Andrew Luan made an enviable living off the subprime mortgage bubble. The bonds he traded were collateralized debt obligations, the toxic mortgage derivatives that blew up the nation’s financial institutions in the fall of 2008. Luan was a vice president at Deutsche Bank, which, like Goldman Sachs, was on the right side of the game and profited off of many others’ misfortune.
But after the dust settled, demand for mortgage derivatives plummeted. Even the more conservative banks that had shied away from CDOs had to slash their staffs. In April 2009, Luan — an MIT-trained engineer with an MBA and two young children — found himself out of a job.
“It was a very stressful time,” says Luan.
From Derivatives Trader to Tour Guide
What do you do when you’re out of a job and have dim prospects for finding employment? You become a tour guide, of course. For Luan, it was an extension of his Wall Street savvy and the financial crisis he helped create.
“I had been giving informal tours to friends when I was still at Deutsche Bank because I worked and lived down here. When friends from other countries visited me, it was just natural for me to show them around, tell them what I do, what it’s like on the trading floor,” he says.
“As the financial crisis unfolded, Bear [Stearns] got in trouble, Lehman got in trouble, AIG got in trouble, and there were more things to tell,” said Luan. “Slowly the word spread. Friends invited their friends. Which led me to think, ‘Aha, this could be a good thing to do.’”
A year and a half later, Luan’s financial crisis walking tour is popular enough that he’s had to hire three tour guides. Like him, they’re Wall Streeters. Two hail from Goldman Sachs and one is a lawyer who used to represent Citigroup and JP Morgan. And while Luan’s income is nowhere near what it once was, he’s trying to make a go of it. Next stop: Broadway, where he plans to launch his next insider tour.
Cashing in on Wall Street’s Debacle
Luan’s version of a Wall Street tour is for the intellectually curious. Many arrive already having read Michael Lewis’ or Andrew Ross Sorkin’s latest books on the debacle. Skip the New York Stock Exchange. Instead, you spend a long time in front of the stunning Art Deco AIG skyscraper, learning about credit default swaps and credit ratings. Foreign tourists make up half his customers. They want to see with their own eyes the places that shook the foundation of the global banking system. But American universities and banks are also paying the $50 ticket price for their students and recruits to take Luan’s two-hour tour. He’s even had a tango champion in his group.
For Luan, marching through the milestones of financial madness isn’t about atonement. “I do get people asking me, ‘Do you feel guilty?’” he says. His unequivocal answer: no. Luan says he didn’t create the toxic mortgage derivatives. His role was to make the secondary market in them. “Once investors had bought these things, if they wanted to sell them off to someone, we would buy them, hold onto them ourselves and then sell them to someone else,” he says.
Luan says his firm warned clients that Deutsche Bank was betting against the mortgages and advised investors to do the same. “It was like winning a poker tournament on the Titanic,” says Luan. “We did really well. But the whole economy around us collapsed. So it’s useless.”
Who’s to blame? Luan believes it was government regulators who failed us. The problem, he says, is that regulators are human, too, and get swept up in bubbles. His conclusion is that 2008 will happen all over again. Says Luan: “Financial crises happen. It’s human nature.”