Howie Hubler

Howard Hubler III
Nationality	United States
Occupation	Trader, consultant
Known for	Trading losses

Howard Hubler III, known as Howie Hubler, is an American former Morgan Stanley bond trader who is best known for his role in the single largest trading loss in history. He made a successful short trade in risky subprime mortgages in the U.S., but to fund his trade he sold insurance on AAA-rated mortgages that market analysts considered less risky, but also turned out to be worthless, resulting in a massive net loss on his trades. His actions directly resulted in the loss of roughly US$9 billion during the 2007–08 financial crisis.

Howie Hubler was born and raised in Boonton New Jersey, United States. He was the son of a real estate broker. Hubler attended college at Montclair State College, where he played American football.

Coming on board with Morgan Stanley sometime in the late 1990s, Hubler worked in Morgan Stanley's Fixed Income division as a bond trader. Among his peers, he had a reputation as a hothead and a bully who responded to critiques with strong anger. In 2003, Morgan Stanley created a proprietary credit default swap (CDS) for the purpose of shorting bad subprime mortgage bonds. When a group was being formed in 2003 to short subprime mortgages, Hubler co-opted management of the group and was placed in charge of the team. After being met with early successes shorting subprime mortgage bonds as well as doing well selling bonds, Hubler was promoted to run the newly created Global Proprietary Credit Group (GPCG) in 2006.

The GPCG had positioned itself within Morgan Stanley as a group that would provide highly profitable deals very quickly. Because of the nature of the credit default swaps, however, the GPCG was required to post premiums to their counter-parties until such a time in which the bonds were considered to be in default. Because the group was paying out a large amount of money to keep the CDS trades in place, their profitability was quite low. To finance their operations, Hubler instructed his traders to sell credit default swaps on $16 billion in AAA-rated collateralized debt obligations (CDOs). Hubler and the GPCG bought $2 billion in credit default swaps on extremely risky mortgages, and sold $16 billion in what they believed were safe CDOs. Because of the opaque nature of the CDOs on which they were selling credit default swaps, Hubler and his group did not realize that the CDOs they were insuring contained similarly risky subprime mortgages to the bonds they were shorting. Because of this, Hubler repeatedly assured his company officers and risk management teams that their position was very secure.

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