Acceptance Speech for H. Russell Fraser

A synopsis of remarks by H. Russell Fraser, a Founding and Life Member Upon His Induction Into FIASI's Hall of Fame on November 12, 1998

In accepting the Hall of Fame award, H. Russell Fraser, CEO of American Capital Access, said the financial guaranty industry is very exciting and that the party is just beginning. Wearing a ranger’s outfit more suitable for the canyons of Wyoming than Wall Street, Russ Fraser accepted his induction into FIASI’s Hall of Fame in an amiable manner. Looking back on his life in fixed income, Russ Fraser remembers the people, the money, the fun, and the challenge. He credits his wife, Patsy, with helping his success.

In his early days at Philadelphia Life, he wore colored shirts so he did not last very long there. At his next job with Standard and Poor’s, he met Dick Wilson, the "Saralee of Fixed Income" in that "nobody doesn’t like Dick Wilson." He met other talented people, who soon left; this made an easy road to promotion for him. At S&P, he realized the importance of ratings: In 1970, Penn Central Holding Company had a bond issue that was rated BB. This dried up the liquidity for Penn Central and culminated in the bankruptcy of the firm.

His biggest surprise in working in the fixed income industry was in the structured market. The highest rating enhancement American Capital Access gives is an A rating. Prior to ACA, the only type of credit enhancement a firm could buy was a AAA rating. Firms that came to ACA were therefore considered the "cream of the crap." The idea of offering less than impeccable ratings has caught on and now at least six new financial guarantee companies offer the lower ratings.

This is just one example of how the market is full of surprises. Mr. Fraser suggests people in the industry should make money, have fun, and appreciate the market’s surprises.