Note: All AMERICATALYST events will be added soon.
EuroCatalyst and AmeriCatalyst have a 20-year history as producers of the most enlightening series of think tanks focused on the housing finance industry in Europe (from 2002-2008) and on the housing ecosystem in the U.S. (2009-current). The process of creating a program and topics to discuss each year is one of definition: We are defining the most important issues that should be discussed, and those that should not. As a result, the release of our programs are highly anticipated as the leading indicator regarding what executives should be focusing on today and more importantly, tomorrow. Unlike traditional conferences, our program content tells a story that builds upon where w left off the previous year. When put together, the ongoing narrative lays out the history of how the magnifying and accelerating social, technological, economic, environmental and political forces of globalization have impacted and transformed housing finance, residential real estate and the overall housing ecosystem. The narrative also tells our own history, in the words of Toni Moss.
2000: EUROCATALYST BV IS ESTABLISHED IN NAARDEN VESTING, NL
By 2000, I had been living and working in The Netherlands for four years. My employer, Bouwfonds Nederlandse Gemeenten/STATER, was owned by the municipalities of the Dutch government and was acquired later that year by ABN Amro. As the Director of Corporate and Business Development, my job was to increase the value of the company by contributing new ideas and business models, setting strategy and growing the company through cross-border joint ventures and greenfield operations. I worked with an incredible team at STATER led by the pioneering CEO Rik Douwes who, for the record, created the world’s first digital and paperless originator and servicer in 1997. (American firms have been claiming to be the “world’s first” since 2015). During my tenure, I had mapped out the market dynamics of 18 countries and was on the road, on average, 200 days a year. Given the extensive network and reputation that I had built across the UK and Europe as well as my ideas to help drive innovation and transform the European housing market, rather than stay within the confines of ABN Amro, I decided to leave and start my own entrepreneurial advisory firm, EuroCatalyst BV.
EuroCatalyst initially provided hands-on advisory services to establish, acquire and/or build cross-border operations for firms engaged in housing finance and related ventures, including fintech, mortgage distribution, origination, servicing and funding across the EU. My first clients were incumbent banks, investment banks, private equity and venture capital firms. In capital markets, I helped national covered bond market issuers in Europe increase their investor bases around the world. To put EuroCatalyst "on the map", I wrote a comprehensive White Paper comparing and contrasting the products, performance, processes and practices of EU and North American mortgage markets, which to my knowledge, was the first national market-to-market comparison and global industry benchmarks ever done. As a result, I inadvertently became a clearinghouse for information on global mortgage markets. Almost every firm that aspired to analyze, establish operations, acquire or hire across borders would inevitably contact me. In preparation for the planned "Single Market" for financial services across what would become the "Eurozone" in 2002, I became an advisor to the European Commission to advise on the harmonization of EU mortgage markets.
At the IMN Global Asset-Backed Securitization conference in Barcelona that year, I presented a speech entitled, "The Owl of Minerva Only Flies at Night," which was a direct reference to Hegel, the 19th century German philosopher who observed that wisdom only comes in retrospect. Or as I like to lament, wisdom comes to us when it can no longer do us any good! The presentation laid out my early concerns about the impact of globalization on mortgage markets, which I believed was the industry most sensitive to commoditization. To establish context to the presentation, I attributed Karl Marx as the “father of risk management” (which is true - he was the first philosopher to argue that we could control the future and should strive to control it) and commented that while communism and socialism have essentially failed, capitalism - also born as an Enlightenment ideal - was a similar grand social experiment with an unpredictable trajectory and outcome. They were some pretty “heady” topics in any discussion, but as I would learn, darned near blasphemy in a room full of investment bankers. To add a bit of self-deprecating humor to the presentation, I played part of the song, "I Saved the World Today" by the Eurythmics at the end of my speech. The audience reaction to the presentation was deafening silence. After about 30 seconds, one person - the crazy and brilliant Swede Peter Fredell - clapped very slowly and loudly said, “Bravo Toni, that took guts”.
2001: THE TIPPING POINT
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 connecter 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 Bouwfonds 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.
2002: EUROCATALYST LAUNCHES ITS SIGNATURE EVENT IN MADRID
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 the some of those features in our website section under Intellectual Influences
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)
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.
2003: NATIONAL MARKET ROAD SHOWS + EUROCATALYST 2003 | LISBON
In the session, “How Much is Europe at Risk?” we discussed the seven-year rise in house prices, the investor shift from equity losses in the dot.com bust to mortgage assets and the consumer shift in treating their mortgage a supplementary pension. In the program introduction I wrote,
“From an economic perspective, rising house prices have historically offset losses of equity wealth which, in turn, support consumer spending and “prop up” troubled economies. In keeping interest rates low to cushion those economies, some argue that central banks have caused a housing bubble, with EU countries including Britain, Ireland, the Netherlands and Spain most at risk. While bubbles are never identified until after they have burst, the combination of rapidly increasing house prices and leveraged mortgage debt have raised serious concern for the industry.”
