Conclusion

The case studies of Countrywide Financial, Bear Stearns, Washington Mutual, and Citibank show clearly the convergence of mortgage, investment, savings and loan, and commercial banks on the model of vertically integrating their produc­tion of mortgages and securities.

The collapse of the savings and loan model of providing mortgages and its replacement with the mortgage securitization industry provided the opportu­nity to make massive amounts of money off of all phases of the mortgage se­curitization process. The managers of all of these firms saw these opportunities and grabbed them. They saw the fee-generating capacity of the business as quite lucrative. They found the production and sale of MBSs to be profitable precisely because investors become convinced that the products were relatively safe and paid high returns. Indeed, these financial institutions came to see that not only were these products great for customers, but they were great to hold as invest­ments. By 2001, all of these banks were committed to being in all of these busi­nesses because they could make money at every phase of the process.