Mr. Bubble Bounces Back: Greg Lippmann Leaves Joke T-Shirts, Daily Sushi and the Glorious Bust Behind Him

Greg Lippmann was sitting in a coffee shop on a recent weekend afternoon, wearing a T-shirt, light yellow plaid shorts

Greg Lippmann was sitting in a coffee shop on a recent weekend afternoon, wearing a T-shirt, light yellow plaid shorts and Spring Court sneakers without socks. “Wall Street’s had a lot of different eras, and people recede from memory,” he said. “People don’t talk anymore about people who were famous in another time. It’s a great thing. I look forward to being anonymous again.” Fred Brettschneider, his partner at the hedge fund he’s about to launch, nodded sympathetically across the table. His sunglasses sat on the bill of a U.S. Open cap with Deutsche Bank’s logo on the back.

Not long ago, the inner workings of Wall Street were out of the public eye and imagination. But in the wake of the financial crisis, bestsellers like Greg Zuckerman’s The Greatest Trade Ever and Michael Lewis’ The Big Short describe how billions have been made and lost so far this century. Not only is Mr. Lippmann a main character in the books, both about the few who foresaw and bet against the housing bubble, but he’s become a key figure in the narrative of the crisis. And he does not like it.

“What happened is that in ’08–” he said, and stopped. Someone was standing over the table. “I’m sorry,” said a pleasant middle-aged woman in cuffed yellow pants, who’d been sitting nearby with her two teenage girls. “What are you being interviewed for?” The two men were silent. They barely looked up. “I just finished reading The Big Short a little while ago; it sounds like a similar topic,” she said. Still, silence. A second person approached, but he was only offering small free samples of a Starbucks drink. “Thank you so much,” the middle-aged woman said politely to the table, and went away.

“I don’t want to be famous,” Mr. Lippmann said, repeating it twice during two interviews. “I just want to go back to living my life.” The problem is that the 41-year-old isn’t renowned simply because of his huge bet against the housing bubble as a trader at Deutsche. He’s known for how he did it.

Doesn’t Mr. Lippmann, in nearly every description of his last years at Deutsche Bank, seem rather dickish? ‘No,’ his partner said, ‘I think “dickish” is the wrong word.’

There was the shirt he passed around, for example, that said “I’m Short Your House!!!”, described by The Times and then widely disseminated on blogs. (It seems to even have inspired an esoteric 24-minute art film with the same name, featuring whispered narration and an actor wearing a prosthetic nose; its producers, described as post-conceptual artists, earned a nice review in Artforum International.) But even more like a Whit Stillman joke was his well-known Sushi Spreadsheet, a meticulous ranking of Japanese restaurants in the city.

“I don’t think I’m a jerk. I’m a nice guy. I don’t wish harm upon anyone,” he said. “I root for the good guy. I’m patriotic. It’s not like I hope to see misery. I don’t wish ill on anyone.”


IN THE GREATEST Trade Ever, Mr. Lippmann is portrayed as a brash misfit who wears his hair long and slicked back, with brown pinstriped suits but poorly tucked shirts. When his bearish mortgage bets began, colleagues rolled their eyes and called him Bubble Boy. And when the bets started paying off, he narrated his gains to them. “The market is tanking!” he once said. “Ha-ha-ha-ha!” His team made $20 million in one day, and again the next. An executive had to tell him to be less obnoxious. “If it wasn’t for me,” he was heard explaining to a potential client, “Deutsche Bank would be UBS.” He was offered a $50 million bonus. “This is not fair. It’s too low!” he told his bosses.

He’s not all that different in The Big Short, except in that book his pointed sideburns are compared to “an 1820s Romantic composer or a 1970s porn star” instead of Elvis Presley. “I would acknowledge it’s based in fact,” he said about that book. “I’m not completely unlike that person,
but he exaggerates my affectations.”

Exaggerated or not, his quirks are almost beside the point. Back in the winter of early 2005, investment banks had a problem. Homeowners weren’t taking out enough subprime mortgages to satisfy the investors who gobbled them up as risky but lucrative mortgage-backed bonds. Over takeout Chinese with men from Goldman, Bear Stearns, Citi and JPMorgan, as the late journalist Mark Pittman wrote, Mr. Lippmann hosted the meeting that solved the problem.

