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C anada's Housing Bubble Story: Mortgage Securitization, the State, and the Global Financial Crisis
Author(s) -
Walks Alan
Publication year - 2014
Publication title -
international journal of urban and regional research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.456
H-Index - 114
eISSN - 1468-2427
pISSN - 0309-1317
DOI - 10.1111/j.1468-2427.2012.01184.x
Subject(s) - securitization , financial system , financial crisis , bailout , business , subprime mortgage crisis , real estate , state (computer science) , finance , financial market , economics , algorithm , computer science , macroeconomics
Abstract C anada's experience during and after the financial crisis appears to distinguish it from its international peers. C anadian real estate sales and values experienced record increases since the global financial crisis emerged in 2008, rather than declines, and C anada did not witness any bank failures. The dominant trope concerning C anada's financial and housing markets is that they are sound, prudent, appropriately regulated and ‘boring but effective’. It is widely assumed that C anadian banks did not need, nor receive, a ‘bailout’, that mortgage lending standards remained high, and that the securitization of mortgages was not widespread. The truth, however, does not accord with this mainstream view. In fact, the C anadian financial and housing markets reveal marked similarities with their international peers. C anada's banks needed, and received, a substantial ‘bailout’, while federal policies before and after the financial crisis resulted in the massive growth of mortgage securitization and record household indebtedness. This article documents the growth of C anada's housing bubble, the history of mortgage securitization, and of government policies implemented before and after the crisis. Instead of making the C anadian financial and housing sectors more resilient and sustainable, the outcomes of state responses are best understood as regressively redistributive.