The Alchemist Who Turned Toxic Assets Into Gold at Citigroup

The Alchemist Who Turned Toxic Assets Into Gold at Citigroup

Mark Tsesarsky, who fled the Soviet Union with $90, has made the bank billions by doubling down on the same subprime mortgage bonds that nearly sank the global financial system.

The memo landed on a Sunday in November. It was 2007, and securities backed by subprime mortgages were roiling markets and imperiling banks. Merrill Lynch Chief Executive Officer Stan O’Neal had just resigned under pressure, and Citigroup CEO Chuck Prince was rumored to be on his way out.

So the Nov. 4 memo to employees in Citigroup’s markets division seems bold in hindsight. While other banks were looking to unload the toxic securities and Citigroup was taking an $11 billion writedown on its holdings, then-trading chief Jamie Forese and fixed-income head Paco Ybarra had other plans. They announced they’d turn the bank’s souring mortgage debt over to a new team and chart a course for the future. It was, they said, a “great opportunity.”

The man they would soon ask to oversee that strategy was Mark Tsesarsky, a refugee from Ukraine with intense blue eyes and a cool demeanor. At the time, T-Man, as he was known around the bank, was head of special situations for securitizations, which meant he made bets on Citigroup’s behalf with bonds backed by mortgages and other assets. Now his bosses were asking him to help limit losses on someone else’s portfolio of collateralized debt obligations—instruments with names such as Bonifacius and Jupiter that were threatening to destroy the bank—and find a way to profit from the turmoil.

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