980s and oversaw a team that wrote a system for tracking daily sales.[5] However, he lost his job once the software became stable.
During the 1990s, Osinski worked for Lehman Brothers as a computer strategist.[6] He helped develop BondTalk, which is a language capable of modeling collateralized mortgage obligations.[5]
The 2008 global financial crisis was caused by the crash in bonds associated with U.S. home loans,[7] which were bundled with other loans and packaged as safe investments.[8] This is referred to as mortgage securitization and was first introduced in 1983.[6] For the first time, however, a software was developed by Osinski—together with his wife Isabel[1]—that streamlined the process through the creation of an intricate network of bonds that are based on homeowners' payments.[6] This new system, a product of 13 years of development, spread on Wall Street and allowed the exploitation of the market and consumers.[6] First, the software became one of the tools used by banks and traders to obtain short-term gain but, later, these were used as "dangerous, volatile, mispriced financial weapons."[9] There was a significant increase in available mortgage credit due to subprime lending but problems (e.g. increased risk of foreclosure) emerged due to relaxed credit standards.[10]
At 45, when his software was sold, Osinski retired[11] and set up the Widow's Hole Oyster Farm.[12] He and his wife bought a Long Island waterfront property in 1999, which they used to cultivate oysters.[13] The Osinskis also actively campaign against the importation of oysters from Europe, citing its risk to the American shellfish industry.[14]