It is a theory that would have a superficial plausibility if the 1990s model of GSE-centered mortgage finance had still been dominant in the early 2000s. But, in fact, in the early 2000s, when the subprime boom unfolded, the industry had changed again. Securitization was more dominant than ever. The GSEs were still responsible for buying and securitizing the top-tier conforming mortgages. But as a new range of actors entered the mortgage market with a more dynamic and expansive agenda, their principal business model was not to disaggregate and to spread the risk but to integrate every step of
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ConsolidAtion!
