Notes

4. Financial Innovation and the Alphabet Soup of Financial Products

1. OR iliese, Ranicri (1996:35) notes, “The CMO Coverptis peeysimple. Rather than look at a mortgage pool as a single group of thirtp-pear mortgages, the CMO concept approaches it as a series of unique annual cash flows each pear for the next thirty pears.

2. Whikcradil scores are a kind rf Anantial instrument, I discmt them here be­cause thep are used as part of the processing of loans. While securitization also produces financial instruments, it is part of a general set of production processes bp which banks take one kind of financial asset and turn it into another. It does not just create the output (i.e., financial instruments) but also creates a set of techniques to do so.

3. I do nos meen th SUFgsstthot È CQsoo cea donoScomewith bi ashe. Since they were first invented, there have been critics of these scores and their biases against certain kinds of people, particularlp racial and ethnic minorities (Capon, 1982; for a more recent critique, see O'Neil, 2016(.

4. One con stm anat mtny of ³Îñºº mottgaeeo we sc tie individuate who were stretched financiallp and had relativelp poor credit. These kinds of MBSs were at the core of the financial meltdown in 2007-2008.

5. The Subprime Moment, 2001-2008

1. The federa]ftιnds Hiieir Ïàñ ³ πter Citlralo alwpioh Orp PNC Finan­cial Services Group Inc., State Street Corporation, TD Group US Holdings LLC, UBS Americas Holdings LLC, U.S. Bancorp, and Wells Fargo & Company.

3. The economics pro fe^s^i onto so atoi of legitimacy wiTh the p ublicfor their role in ignoring the crisis and appearing to be cheerleaders for whatever the banks wanted to do. The idea that all financial innovation is efficient, an idea that is core to much of financial economics, is one that many are now skeptical of.

4. Thcr Uanscriptpf thieaefsr eoneerencewas ^^0^0x100 J2ly0o a 2h20, at https:// www.rev.com/blog/transcripts/jerome-powell-federal-reserve-coronavirus-press -conference-transcript.

5. In Thuations where ³^ºÍº have 2eeuae knowJeUge uiW beep deendeisggied de­cision-making power, they can have more influence. The Federal Reserve and monetary policy are a site where some have suggested this might be the case (Hirschman and Popp Berman, 2014).