In 2001, I began to turn my accidental “research clearinghouse” into a more formal network that brought together all of the most important market players from each EU country to meet and collaborate with their counterparts. Hence the name, “EuroCatalyst”. At that time, there were 12 distinct national EU markets, each one having their own constellation of dominant market players who drove their national market with their own way of doing things. While they were powerful in  their own country, on a pan-European scale they were smaller fish in a much larger pond. The only centralized power for European market players at the time was the European Mortgage Federation (EMF) in Brussels, led by the extremely influential and effective Judith Hardt. However, EMF constituents and lobbying were primarily focused on funding issues exclusive to covered bonds – an inherently European on-balance sheet funding tool.

As a natural connector of people and ideas, I embarked on a pan-European “road show” that brought people together to accelerate deal flow by providing a context for and introduction to each other. Part of my motivation was also to bring together all relevant constituents to point out how globalization was changing their markets faster than they could adapt. My hope was to establish a sound collaborative strategy in anticipation of the profound upcoming market disruptions due to the launch of the euro and Single Market on January 1st of the following year. Overnight, we would wake up to a market that spanned twelve countries as opposed to one – and everybody wanted in.

Especially American firms, which, as an American myself, frequently put me in a suspicious and awkward position. Fortunately, because I was based in The Netherlands, the Dutch market players graciously “vouched” for me and most of the time I knew when to tone it down to avoid certain cultural animosities. In several financial media articles throughout Europe, I was referred to as “the connector” and “tipping point” for building this powerful pan-European network of entrepreneurs, visionaries and senior executives from all national mortgage markets. I also happened to be in the right place, at the right time and many important Europeans like Judith Hardt, the head of the EMF and Michael Coogan, Director General of the UK-based Council of Mortgage Lenders, helped me tremendously.

The first securitization transaction in Continental Europe was issued by Bowfonds in 1996 and formally heralded the race to move mortgage assets off balance sheets in Europe. It was an extremely significant development, as up to that time, all lending in Europe was conservative and relationship-based. The primary funding vehicle was covered bonds, which were a series of national market funding tools that were sold as bonds (fixed-income securities) to a well-developed and hard-earned investor base. To oversimplify, covered bonds are a much safer investment than mortgage-backed securities due to the fact that if an institution selling a covered bond goes bankrupt, the covered bond investors retain their access to the cover pool. Covered bonds date back to the late-1700s and with a history like that, they became as much a funding tool as a religion, and justifiably so.

As European lenders began to move assets off their balance sheets utilizing new securitization legislation across the EU, I was concerned that the drive to establish a global MBS market was very risky given the lack of harmonization and fundamental underlying differences in each national market. At that time, credit was cheap and as American investment bankers piled into the European market to promote securitization, they explicitly advocated the creation of mortgage products that moved down the credit curve and up the LTV curve while at the same time, stoking investor appetite for higher yields. As the internet stock craze imploded, investors turned to mortgages. On the consumer side, homeowners were beginning to leverage their homes as an ATM. Looking to the future, all of these factors gave me an uneasy feeling and I wondered if this might ultimately lead to serious trouble in mortgage markets around the world. Were that to happen, it was clear that it would impact the entire global economy. At the very least, I believed that the appropriate entities and authorities should be talking about this.

In the fall of 2001, I took my research and theory to the International Monetary Fund (IMF), the European Commission, the European Central Bank, the US Federal Reserve and the World Economic Forum, hoping to convince them to produce a conference or create a think tank about how globalization was accelerating and magnifying the vulnerabilities of mortgage markets. I was told a similar story each time – that mortgages were just one of many financial services products and a primarily local activity. As such, these groups were uninterested in getting involved. My response each time was “yes, mortgage lending is local but the funding of mortgages is now global.” When no one expressed any concern, my friends and adopted mentors Esther Dyson and Mark Thompson convinced me to do an event myself.

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