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The Financial Exception and the Reconfiguration of Credit Risk in US Mortgage Markets

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  • Philip Ashton

    (College of Urban Planning and Public Affairs, University of Illinois-Chicago, 412 S. Peoria, 231 CUPPA Hall (MC 348), Chicago, IL 60607, USA)

Abstract

This paper engages recent arguments regarding the transformation of credit (default) risk within US mortgage markets. With the growing integration of mortgage lending into volatile circuits of finance, emergency interventions during financial crises have become productive moments for credit risk, securing the broader norms of risk taking by selecting out problematic loans—a distinctive orientation to risk that I characterize as the financial exception. I develop this argument by focusing on emergency interventions during two signal moments in the recent history of US mortgage markets—the late 1980s banking crisis and the post-2007 mortgage crisis. In both cases the regulatory practices of isolating system-threatening risk-segmented borrowers into distinct market spaces, deepening and extending particular forms of credit risk inherited from the New Deal financial system.

Suggested Citation

  • Philip Ashton, 2011. "The Financial Exception and the Reconfiguration of Credit Risk in US Mortgage Markets," Environment and Planning A, , vol. 43(8), pages 1796-1812, August.
  • Handle: RePEc:sae:envira:v:43:y:2011:i:8:p:1796-1812
    DOI: 10.1068/a443
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    References listed on IDEAS

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    1. Poon, Martha, 2009. "From new deal institutions to capital markets: Commercial consumer risk scores and the making of subprime mortgage finance," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 654-674, July.
    2. Felton, Andrew & Reinhart, Carmen M. (ed.), 2009. "The First Global Financial Crisis of the 21st Century Part II: June–December, 2008," Vox eBooks, Centre for Economic Policy Research, number p199.
    3. Kevin Fox Gotham, 2009. "Creating Liquidity out of Spatial Fixity: The Secondary Circuit of Capital and the Subprime Mortgage Crisis," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(2), pages 355-371, June.
    4. Martha Poon, 2009. "From New Deal institutions to capital markets: commercial consumer risk scores and the making of subprime mortgage finance," Post-Print halshs-00359712, HAL.
    5. Charles P. Kindleberger & Peter L. Bernstein, 2000. "Manias, Panics and Crashes," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-0-230-53675-3, March.
    6. Martha Poon, 2009. "From New Deal institutions to capital markets: commercial consumer risk scores and the making of subprime mortgage finance," Working Papers halshs-00359712, HAL.
    7. Martha Poon, 2009. "From New Deal institutions to capital markets: commercial consumer risk scores and the making of subprime mortgage finance," CSI Working Papers Series 014, Centre de Sociologie de l'Innovation (CSI), Mines ParisTech.
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    Cited by:

    1. Christopher Niedt & Brett Christophers, 2016. "Value at Risk in the Suburbs: Eminent Domain and the Geographical Politics of the US Foreclosure Crisis," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 40(6), pages 1094-1111, November.
    2. Michael Byrne, 2016. "‘Asset Price Urbanism’ and Financialization after the Crisis: Ireland's National Asset Management Agency," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 40(1), pages 31-45, January.

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