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]

Early life and career

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]

Financial crisis

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]

Retirement and farming

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]

References