- List of Figures
- List of Tables
- Global Finance And Its Institutional Spaces
- Politics And Financial Markets
- Finance And Institutional Investors
- Business Groups And Financial Markets As Emergent Phenomena
- Central Banking And The Triumph Of Technical Rationality
- What is a financial market? Global markets as microinstitutional and post-traditional social forms
- Auctions And Finance
- Interactions And Decisions In Trading
- Traders And Market Morality
- The Material Sociology Of Arbitrage
- Seeing Through The Eyes Of Others: Dissonance Within And Across Trading Rooms
- Market Efficiency: A Sociological Perspective
- Financial Analysts
- Rating Agencies
- Accounting And Finance
- The International Monetary Regime And Domestic Political Economy: The Origin Of The Global Financial Crisis
- A Long Strange Trip: The State And Mortgage Securitization, 1968–2010
- Dead Pledges: Mortgaging Time And Space
- Financial Crises As Symbols And Rituals
- The Sociology Of Financial Fraud
- The Disunity Of Finance: Alternative Practices To Western Finance
- Islamic Banking And Finance: Alternative Or Façade?
- Geographies Of Finance: The State-Enterprise Clusters Of China
- The Financialization Of Art
- Historical Sociology Of Modern Finance
- Gender And Finance
- The Role Of Confidence In Finance
- Finance In Modern Economic Thought
- Financial Automation, Past, Present, And Future
Abstract and Keywords
This article provides a brief account of the mortgage securitization industry: the role of government in creating the market; the role of firms and innovative actors in constructing the market; and the evolution of financial products as pragmatic solutions for sellers to overcome objections of buyers. It shows how firms came to sow the seeds of their own destruction in 2002–7. The article is organized as follows. First, it proposes a general way to understand the financial cycle and the link between governments, firms, and the growth of financial products. Then, it considers the case of the market for mortgage securitization. Next, it documents how the government invented the market in the 1960s. It moves on to the building of the market from 1970 until 1993. Then, it examines how the industry changed from 1993–2007 and how this caused the crisis. Finally, it considers the unfolding of the crisis and briefly assesses various arguments about the government's role in causing it. The conclusion returns to a broader discussion of governments, financial crises, financial instruments, and regulation.
Neil Fligstein is the Class of 1939 Professor in the Department of Sociology at the University of California. He is the author of numerous books including The Architecture of Markets (2001), Euroclash (2008), and A Theory of Fields (with Doug McAdam; forthcoming). He has written extensively on the topics of economic sociology, social stratification, political sociology, and European economic and political integration. He is currently working on studying different aspects of the current financial crisis. He is a member of the American Association of Arts and Sciences, a former Guggenheim Fellow, and a former fellow of the Center of Advanced Study in the Behavioral Sciences in Palo Alto.
Adam Goldstein is a PhD Candidate in the Department of Sociology at the University of California, Berkeley. His research focuses primarily on the economic sociology of financial capitalism in the contemporary United States. Current projects examine how labor market insecurity and growing inequality have shaped households’ incorporation into financial markets since the 1980s; the organizational undermining of the 2008 financial crisis; and the role of local community structures in mediating patterns of housing market speculation.
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