From Bear Stearns To Fintech: How A Former MBS Trader Is Using Data To Help Prevent The Next Great Recession

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In this episode of the Fintech Focus podcast, we chat with Perry Rahbar, a Bear Stearns alum who traded mortgage-backed securities in the run-up to to the financial crisis. After having a front row seat to the market collapse, Rahbar wanted to build an information infrastructure between lenders and participants that wasn’t present at the time and make sure the same mistakes won’t happen twice.

That’s why he created dv01, a company that offers securitization reporting options on more than 45 online lending deals. Since its inception, dv01 has collected data for 4.2 million online loans, leading to $57 billion of origination.

Listen to the podcast below to learn more about why Rahbar wants to focus on bringing data to market participants so they have the right information when they need it.

Interview Highlights

People may still be confused a bit about capital markets and lending data, so can you explain exactly what DVO1 does?
What we do is we're a true end-to-end solution for anyone in the capital markets on the lending side. So meaning, we capture all the data from originators and services. We provide a whole reporting and analytics suite on top of it. And it's a fully integrated solution.

I talk about with consumer focused, B2C fintech companies, and I'm always curious if the average consumer would be just surprised in a bad way, about the level of sophistication of technology behind some core services that we take for granted. And you're saying that Wall Street's the same way?
Yeah. It is. And I think one of the, and I've thought about this a lot, one of the probably important cultural factors going on at the same time as we've been building dv01 is that all of our clients, and people, the tools that they have at work versus the experience that they have on their phone. There's such a gap in between those two. Right?

Seamless interfaces, seamless interface experiences, really efficient technology, quick answers, that describes your personal life. Then you go to work, and you're on a really outdated version of Windows and Excel and everything crashes and you're still using the same tools that you've used for the past 15 years.

I think it becomes really noticeable at a certain point as that gap continues to widen. Our personal life continues to get better, and better, and better and nothing's changed professionally. And so I think that's kind of like an opening for companies like us where it's like, “Hey, we should give this a chance, because this is ridiculous. Right?” Makes people open to wanting something better.

What were some major issues that brought forth the recession and what did you want to fix?
I think there were a lot of things that contributed to the crisis, but I do think the one thing that made everything a lot more difficult was that just the information wasn’t as easily accessible. So, in absence of that kind of information and that transparency people just tend to put the lowest bid possible forward and it kind of creates this negative vortex from a pricing standpoint. 

It’s really crazy when you think about it, but I learned a lot from it, that’s for sure, and I’m definitely happy if nothing like that ever happens again. So, the idea with dv01 was to really build a brand new infrastructure for the capital markets from the ground up not beholden to any legacy processes and also in this new space as kind of our beachhead.

This is where there was no infrastructure, it didn’t really plug into the way investors did things, and these investors who are really sophisticated from a mortgage credit or consumer credit standpoint weren’t really sophisticated from a technology standpoint and it was the perfect blank canvas to work on. But the vision was really always start here and spread beyond the online lenders into the broader capital markets and other asset classes like mortgages and so forth.

Read the full transcript here.