What would “Fabulous Fab” say? The makers of the mortgage derivatives that helped to cost Fabrice Tourre his career and Goldman Sachs $550 million are launching a hedge fund, reports Forbes.
And if you really like irony, you’ll enjoy this. The hedge fund is trading securities that banks can’t handle anymore — the result of the Frank Dodd reforms coming from the financial upheaval of 2008-09. It’s the crisis that just keeps giving and giving.
Jonathan Egol and Rob Allard have set up Firebreak Capital to become the newest member of the shadow banking system replacing traditional bank functions. The firm will invest in securities in the U.S. and Europe.
“There now exists a lending market that is, and will continue to be, underserved by the traditional banking system, emerging as a widely recognized trend across a variety of assets that require finance particularly in the more complex, structured solution based financing that will be Firebreak’s specialty,” the fund said in a Tuesday press release. It aims be an “alternative balance sheet” in the illiquid lending and investments, in addition to direct lending, “providing private credit, asset-backed and structured finance solutions,” to those markets.
Egol previously worked as head of collateralized debt obligation at Goldman Sachs where he over saw Tourre, later convicted of fraud in connection with a deal known as Abacus 2007-AC1.
Allard worked as head of a structured product sales desk at Goldman’s vaunted fixed income commodity and currency trading arm.
Former CFO of Prosiris Capital, Jerry Chang, will be joining Firebreak in a similar role.
Photo: iStockPhoto.com.