The Banks Did It: An Anatomy of the Financial Crisis

To understand the 2008 financial crisis, Neil Fligstein looks to the business models of the big US banks. He shows how firms got hooked on mortgages—originating them, securitizing them, selling those securities, and even buying the same securities. In time their addiction nearly collapsed the economy.

Table of Contents:
Cover Title Page Copyright Dedication Contents List of Illustrations Preface Chapter 1. A Long, Strange Trip Chapter 2. From Mortgages to Mortgage Securitization Chapter 3. The Rise of the Vertically Integrated Private Banks, 1993–2001 Chapter 4. Financial Innovation and the Alphabet Soup of Financial Products Chapter 5. The Subprime Moment, 2001–2008 Chapter 6. The Crisis and Its Spread Worldwide Chapter 7. Fraud and the Financial Crisis Chapter 8. Why Did the Federal Reserve Miss the Financial Crisis of 2008? Chapter 9. The Banks Did It (With the Help of the Government!) Notes References Acknowledgments Index

Review :
Neil Fligstein's new book reads like a financial crime novel, but with a twist. Instead of asking 'who done it?' we are told up front that the banks did it, and the real mystery concerns why they did it, when they did it, and how it produced a global crisis in 2008. Why did US banks become so deeply involved in industrial-scale origination and securitization of home mortgages? Who would loan money to borrowers that almost certainly couldn't repay? Why didn't banks change course when it became clear that the bubble was about to burst? Fligstein weaves together a huge amount of evidence as he identifies key turning points, refutes simplistic explanations, and presents a coherent and sophisticated account of an extraordinarily consequential sequence of events. -- Bruce G. Carruthers, Northwestern University Fligstein is the most influential economic sociologist at work today. Hands down. He is also one of the most successful sociological discipline-spanners, with wide influence outside of sociology. This eminently readable book will be of great interest beyond sociology, to historians, political scientists, and economists. The Banks Did It is erudite, carefully researched, and powerfully argued. It does not disappoint. -- Frank Dobbin, Harvard University Well-structured, well-evidenced, attractively written, and based on over a decade of research, The Banks Did It is a brilliant work by a scholar who has reshaped how we should think about markets. -- Donald MacKenzie, University of Edinburgh In this incisive and exceptionally clear book, Neil Fligstein describes how government action unwittingly helped shift the business model of American banks from long-term customer relations towards fee-based activities anchored in mortgage origination and securitization. By the mid-2000s, every part of US financial organizations was oriented to maintaining this pipeline, at the cost of considerable risk-taking and even fraud. By offering a long-term view of the lead-up to the 2008 financial crisis, Fligstein shows exactly how the banks, really, 'did it'--and also lays blame at the feet of monetary experts and authorities, who never saw it coming. -- Marion Fourcade, University of California, Berkeley A rich, deep, and comprehensive account of the financial crisis, arguing that the world the banks constructed and how they profited from it are at the core of what happened...Represents an important advance in our understanding of the financial crisis of 2007-2008. Readers, be they organizational theorists or anyone who has a stake in preventing the next financial crisis, will walk away better informed of how the crisis was produced, why it spread so fast and so deeply, and how regulators missed what was happening. -- Lori Yue Administrative Sciences Quarterly