Rick Bookstaber on the Risk of a Leverage Liquidity Cascade

Rick Bookstaber has held chief risk officer roles at Morgan Stanley, Salomon Brothers, Bridgewater, and the University of California Regents pension fund. He served at the U.S. Treasury in the aftermath of the 2008 crisis. He is the author of two books, The End of Theory, and A Demon of Our Own Design. He is the founder and head of risk at Fabric RQ, a new firm.

I interviewed Rick on July 26, 2021. To listen to this interview as a podcast, click here.

Let's start off with your storied career in risk management. You've worked at big investment banks, the biggest hedge funds like Bridgewater and Moore Capital, the University of California pension and endowment, and even a stint at the Treasury after the financial crisis, where you looked at big systemic issues and helped write the Volcker Rule. Now you're turning your attention to advisors. Tell me a bit about what you're doing with Fabric RQ and why.

I've been on the sell side and the buy side. I've been at banks and broker dealers. I've been with hedge funds. When I was in Treasury, the thing that I realized is that ultimately the people that matter in investing are the individuals. The focus for risk management, first and foremost, should be for individuals, or for their agents, whether that's a pension fund that's managing their money or an advisor. Risk management has not focused on the fact that this group has been underserved.

As I finished up at Treasury, I wanted to move more into what I call the “asset-owner space.” That's where I ended up first at University of California, working with Jagdeep Bachher. With Fabric RQ, it's taking the same view of providing institutional level of risk management for individuals and doing it through the wealth management community.