Mortgage Lending and Economic Wrongdoing During the Spanish Housing bubble

Granting mortgages to customers likely to become insolvent was widespread in Spain during the housing bubble that burst in 2007, resulting in an unprecedented rate of home repossessions. The practice was usually legal, but if power relations, structural determinations, and asymmetrical access to information are taken into account, it appears abusive and socially harmful. Several sorts of people were involved in it: bank staff who, under pressure from managers, took advantage of their long-standing relationships with customers; real estate agents and mortgage brokers who saw a business opportunity in people’s aspiration to home ownership; and investment banking executives who devised sophisticated financial products aimed at masking risk. For them, selling risky mortgages was not only a profitable business but also a way to comply with norms, values, and expectations at play in their social settings. This chapter will show how mortgage lending and its evaluation as wrong or acceptable by actors in different social positions has a relational nature, and is based on diverging moral economies that guide economic action in the framework of neoliberalism.