Quants worth following: William Mann, Founder and CEO of HarmoniQ Insights

"Quants worth following" is our interview series highlighting thought leaders in the quantitative trading industry who actively share their knowledge and resources with the community.

William Mann, founder and CEO of HarmoniQ Insights, brings nearly 30 years of experience across quant, strategy, and risk, from sitting inside AIG during the 2008 financial crisis to leading roles at Bloomberg, AQR, and Two Sigma. As a rare CFA and CPA charterholder, Bill has built a career at the intersection of markets, data, and real-world decision-making.

We sat down with Bill to unpack the real cause of AIG’s unraveling, the overlooked difference between credit and liquidity risk, and why the next crisis might come from leverage-on-leverage products that feel safe—until they aren’t.

“I can actually tell you the exact moment. I was sitting next to my boss on the trading floor. He turned to me and said, 'There’s a collateral call on the super senior.' We just stared at each other.”

At AIG Financial Products (AIG FP), Bill worked on a team that wrote credit default swaps (CDS) on “super senior” tranches of collateralized debt obligations (CDOs)—positions so far up the capital stack that over 95% of the underlying assets would have to default before any losses were realized.

“There was never, in any model, any expectation that you’d suffer a loss. They were designed for regulatory arbitrage.”

These trades were considered safe, essentially risk-free from a credit perspective. But that assumption didn’t account for mark-to-market risk.

“We’d been arguing with accountants for years about whether we should mark these to market. The models said they were safe. But when counterparties started marking them down and calling for cash, everything changed.”

Though no credit events had occurred, AIG’s contracts required collateral to be posted against unrealized losses. As markets seized up, counterparties exercised those rights.

By 2008, AIG had posted $33 billion in collateral. The CDS exposures were still rated investment grade, but the liquidity wasn’t. The risk wasn’t credit. It was confidence.

“Most people conflated the two. But liquidity is about confidence—and once that’s gone, it’s game over.”

Bill emphasized a key distinction that even experienced professionals overlook:

Credit risk refers to the likelihood that a borrower will default on their obligations. Liquidity risk, on the other hand, is the inability to meet cash demands when they arise—typically because counterparties stop rolling funding or demand collateral, even if the underlying exposures haven’t defaulted. This problem is exacerbated when your counterparties are market makers who must post collateral to clients with the opposite exposure.

The winners featured in The Big Short found counterparties for toxic mortgages through “synthetic CDOs”. The easy profits from seemingly riskless trades were too attractive to resist, blinding many to the fact that these leveraged vehicles weren’t just about offloading regulatory capital risk—they were designed to deliver massive payoffs in a tail-risk scenario.

“It’s It’s a Wonderful Life on repeat. Banks lend out more than they keep on hand. If everyone wants their money back at once, even solvent firms go down.”

That’s what happened in 2008. The mark-to-market provisions in AIG’s CDS contracts were well understood, but the firm never expected to be called on them en masse. And it wasn’t just counterparty risk. Internally, AIG was also running a repo book—borrowing against bonds, buying more bonds, and compounding its own exposure to rapidly deteriorating assets.

As markets seized and collateral demands accelerated, the liquidity vanished.

“The whole financial system was effectively insolvent. And no one expected that—from a firm with a AAA rating.”

“The government stepped in. Ripped up the contracts. Took the bonds off bank balance sheets and moved them into a trust.”

To stop AIG’s collapse from triggering a broader crisis, the Feds created Maiden Lane III—a special-purpose vehicle that absorbed the synthetic CDOs behind the firm’s collateral calls. This allowed the CDS contracts to be canceled, providing banks with immediate liquidity.

“It was a backdoor bailout, yes—but it also prevented total collapse. It was strangely elegant, in retrospect.”

Bill cautions that while it looked like a bailout, that framing is an oversimplification. The intervention sidestepped a full-scale unwind and bought time when no one could fully explain the risk exposure across the system.

The government took control of AIG. The banks offloaded risk at par. And many avoided being publicly tied to the firm’s exposure, at least until later Congressional hearings.

“If you pay people to take risks—especially when it’s not their own—they’re going to take it.”

