The financial crisis of 2008 has now been discussed and analyzed from a variety of viewpoints. Curiously, many of these discussions focus on the causes of the housing bubble, as distinguished from the crisis, and give little attention to the role of the extreme dysfunctions in the markets for residential mortgages and securities derived there from – notwithstanding the fact that these dysfunctions were extremely prominent in the unfolding of the crisis itself. We argue that understanding the crisis of 2008 requires understanding its specific features as well the features it shares with the many other financial crises in the historical record. Central to those specific features are the changes in business practices related to mortgages. These appeared in conjunction with the evolution of the vertical structure of mortgage banking, which in turn facilitated transformations of the financial sector and the structures and incentives that within it. Our theoretical approach is firmly in the evolutionary tradition, emphasizing learning as the source of competence and feedback as the driver of behavior. Analysis of the crisis highlights, however, hazardous potentialities in these processes that have not received adequate attention.