The 2007-2009 financial crisis was centered on the nonconventional mortgage industry. Scholars have just begun to carefully consider what really caused the crisis. This paper pushes the debate forward in several ways. First, we elucidate four different theoretical approaches, “financialization”, “actor-network/performativity”, “perverse incentives”, and “”markets as politics”” to understanding how the mortgage securitization industry evolved. We generate hypotheses and relevant data and show that the “markets as politics” approach accounts for the social structuring of the market from 1990-2008. Second, we use archival and secondary sources to show that the industry became dominated by an “industrial” conception of control whereby financial firms vertically integrated in order to capture profits at all points in the value chain. In 2004, the conventional mortgage market turned down. Financial firms entered the nonconventional market in order to keep their “industrial” conception going. The nonconventional market thrived for three years but when it turned down, the
firms that went bankrupt were those who were the most committed to the “industrial” conception of control.