Wed, 11 Aug 2021 16:46
AbstractAfter 2007, many US households suffered significant financial losses when their mortgages were foreclosed upon and homes repossessed. Much of this lost value ended up in the hands of institutional investors who bought repossessed homes at the bottom of the market. Using the case of the biggest such investor, Blackstone, as an exemplar, this article argues that the state was implicated in this value transfer in several crucial ways: its failure to better assist distressed borrowers ensured the availability of large numbers of homes for investors to buy; it privileged such investors over other categories of potential buyer; and its taking of action to support recovery of the housing market coincided with such investors beginning to buy at scale. The article draws on the critical macro-finance literature to conceptualise the state's role in terms of the ''de-risking'' of financial markets that are increasingly integral to contemporary social and economic governance.
IntroductionOne of the many significant developments within the US urban-economic landscape in the wake of the global financial crisis was the emergence of what was effectively a new institutional-investor asset class: single-family (as opposed to multi-family) rental housing. To be sure, much of the country's single-family housing stock had long circulated within the rental sector; its being rented was not per se new, although the proportion being rented did now grow (Pfeiffer et al. 2020 ). What was new, rather, was the make-up of the community of landlord-owners. Historically, single-family landlords were typically small, ''mom-and-pop'' operations, owning a handful of properties at most. But after the crisis, large financial investors such as private-equity firms began for the first time to acquire single-family homes on a significant scale, focusing predominantly on foreclosed properties. One estimate suggested that by 2018, perhaps as many as 300,000 such homes had been purchased by major investors (Amherst Capital 2018 :2). Single-family rental (SFR) was now a bona fide asset class, one that has received increasing attention within geography and related disciplines (e.g. Christophers 2021a ; Colburn et al. 2020 ; Fields 2018 ; Immergluck and Law 2014 ).
The growth of this asset class from out of the rubble of the financial crisis represented a vast transfer of value. Foreclosures peaked in 2010; house prices bottomed out in mid-2012 (see Figure 1); and it was then, when homes'--including those repossessed from distressed homeowners'--were at their cheapest, that institutional investors began buying in earnest (Amherst Capital 2018 :3). Midway through the following year, the Blackstone Group, the biggest investor in SFR and the main investor-subject of this article, indicated just how cheaply it was able to buy: to that point, it had acquired c. 25,000 homes, paying an average of $153,000 for properties with an estimated average 2006 value of $303,000 (Blackstone 2013 :12).
S&P/Case-Shiller US National Home Price Index, 2000''2019 (source: Federal Reserve Bank of St. Louis)
Blackstone exited the SFR business in 2019, selling its final shares in the company it had established in 2012 to buy and let houses, called Invitation Homes.1 Blackstone's eventual profit on the venture was estimated at over $3.5 billion (Dezember 2019 ). The profit is easy to explain: by 2019, house prices had recovered to far above their pre-crisis peak (Figure 1), thus inflating the value of the Invitation Homes portfolio. It was a classic investor coup: buying low and selling high. But of course, the flip-side to Blackstone having bought at the bottom and sold out once prices improved was a massive cohort of former owner-occupiers who by contrast had bought at or near the top and sold out'--or, in a majority of cases, been sold out by their mortgage holders'--at or near the bottom, and seen their equity eviscerated in the process. In other words, the money that Blackstone made from this investment initiative was effectively money that foreclosed-upon or otherwise distressed households had lost. It did not materialise out of thin air: this, rather, was a transfer of value from one set of hands to another. Call et al. ( 2014 :10) managed to identify some of the losing hands. Examining a sample of 108 homes acquired by Invitation Homes in Atlanta, they found that the 77 of these that were formerly owned by individuals (as opposed to companies) had originally been bought by those individuals for a cumulative $7.4 million but had been picked up by Invitation Homes for a cumulative $4.2 million. The individuals' loss would be Invitation Homes' and Blackstone's eventual gain as the market swung in its favour. The fact that many foreclosed-upon households would end up renting homes back from Blackstone, or from other such institutional investors that had benefited from their misfortune, rubbed salt into the wound.
The present article is concerned with one critical component of the SFR story: the role of the state in enabling the aforementioned value transfer, a role that was fundamental and multifaceted. The state underwrote investor gains and homeowners' commensurate losses in three main ways. First, it was the state's failure to come meaningfully to the aid of financially distressed homeowners that ensured that large volumes of distressed assets were available for purchase by investors in the first place; the relevant assets included not just homes themselves but also mortgages that could (and in many cases, did) enable investors to take control of the mortgaged property. Second, the state put large investors in a privileged position relative to other possible buyers when it came to the purchase of those assets, and furthermore enabled them to make those purchases on distinctly favourable terms. And third, around the time that large investors began buying single-family homes at scale, the state intervened in financial markets in such a way as to more-or-less guarantee house-price inflation and thus capital gains.
