I decided to hold the first event in Madrid because I thought that if mortgage markets were to implode, Spain would get hit the worst. At that time, Spain had experienced the most dramatic rise in house prices due to a phenomenon that no one wanted to discuss publicly: In the buildup to the launch of the euro banknote that year, due to “purchase inefficiencies” in the Spanish market and the exposure to exploitation, most of the “dirty” money across Europe (and Russia) was laundered in Spanish real estate. Fortunately, one of my closest friends in the European mortgage industry, Baralides Alberdi, was a legend in the Spanish market and extremely well respected and connected.

She was instrumental in getting everyone, from the government to Spanish market players, behind the event. Still, there were 11 countries to go. In January, I signed the contract with the Westin Palace in Madrid, personally guaranteeing a final payment of €430k for the use of the entire hotel for 4 days. There was no going back.

In February of 2002, I convinced Shirley Jackson, then the Deputy Managing Editor of The Japan Times in Tokyo, to be one of the first partners in the event. At that time, the Japanese were one of the largest investor bases for both MBS and European covered bonds. Having such an influential Japanese publication behind me gave immediate traction to the event. That development, in turn, convinced trade organizations including the European Mortgage Federation (EMF) and the Council of Mortgage Lenders (CML) to support me. I established an arrangement with the EMF whereby they would receive a percentage of the event profit for their assistance in promoting it among their member base. While it was a powerful endorsement, their resources for assistance were thin and as a complete amateur in putting together a large scale event, I didn’t know what to ask for.

The person helping the most was actually Shirley, via Skype from Tokyo. By May, I had been traveling 4 days a week to every EU country to convince national market trade organizations and leaders to participate, researching and writing the evolving program late at night. I literally began passing out from the pressure of doing the event by myself. Shirley took a 6-month leave of absence from The Japan Times to join me in The Netherlands to pull it off. Now, there were all two of us!

I had spoken at so many conferences around the world, only to spend the rest of my time networking in packed hallways because God-forbid anyone die of boredom in the actual conference sessions. Therefore, I wanted to do things differently. I’ve written more about some of those features in our website section under Intellectual Influences. 

Our first participants encompassed NGOs, central banks, regulators, institutional investors, investment banks, banks, rating agencies, top analysts and mortgage executives across Europe and many from around the world.

EUROCATALYST 2002 was held in September, with the theme “Will European Markets Survive Globalization?”. Beginning at 9am, the sessions on the first day did not end until 9pm. Obviously, with this being our first event, we were bad at keeping sessions on time. In our defense, no one wanted to get off of the stage on time, nor did they want to leave the audience. Our electronic interactivity enabled the audience – for the first time – to have a voice in the discussions, and they certainly made the most of it. Furthermore, our first “Champagne Debate” compared lending profitability between the U.S. and European Lending Models in the session, “Adopting the Best and Leaving the Rest”. The debate, which was scheduled for an hour and fifteen minutes, went on for close to three hours. Clearly, Europeans and Americans had a lot of “friction” to sort out. (Thank God I was not onstage for that session!) The absolute best line of the debate came from Achim Duebel, who received a standing ovation for characterizing the U.S. GSE model as “privatizing the profits and socializing the losses.” Nonetheless, despite the ridiculously late hour the ballroom remained full, so we just had staff serve dinner in the ballroom. It finally emptied out around 11pm.

The following day saw chaos when the Dutch blocked the door to the conference room where their regional market session was being held and refused to leave the stage. While it was very hard not to laugh, Shirley and I stood outside the ballroom fuming with the Italians, whose session was now running almost an hour late. From that point forward, each year the Dutch market session was held we would begin their session with the film clip of the famous Michael Caine line from Austin Powers. “Son, there are two things I cannot stand in this world: People who are intolerant of other cultures, and the Dutch!”, immediately followed by the song “Windmills of Your Mind” by Sting. The Dutch were shameless. They loved it.

EUROCATALYST 2002 was the first time in history that all major trade organizations in every EU country supported a single event. However, the friction among and between national market trade organizations was so potent that Shirley and I decided to keep the event entirely independent and neutral moving forward. Much of the friction stemmed from historic and cultural bias as well as the European Union’s intent to harmonize EU mortgage markets as a key step in creating a Single Market for financial services across the EuroZone. In an October, 2002 op-ed for the London-based publication Structured Finance International, I referred to navigating the substantial differences in European mortgage markets as “Playing scrabble without the vowels” (credit to Duke Ellington). Given those differences, national market trade organizations were in fierce competition for the EU to choose their market standards for harmonization and thereby gain a substantial advantage in cross-border competition. In the same op-ed, I attempted to bring attention to the vulnerability of an investor over-reliance on rating agencies. I wrote, “Within rating agencies, for example, there are naturally methodological differences between how structured finance and bank analysts view certain risks, and how they should be guarded against or provisioned for. Some say these differences offer potential for ratings arbitrage.” From a commercial perspective, it was not the smartest thing I could have done. My integrity, however, remained intact.

One of the more unique aspects of the event program was the fact that in the main ballroom sessions, the topics systematically cycled through all of the sectors of the housing finance ecosystem. It was a deliberate move to essentially force a senior audience to understand the extent to which each sector of the lending process was equally important, and a failure in one sector directly impacted the other. The only session that backfired was the servicing session, during which a few people jokingly threw pillows onstage in protest over the less exciting aspects of operational discussions. The funding session, however, elicited fireworks: presenting both covered bonds and securitization onstage as equal funding tools led to a walkout by the primary lobbyist from Germany’s Pfandbriefe trade organization, who took me (by the collar of my jacket) with him. However, the fact that I played “Stayin’ Alive” in the introduction to the German session could have been a contributing factor. Despite the Dutch, the friction and behind-the-scenes politics, the event was an enormous success.

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