They came up with a standardized credit default swap, which is more gorgeously simple than it sounds. There were only so many subprime securities in the world to invest in, but by buying and selling insurance on them, Wall Street could now bet infinitely. Trading soared. “It wasn’t that it was our idea to standardize it,” he said this week. “It just so happened that the thing happened at Deutsche Bank because we were willing to host and other banks weren’t.”

By the autumn, Mr. Lippmann was betting heavily on a downfall. On the other side were the bulls, finally able to gratify their exuberant hunger for subprime, selling him billions of dollars worth of swaps. “I ultimately don’t feel that I was the problem. I think the problem was the people who bought too much of it, and lost,” he said this week. “I don’t feel guilty. Look, if more people had viewed the world the way I did, the catastrophe would have been smaller. It’s not my fault.”

More importantly, he said, his trade would have worked even if the gargantuan rise of home prices had just slightly leveled off. “I didn’t actually envision the carnage that came,” he said. “I envisioned a mere ripple on the perfect utopia that had existed.” He compared it to sports handicapping: “If you’re betting on a football game, and the spread is flat, it doesn’t matter if your team wins 21-20 or 42-0. You win the same amount of money.”


IF HE’D KNOWN the final score, he wouldn’t have handed out the “Short Your House” shirt. “It’s juvenile. It’s funny in March of ’06 when everybody calls you Chicken Little. It’s not funny now.” But he swore, twice, that he didn’t design it. “It wasn’t my idea–that’s a fact, on my kids’ lives. … I definitely did not, on my kids lives. Somebody gave it to me.”

Still, doesn’t Mr. Lippmann, in nearly every description of his last years at Deutsche Bank, seem rather dickish? “No, I think ‘dickish’ is the wrong word,” Mr. Brettschneider, who speaks in a soft Canadian accent, said.

“Just to finish that,” Mr. Lippmann added. “If you’re a die-hard Yankee fan, and you meet someone who’s a die-hard Red Sox fan, there’s an initial ‘He’s a dick,’ right? Because he likes the Red Sox and I like the Yankees. So the people that were rabidly bullish about this, that had invested their own careers on the opposite of me, it’s natural they’d be like, ‘Well, that guy’s a dick, because he disagrees with me. He’s not a dick for any credible reason. He’s a dick because I don’t like his opinion.'”

If he was as unpleasant as he’s been painted, he said, several coworkers wouldn’t have followed him to his new fund, called Libre Max.

He would not speak about Libre. “What we’re doing isn’t that sophisticated–starting a hedge fund to buy structured products,” he offered. The fund is being rolled out quietly. But there already have been two mentions in The Wall Street Journal, one that said he left to form a hedge fund “aimed at profiting from the mortgage mess.” That story was mostly about the dual role that banks, especially Goldman and Deutsche, played in creating and betting against subprime securities. The attorney at Deutsche who signed off on billions of the deals, it points out, was Robert Khuzami, who left to direct enforcement at the S.E.C.

According to a source who saw one of Libre’s pitches to investors, in a well-attended meeting in Bear Stearns’ old building, now JPMorgan’s, the message from the fund was that there is money to be made: “I am cautious and I can make my way through the jungle and pick securities that are going to do well,” the source paraphrased.

“We’ve been received warmly. Time will tell whether that means that money is coming in or not,” Mr. Lippmann said. “People have been happy to meet us. They’ve said, ‘We’ve enjoyed your presentation, you guys seem like you’ve got a good idea.’ But it’s free to say that.”

The pitches aren’t all perfect. “One of the things I’ve found,” he said, “is in some of these investors meetings, some people want to know what I think is blowing up next,” he said. “I’m like, ‘Look, I’m not here for that.'”

He isn’t dispensing as much Japanese restaurant advice, either. “I still update the spreadsheet, because people ask me to.” But in fact, he’s not eating much sushi anymore. “One, I don’t want to eat bluefin, because it’s a terrible thing,” he said. “And then, separately: mercury.”

Mr. Bubble Bounces Back: Greg Lippmann Leaves Joke T-Shirts, Daily Sushi and the Glorious Bust Behind Him