That year saw new MBS issuances from 6 EU countries. At this point, standard rating agency practice was to assign “harmonized” ratings on MBS without compensating for the underlying market differences. To their credit, FitchRatings did publish regular research on each country that generally described differentiating market dynamics. To their demise, while there was never a conference that did not have a panel of investors complaining about the lack of transparency and sufficient information in MBS transactions, the insufficiencies did not curtail their buying habits. The dirty little secret was this: underlying portfolio information was scarce not because issuers withheld the information. In most cases it was because the servicing was so poor that the information just didn’t exist. In 2003, the majority of our advisory work entailed helping investors understand and differentiate portfolio risk from country to country.
2004: INVESTMENT FOCUS | NORDIC COVERED BONDS 2004: EUROCATALYST 2004 | BERLIN "The impact of globalization and the free flow of capital is the most appropriate context in which to understand the vast divide between housing (as a local endeavor) and its funding (an increasingly global endeavor). From a balance sheet perspective, the asset side remains local while the liability side can now be offset globally. However, as risk continues to be dispersed among a global investor base, at what point does that risk become so concentrated that it poses systemic risk to the global financial system?"
That year, as sub-prime products began to proliferate across European markets and house prices continued their lofty ascent, we began to emphasize the need for greater attention to the European servicing sector in preparation for large volumes of mortgage defaults. By this time, the animosity between MBS and covered bond issuers was so overt that we opened the debate on funding to the song, "Two Tribes (go to war)".
The most remarkable session "10/20/50: A Blueprint for Mortgage Funding" was a monumental collaborative effort that took six months to put together. In collaboration with Dominic Swan at HSBC, Will Ross and Tim Skeet at ABN Amro, Hoesli Labhart at Citigroup and Kris Wulteputte from the Dutch-based SNS Bank, the presentation was the first time that a balanced approach to mortgage funding incorporating both covered bonds and MBS had ever been proposed. In the session, Wulteputte expressed the most famous quote from the event when he pleaded with the EU's Gerald Dillenberg, "Don't take away my funding DNA!"
2005: EUROPESERVICING | AMSTERDAM
In opening comments I delivered a "Servicing Manifesto" that called for redefining servicing from "the originator's back office" to the "homeowner and investors' front office". My primary argument was the following: "It is ridiculous that the most compensation in mortgage lending always goes to those on the front end - the loan officers and originators who lend the money - or in essence, give the money away. Those who are the least compensated - the servicers - are the ones actually getting the money back by collecting the payments. Servicers are not the originators' back office. That concept is outdated, diminishes the role and value of servicing and de-motivates the entire sector. Servicers are the front office for investors and homeowners". The speech elicited rousing cheers, and I really should have quit while I was ahead. But I didn’t. My next words were, “For too long, servicers have been treated like the fat kids on the soccer team. To be fair, some continue to act like it.” In that moment, I lost most of my Brownie points.
2005: EUROCATALYST 2005 | ROME
One of the more notable sessions featured four top economists discussing house prices around the world, which were now at spectacular, all time highs. Hosting the session, Tim Skeet and I walked onstage wearing T-shirts emblazoned with the caption, "Mr. Housing Bubble. When I pop, you're screwed!" There had never been a time in history when homeowners all over the world were so over-levered on their homes. Even the respected Economist magazine previewed the inevitable decline in house prices and resulting economic devastation with their June 2005 cover story, "After the Fall". Despite this, lenders throughout the US continued to originate sub-prime loans with no documentation (and no equity) and in Europe, sub-prime lending continued to proliferate, particularly in the UK, Netherlands, Spain and Ireland.
In his comments about the state of the U.S. market, Alan Boyce commented on the U.S. market, "in the 4th quarter of 2006, the sh*t is really going to hit the fan". Indeed, it would. By now, the "American invasion" of Europe was in full throttle, including the entry of Countrywide in a servicing joint venture with The Woolwich in the UK. Plot spoiler: the venture failed spectacularly.
The most fun session of the event, "The Dating Game" featured the top Italian bankers posing as mortgage borrowers with a variety of credit profiles who were in competition for a fictional "date" with the Head of Genworth Mortgage Insurance in Italy. At the end of the session, the audience decided which borrower profile they would fund, thereby naming the winning "bachelor". Who won? The charismatic soccer player with inconsistent income.
