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đŸȘ” The Threshold

Post-crisis lending shifted from securitized bank credit to shadow-bank portfolio lenders valuing future prospects

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tagsja-picks, xref, define, causal_relationships, primary_study, singleton, category/causal-relationships
aliases@langley_assets_2020, loc. 31

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Post-crisis lending shifted from securitized bank credit to shadow-bank portfolio lenders valuing future prospects

Evidence

Drawing on the literature that we brought together in the previous section, the movement of financialized capitalism onto the terrain of social reproduction can be analysed somewhat differently, and as constituted through an array of assetization processes. The significance of asset-backed securitization techniques was revealed by the course of the global financial crisis (Aalbers, 2008). While the portion of credit-debt relations (e.g. mortgages, consumer loans, auto-loans, student loans, credit card receivables, etc.) securitized by banks has declined considerably since then - reregulated retail banks now hold a greater portion of their lending business on their balance sheets – other processes of assetization have come to the fore. In the terms of a report by Standard & Poors (2017: 6), retail banks and other ‘balance sheet lenders’ in the US, Europe and Asia were joined over the last decade by ‘a new class of portfolio lender 
 supported by money from asset managers, pensions, and private equity’ (see also Erturk et al., 2010). As the report continues, in the ‘stable post-crisis environment’ of low interest rates and unprecedented monetary policies, ‘these new lenders 
 experienced gradual asset value appreciation, with the resulting positive asset performance enabling them to accumulate more loan product’. This is because portfolio lenders (a type of ‘shadow bank’) leverage investment and operational capital in ways that are dependent upon prospective valuations of their future prospects. And, paralleling the pre-crisis tranching of securitized subprime mortgages to make them amenable to diverse investor constituencies, ‘this newer format can be customized to the asset investor’s risk/ return target’ (Standard & Poors, 2017: 6). In crucial respects, then, Michel Feher’s (2018) provocation to understand structurally indebted individuals and households who are making their way in contemporary financialized capitalism as ‘investees’ seeking backing and capital from investors is arguably more relevant now than it was at the height of the global crisis. — Paul Langley, Assets and Assetization in
, 31

Categorization

  • XREF: Connects to theories of financialization of everyday life and debt-based subjectivity; Feher’s ‘investee’ framing resonates with the reader’s finance-theory background. — connects to: Portfolio logic shifts investment from long-term commitment to scattered short-term securitization. — Max Haiven, Cultures of Financialization, 449; Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis — Albert Bandura, Moral Disengagement: How People Do Harm
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  • DEFINE: Defines portfolio lenders / ‘shadow banks’ as a structural category distinct from reregulated retail banks.

Broader Connections

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