Exploding mortgage-security demand forced lenders to invent worthless borrowers.

Evidence

By the mid-2000s the markets couldn’t get enough of these securities, which was a problem because the banks and brokers writing these very profitable mortgages were running out of good borrowers to whom they could lend. The later batches of these securities were therefore increasingly made up of NINJA (no income, no job, no assets) mortgages collateralized by the eBay earnings or bar tips of the new mortgagers, or by purely fabricated income statements and robo-signed paperwork. Because the new mortgages coming in were of such dubious quality, the issuers of these securities increasingly didn’t want to hold any of this dubious risk on their own books and wanted them moved off-book. — Mark Blyth, Austerity, 94

Categorization

• DEFINE: Defines the NINJA mortgage and explains why securitization moved risk off corporate books.
• XREF: Connects to Mattei’s critique of financialization and the political manufacture of asset bubbles. — connects to: Shortages of Treasury bills pushed AAA mortgage securities into repo collateral. — Mark Blyth, Austerity: The History of a Dangerous…, 81; Regulatory AAA requirements forced funds to buy the very derivatives that collapsed. — Mark Blyth, Austerity: The History of a Dangerous…, 93; Predatory lenders converted unaffordable homes into deceptively affordable mortgages (+10 more)

Broader Connections

• Predatory lenders converted unaffordable homes into deceptively affordable mortgages #exemplifies (0.90)
• Teaser-rate loans were an explicit lure that backfired on lenders #corroborates (0.80) — Albert Bandura, Moral Disengagement, 1489
• Blaming individual borrowers hides a systemic precariousness produced by finance #corroborates (0.80) — Max Haiven, Cultures of Financialization, 208
• De-regulation created a criminogenic environment allowing mass financial wrongdoing #expands (0.80)
• Blaming borrowers’ financial ignorance obscures the structural logic of sub-prime lending #corroborates (0.75) — Max Haiven, Cultures of Financialization, 528
• The ideal entrepreneurial-agent construct erases the very concept of predatory lending #corroborates (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 347
• Commission-based financiers possessed phantom-like unreality and lacked real control #complicates (0.75) — Hannah Arendt, The Origins of Totalitarianism, 519
• The finance industry repeated savings-and-loan fraud patterns in the 2008 crash #expands (0.72) — Albert Bandura, Moral Disengagement, 1424