2006: EUROPESERVICING | LONDON
EUROPESERVICING 2006 was held at the British Academy of Film and Television Arts (BAFTA) in London. In honor of the venue, all sessions were themed (and highly editorialized) with movie titles, and began with clips from famous films that could easily be interpreted to each session. The primary focus of the event was on default, or distressed servicing, which was a relatively unknown skill set and practice in Europe. In the session “Bambi Meets Godzilla” we addressed the “Americanization” of European real estate markets head on. “Catch-22” discussed the servicers’ dilemma of high investor expectations with little operational budgets to work with. In the session description, I wrote, “In the US, virtually every industry conference features a session dedicated to beating up the servicers. In Europe, servicers can’t even get enough attention to be arrested.” The final session, “Crash: When High Street meets Wall Street in The City, which way do you turn?” was the most obvious editorial of all, previewing events the following year that would permanently alter the global economy.
2007: EUROCATALYST | MADRID
The opening video montage of the event featured the trailer from the film "Chicken Little", which builds up Chicken Little as a hero: "He tried to warn us...and now, in our darkest hour, he's got a plan to save us all". At that point, Chicken Little yells "ruuuuuun!" and smashes into the camera. In the opening session, "After the Deluge", Pat Butler, the Head of the Global Financial Services Practice at McKinsey, delivered an aptly titled presentation, "From the Subprime to the Ridiculous: What the F*ck Happened?"
The most provocative session of the event, "The Shadow Banking System and Financial Dislocation of the New Non-bank World" made a deep dive into the "shadow banking" system that operated beyond the reach of regulators. In the session description, which was written in June of that year, I wrote:
"This 'non-bank' world is comprised of alpha-hungry investors driving highly complex and levered investment conduits, vehicles and structures that have risen in conjunction with the global housing boom. The return/yield formula has led to an appetite for risk that the traditional financial system cannot digest. The result is a gradual loss of control by central banks, and panic-driven chaos...The speed at which the contagion has spread has equally shocked market participants and the regulatory sector, proving once again that the new world of financial innovation is no more than grand experiments of trial and error that lead to uncertain and severe consequences on a global scale. If evolution provides no other options than to evolve or die, the choice is clear. The question is, what are we evolving toward?"
Two months after the final event, in the November 2007 issue of Mortgage Strategy, a UK publication, I was interviewed for a story titled, “Shadow World of Global Banking”. In it, I made a prediction that in retrospect, surprised even me. The interviewer wrote,
“Moss foresees a surge of nationalism as the next reaction to the volatility that the shadow banking system and SWFs are having on the global economy.” 2008: EUROPESERVICING | LONDON
Held at the British Film Institute, once again all sessions were themed to films and the event was aptly titled "VERTIGO: Servicing in a World Off-Balance". Notably, the event was formally supported by the CFA Society of the UK, which encompassed the largest group of institutional investors in the UK.
We opened with the session, "To Kill a Mockingbird", referencing racial injustice (minorities were disproportionately hit by the mortgage market implosion) and the destruction of innocence. McKinsey Director Charles Roxburgh incorporated the theme in his presentation, "Subprime: Canary in a Coal Mine", which warned of global economic repercussions that had only just begun. (Heark! A song comes to mind!) The following session, "Running With Scissors," referred to the breakdown of counterparty boundaries and trust in structured finance and finally supported my incessant and longstanding insistence on why servicers should function as the investors' front office.
On a fun note, all sessions featured the original film posters that coincided with session titles, with speakers Photoshopped into the posters. In the session “Best in Show”, which was about the correlation between servicing and loan performance, we featured Ingrid Beckles, who at the time was the head of servicing and asset management at Freddie Mac. It was refreshing to feature a woman onstage, and even more rare to feature a woman who was also a minority. For those who don’t know her, Ingrid Beckles is an extremely formidable presence. Not knowing her well myself at the time, while I was thrilled to have someone of her stature speaking at the event I have to admit that I was a bit intimidated by her. For those unfamiliar with the film, “Best in Show” is a “mocumentary” about dog shows. After introducing her, when Ingrid took the stage she immediately pointed at the massive screen with her photo superimposed as the handler of one of the dogs in the “Best in Show” poster. As I was walking offstage, Ingrid called me out. “Hey Toni! Why am I the one with the black dog?” Thinking fast, I blamed Shirley.
Given the catastrophe at hand, it had finally hit home. Our last session was "BLOWUP: When Servicing Counts - Whole Loan Sales and Asset Disposition". EUROPESERVICING 2008 was EUROCATALYST’s last event in Europe. (The following year, the event was held as EUROCATALYST one last time in Austin, Texas, with the theme, DISTRESSED SERVICING.)
In a BBC radio interview immediately following the event, I was interviewed along with a very well-known chief economist from one of the world's largest banks. When asked to comment on the unfolding economic catastrophe, we were asked to characterize the situation in one sentence. The economist referred to current events as "the perfect storm" that would ultimately pass. I responded, “It’s economic climate change”.
Note: We will add the history of the AMERICATALYST event soon. In the meantime, you can go to our section on "Past Events" to see the program and speakers from all AMERICATALYST events.