Looking back, Bill points to a mix of corporate governance failures, misaligned incentives, and cultural complacency across the financial industry, not just AIG. His team at AIG FP operated with relative independence, retained 30% of profits, and even transacted internally with AIG, creating conflicts that few at the top fully understood.

“To hedge that $500 billion in super senior risk would’ve been cheap. But hedging meant lower profits—and lower bonuses.”

He attributes much of the behavior to structural shifts, such as investment banks going public and executives no longer having a personal stake in their decisions. That detachment, he argues, changed how risk was perceived and rewarded.

“Corporate governance is more art than science. And when no one feels the downside, risk appetite can get dangerously distorted.”

“It was a year of putting out fires before the rest of the world even noticed.”

Bill describes the experience as deeply disruptive—months of mounting collateral calls, internal scrambling, and growing anxiety while markets outside AIG still appeared stable. Bonuses evaporated. Salaries were capped. To retain talent, AIG issued guaranteed retention contracts, which were later criticized in the media and by government officials.

“People were protesting outside coworkers’ homes. Congress, Bernanke, and even President Obama called us out. It got personal.”

Inside AIG, trust began to fracture. After leadership turnover and the government takeover, new CEO Ed Liddy publicly questioned the same bonuses employees had been repeatedly reassured would be paid. When the payments were delayed, panic set in.

“We were told again and again that the contracts would be honored. Then came the letter asking us to give the money back.”

In the end, Bill left with a deep sense of disillusionment—not just with AIG, but with how leadership reversed course after months of written guarantees.

“Incentives and hubris go hand in hand. People fail to see risks they don’t want to see.”

Seventeen years after the crisis, Bill still sees echoes of the same blind spots that led to AIG’s collapse: misunderstood products, mispriced risk, and the belief that markets will always recover. One quote that stuck with him came from former Citi CEO Chuck Prince: “We’ll keep dancing until the music stops.” A mindset that, in hindsight, captured the risk appetite of the era, with no plan for what happens when the music actually stops.

Today, he points to complex structured products and retail-friendly leveraged ETFs as areas of concern. These instruments promise liquidity and return profiles that don’t always hold up in stressed markets, especially when volatility is low and leverage builds on itself.

“There are products out there offering triple leverage with options layered on top—leverage on leverage. It only works until it doesn’t.”

For newer market participants who haven’t lived through a full-blown selloff, the lesson remains the same: understand the products you’re in, and don’t let calm markets lull you into false confidence.

After stints at Bloomberg, AQR, and Two Sigma, Bill launched HarmoniQ Insights in 2024 to work directly with institutional investors, fintech firms, and data providers across the quant ecosystem.

“It started as an advisory shop. But increasingly, I’m helping clients reconcile messy data, evaluate new vendors, or stress-test their assumptions. Sometimes I’m even a referral agent—it’s been fun being on the startup side.”

The shift to entrepreneurship came with unexpected lessons. Like many who have crossed into the founder world, Bill found himself learning sales, marketing, and social media in real-time.

He also hosts a podcast, New Barbarians, on the intersection of finance and technology, and has become more active on LinkedIn since founding the firm.

“I’ve posted more in the last year than in the previous fifteen. But it’s been fun—I’ve met some really sharp folks through it.”

After three decades on Wall Street, Bill emphasizes that while tools change, the fundamentals remain, especially as AI and automation reshape the industry.

1. Don’t trust machines blindly. “Good models with bad data still give you bad results. That was part of what happened at AIG—our models didn’t account for liquidity, and it nearly sank the system. You’ve got to stay skeptical.”
2. Value the unglamorous work. “Building data pipelines doesn’t sound exciting, but it’s incredibly valuable. There are plenty of people who can run AI models—fewer who can reconcile messy datasets.”
3. Study past crises. “New models are trained on recent data. However, they haven’t experienced a real credit cycle. If you don’t understand how markets behave under stress, you’ll get caught off guard.”

The lesson: tools will evolve, but mindset still matters most.

Catch the full interview with Bill Mann on YouTube here. For more interviews with professionals shaping the future of quant finance, explore the rest of our "Quants worth following" series here.