Securitization let lenders profit without ever collecting repayments, incentivizing predatory subprime lending.
Evidence
So they created more debt from scratch to use as raw material for more bets. How? By lending to impecunious blue-collar workers who dreamed of the security of owning their own home. What if these ‘little people’ could not actually afford their mortgage in the medium term? In contrast to bankers of old, the Jills and the Jacks who now lent them the money did not care if the repayments were made, because they never intended to collect. Instead, having granted the mortgage, they put it into their computerised grinder, chopped it up digitally into tiny pieces of debt, and repackaged them into one of their labyrinthine derivatives – which they would then sell at a profit. By the time the poor home ‘owner’ had defaulted and her home was repossessed, the financier who granted the loan in the first place had long since moved on. — Yanis Varoufakis, Technofeudalism, 225
Categorization
- XREF: Connects directly to the mechanics of securitization and the 2008 crisis as later described in platform-era finance chapters and to ‘The Big Short’ accounts. — connects to: Securitization let bankers profit while dispersing loan default risk to distant buyers. — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 181; Government-backed loan guarantees without oversight enabled predatory lending — Albert Bandura, Moral Disengagement: How People Do Harm…, 1487; Mortgage lenders of 2008 never intended to collect repaid loans — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 225 (+2 more)
Broader Connections
- Mortgage lenders of 2008 never intended to collect repaid loans
#expands(0.80) — Yanis Varoufakis, Technofeudalism, 225 - Bankers avoided fear by decoupling profit from loan repayment
#corroborates(0.80) — Yanis Varoufakis, Technofeudalism, 181 - Government-backed loan guarantees without oversight enabled predatory lending
#qualifies(0.75) — Albert Bandura, Moral Disengagement, 1487 - Loan securitization concentrated risk rather than eliminating it.
#complicates(0.70) — Mark Blyth, Austerity, 80