Laying the Foundations for a Crisis: Mapping the Historico‐Geographical Construction of Residential Mortgage Backed Securitization in the UK

Abstract

This article will explore the geographical origins of Residential Mortgage Backed Securitization (RMBS) in the United States and map the subsequent migration of RMBS, as idea, technology and investment vehicle, to the United Kingdom and other nation-states during the 1990s. It will illustrate how RMBS was used as a medium to circulate capital and construct urban space, and seek to interpret the development of RMBS and the contemporary credit crisis in the UK through a series of historical, political and sociological lenses. It argues that, despite travelling across the globe, this financial innovation has maintained a spatial sensitivity since the idea of securitization has been embodied and (re)interpreted in specific spaces to comply with local economic, political and social institutions. It also argues that this is an important primer to understanding the 'credit crunch' of 2007 and its repercussions. The article focuses particularly on how the current significance of securitization and RMBS can be traced back to the 'Big Bang' and the wider processes of the competitive re-regulation of the City of London and the British financial system more generally during the mid-1980s. It shows the differential evolution of securitization in the UK and US, and in so doing argues that such spatial variations have left different financial institutions in the two economies exposed to different forms of credit and market risk. Copyright (c) 2009 The Author. Journal Compilation (c) 2009 Joint Editors and Blackwell Publishing Ltd.

Housing and positive European integration: permissible state aid for improving the urban environment

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Household vulnerability in rural areas: Results of an index applied during a housing crash, economic crisis and under austerity conditions

“…In the wake of the financial crisis, a growing body of literature has examined financialisation relating to mortgage markets and home ownership, referring to a pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production (Aalbers, 2009a). Research in this area, for example, has focused on the linking of mortgage markets and stock markets through so-called securitisation investment vehicles (Gotham, 2009;Wainwright, 2009) originating in the US sub prime market, and globalisation of mortgage markets as a result of the financialisation of borrowers and markets and a globalisation of mortgage lenders (Aalbers, 2009b;van Heijden et al, 2011). For Aalbers (2009a) this transformation of the mortgage market has had profound effects on housing markets and the creation of housing bubbles, enabling the expansion of the mortgage market and allowing borrowers to buy more expensive homes fuelling a housing bubble.…”

“…Other scholars have investigated the impact of financialisation at the regional scale (Pike, 2006;Marshall et al, 2012;Wainwright, 2012). And yet Wainwright (2009) argues that there is a much more limited geographical literature outside of the US focusing on local and national scale studies.…”

Mortgage-related issues in a crisis economy: Evidence from rural households in Ireland

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