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The anatomy of the mortgage securitization crisis

Markets on Trial: The Economic Sociology of the U.S. Financial Crisis: Part A

ISBN: 978-0-85724-205-1, eISBN: 978-0-85724-206-8

Publication date: 9 July 2010

Abstract

The current crisis in the mortgage securitization industry highlights significant failures in our models of how markets work and our political will, organizational capability, and ideological desire to intervene in markets. This article shows that one of the main sources of failure has been the lack of a coherent understanding of how these markets came into existence, how tactics and strategies of the principal firms in these markets have evolved over time, and how we ended up with the economic collapse of the main firms. It seeks to provide some insight into these processes by compiling both historical and quantitative data on the emergence and spread of these tactics across the largest investment banks and their principal competitors from the mortgage origination industry. It ends by offering some policy proscriptions based on the analysis.

Citation

Fligstein, N. and Goldstein, A. (2010), "The anatomy of the mortgage securitization crisis", Lounsbury, M. and Hirsch, P.M. (Ed.) Markets on Trial: The Economic Sociology of the U.S. Financial Crisis: Part A (Research in the Sociology of Organizations, Vol. 30 Part A), Emerald Group Publishing Limited, Bingley, pp. 29-70. https://doi.org/10.1108/S0733-558X(2010)000030A006

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited