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Vidivici CEO Jeremy Mabbitt on the impact on the financial crisis of how banks used the Galapagos software he invented.
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Affected in some way shape -- form.
After the financial crisis strangled to this very day just about all the financial crisis you're dealing with can be traced back to the credit bubble popping in 2008.
So last week I was flying back from London Olympics I'm reading the Financial Times on the planet come across this headline.
I helped cause the credit crunch.
After myself personal who would admit that but right.
-- -- -- admit that when I saw you are really wanted to hear from the sky and get a on the air so joining us now from London at a Fox Business exclusive.
He's the guilty party himself.
Not certainly for all of that the Jeremy map that is the inventor of something called Galapagos software and the founder and CEO of the new company called VD VH -- Welcome Jeremy let me begin by explaining.
First to our viewers that Galapagos software which you invented in your apartment back in 2003 in -- was used by major global financial institutions to do what exactly.
But how highly isn't personal thanks very much and -- on the show.
What glad because -- -- today.
Was the structure.
Synthetic CD days muses that it's -- and they -- it wasn't particularly.
And in fact -- became a -- over the course of through for you is as a result yes it's not just on me but also a team of fifty or sixty stuff that I.
-- it.
It became the standard platform for building these.
And complex derivative and products.
And -- JPMorgan Citi Deutsche bank and that I believe one -- your last contracts was Lehman Brothers in 2008 correct.
If it wasn't data.
Yeah out what we had thanks.
Amazing client list it was beloved by one point eight of the top ten global investment banks and world.
We using -- to get us -- what's -- structured these.
These synthetic -- products -- what what do synthetic CD.
Gazing at an affinity for the united.
Is that you can think it is that as a very complicated kind of up for failure really offensive -- for -- say -- portfolio.
In this case.
-- corporate bonds.
But superimposed on top of that is is -- -- structure.
Which is what enables these products obtained.
Racing -- rates of production they rated double a -- and -- -- -- and and what what Galapagos did.
Was.
Would -- the requirements for a deal so that would be give me AAA rated.
Thailand CA for example got a list of other requirements of shopping list of requirements which invest in my specified.
And then it would automatically generate -- CIA to fit those requirements and and generate sensors to give maximum yield.
-- the investor will say this is something which the bank subsidy loved.
And we sold on the basis of about head to head comparison say this this Galapagos -- we've built using.
-- -- technologies artificial intelligent type technologies which we've pioneer.
We could head to head -- -- banks Payne.
And party paid.
Specialist structuring stuff and and and their own tools.
And we did -- kind of double blind.
Comparison with the -- there's been okay.
What we've cooperated with.
Let me jump in here because -- really interested to know Jeremy when you started to notice that things were starting to go a little haywire and that there was a ghost in the machine or at least.
It was being misused.
What I'm in actually of these senior products can't kind of bad press spreads someone and a perfectly fine I mean there's nothing inherently wrong.
In my belief.
-- -- -- is as a product and many of the investors continue to buy and hold investors in these products for the bank by corporates I've gone to perform.
I -- actually.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- And then belief on the part of investors -- how -- is until guess.
So what you're saying Jeremy what you're saying it is that it isn't really the gun that caused the problem it was the bankers wielding -- correct so then your -- your software for all intents and purposes was the got right.
What I I think that's a great way to put it -- and of course because I have to really.
But some I know I think one could blame.
Some of the investors.
In these products he didn't see that diligence properly perhaps I think one to blame the rating agencies -- -- -- analyzing improperly.
I want to send you blame regulations for I think -- the ratings of the centers.
Regulated energy and what -- I don't think it sets a lot of.
-- what your new software that -- coming out with.
Talk about what that plans to do what how it's different because -- with and we don't let me hear a blowing anything up -- more -- That city -- I'm signing on they got to get sick I mean what we're doing what is a bit of its human news new company.
Is we're trying to what are effectively.
-- turn the tables might -- -- decision of the trying to get more power to individual investors to manage their investments rather than relying on Wall Street the big financial institutions.
It's easier for them and we using the same kind of AI time techniques that we -- -- -- Galapagos country effects.
But rules having something fundamental news and what really I believe doesn't look as if you take.
Professional.
Finance.
In this management -- -- and -- on mine and give them -- Ordinary investor that -- in the -- -- have -- training tool in their front slender engineering or anything like that.
-- that that just doesn't work I think what fund commitment to you need to gave.
Individual investors.
Parents and in this contrast with the CB -- market which is fundamentally.
And opaque market for what's needed for individual investors is transparency.
And that is uniquely won't did eventually.
Has to wolf.
Individual investors say it's not good enough units due to give them the of the professional schools houses and you can say that that that powered by.
You know mathematical algorithms developed by Nobel laureates will always -- things.
But but that's not good enough -- -- -- -- you know what I mean by transparency.
Is the enabling investment committee on stand.
Why.
And they give incentive.
Investments which that trade is good for the a patent and the way we do you that would really bitchy.
It is by allowing.
On uses to expressed -- views -- that happened during views on stocks and shares and on the market in general.
Scott and that we paid -- investments -- you know w.'s.
Jeremy I appreciate you coming on how we thought was very interesting story and we wanted to get you want you don't seem to the guilty guilty and they look again.
You just created it if other people misused it that's the story good to see you and we'll keep an -- -- media -- thank you Jeremy -- it CEO and founder of DV VG an investor of course an inventor rather of -- -- -- --
