Caught in the Housing Crash: Model Failure or Management Failure

I apply standard time series models to US housing prices. Forecasts made in 2005 or earlier would have produced stress scenarios that are worse than the subsequent actual change in housing prices. The probability of these scenarios is in the range that banks claim to consider in their risk management. Hence, the fact that the crash caught many financial institutions by surprise should not be attributed to deficiencies in the traditional risk modeling approach. It seems instead that risk managers failed to apply their toolboxes, or that bank managers overruled their risk managers' assessments.