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How Black Box Casino Crashed Housing

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Remarks to the Real Estate Research Council of Southern California
Kellogg Center at California State Polytechnic University, Pomona
March 7, 2012
By Robert Stowe England
For most Americans, a thick fog still shrouds the origins of what has turned out to be the worst financial crisis of modern times.
Finding the answer to what went wrong is what compelled me to write Black Box Casino.
At the center of origins of the crisis is a single industry – the mortgage industry.
As senior writer for Mortgage Banking magazine since 1988, I reported on the vast changes sweeping through the industry for more than two decades.
We’ve come a long way.
In the early 1990s, the mortgage industry was disciplined by the free market. Risky products were priced to cover expected losses. When players miscalculated, they were soon out of business.
Over time, however, the virtues of the mortgage market slowly failed and the market became an engine of toxic mortgages.
By August ’07 the entire private sector side of sec…