European banks created most US mortgage SPVs and absorbed the losses

Evidence

Besides being funded via short-term borrowing on US markets, it turned out that those conservative, risk-averse European banks hadn’t missed the US mortgage crisis after all. In fact, over 70 percent of the SPVs set up to deal in US “asset backed commercial paper” (mortgages) we encountered in chapter 2 were set up by European banks. The year 2008 may have been a crisis in the US mortgage markets, but it had European funders and channels, and most of those devalued assets remain stuck on the balance sheets of European banks domiciled in states with no printing presses. — Mark Blyth, Austerity, 236

Categorization

• XREF: Reverses the common US-centric framing of 2008; connects to the eurozone’s lack of a ‘printing press’ that structures the whole chapter and Blyth’s broader argument about currency unions. — connects to: Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis — Albert Bandura, Moral Disengagement: How People Do Harm…, 1492
• SEED: Article angle: the 2008 crisis as a European funding story mislabeled as American, and how this mislabeling shaped the austerity response.

Broader Connections

• Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis #expands (0.82) — Albert Bandura, Moral Disengagement, 1492