The existing literature on SFR has certainly addressed the role of the state. But pertinent studies cover only one or another aspect of that role. Thus, drawing on and extending the accounts of, for example, Immergluck ( 2015 ) on the inadequacy of the state response to borrower distress and Fields ( 2018 ) on the state's support for investor acquisition of single-family dwellings, and combining this synthesis of the secondary literature with analysis of original primary materials (e.g. annual reports, financial statements, securities filings, and government agency documents), this article aims to paint a more unified picture of the state's ubiquitous involvement in the processes occasioning investors' multi-billion-dollar profits'--showing that without the state's support, profits on such a scale would have been unthinkable.
Furthermore, existing studies of SFR'--and indeed of similar post-crisis transfers of value from distressed homeowners to institutional investors in other territories'--typically go no further than identifying (aspects of) the state's role. Limited consideration has been given to attempting to understand in conceptual terms why the state acted in the ways it did'--what its actions might suggest, for instance, about the relation between the state and finance capital in times of crisis.
To the extent that the state's role has been considered analytically, explanations tend to alight on the finance sector's instrumental power'--its ability to shape political decision-making through lobbying. No doubt there is considerable purchase in this. But this article seeks to add an additional, theoretical, explanatory layer. To do so it draws on recent conceptual work within ''critical macro-finance'' (Gabor 2020 ). The central insight here is that recent decades have seen the growing entanglement of states and financial markets. States not only borrow in the markets. They increasingly act and govern through the markets, in areas ranging from monetary policy to climate policy and, not least in the US itself, housing policy. This makes the state reliant on markets' robustness and liquidity, resulting in policies that consistently prioritise market ''de-risking''. Such de-risking occurs through both the guaranteeing of systemic liabilities in times of crisis and the enabling of the creation of new asset classes as markets emerge from crisis. The various US state actions that facilitated the value transfer examined in this article represent, the article suggests, a case in point.
In developing these arguments about the state's role, the article refers in particular to Blackstone and its post-crisis investment activities. Blackstone was by no means the only large investment institution to acquire substantial amounts of distressed US single-family stock in the period beginning around 2012, and to benefit from the state's interventions. But it was, by some margin, the biggest operator (Amherst Capital 2018 ). Arrowing in on Blackstone's experience allows us to put flesh'--numbers relating to profits, homes, loans and the like'--on the bones of the argument, without in any way suggesting that Blackstone's experience was representative of institutional investors more generally (cf. Colburn et al. 2020 ).
The article begins by looking at the existing literature on the role of the state in the post-financial crisis transfer of housing'--and value'--from households to investors both in the US and overseas, and by considering how critical macro-finance might inform our understanding of this phenomenon. The three following sections examine, respectively, the three main ways in which the state buttressed that value transfer in the US.
Single-Family Rental, the State, and Critical Macro-FinanceA decade after large financial institutions began investing widely in distressed US single-family housing, a growing stream of research on the topic by geographers, planners and urban scholars means that we now have a good understanding of it. We know what types of investment firm have been most active, and the types of strategies and business models they have employed (Christophers 2021b ; Colburn et al. 2020 ; Immergluck and Law 2014 ; Mallach 2014 ). We know how they have financed their investments (Fields 2018 ) and how they have utilised digital technologies in both selecting properties to acquire and then managing them as rental assets (Fields 2019 ). We know what types of neighbourhoods investors have been particularly active in (Charles 2020a , 2020b ). And we know that in some areas, at least, such investors are associated with higher rates of tenant eviction than other types of landlord-owner (Akers and Seymour 2018 ; Raymond et al. 2018 ).
We are also beginning to appreciate how important a role various arms of the US state have played in facilitating the transfer of single-family homes and associated economic value from distressed homeowners to the investment institutions in question. Two aspects of this role have been illuminated'--both of which will be addressed in depth in subsequent sections of this article. First, Blackstone and other big investors were only able to cheaply acquire large volumes of distressed housing stock because so many homeowners had been foreclosed upon, and this, in turn, had occurred in part because the state failed to provide substantive support'--especially to minority and lower-income households in neighbourhoods most rapidly and extensively engulfed by the foreclosure crisis (Immergluck 2015 ). Second, the state sold government-owned foreclosed homes directly to institutional investors (Fields 2018 ), which, as we shall see, was important not so much in terms of those homes per se'--which were relatively few in number'--but for the effect that this had of legitimising investor acquisition of foreclosed homes more generally. The state also sold to institutional investors large numbers of distressed, government-owned single-family home-loans, many of which would themselves subsequently be foreclosed upon (Greenburg 2017 ).2
Nor was it only in the US, researchers have shown, that, in the wake of the financial crisis, the state acted in ways that served to enable the transfer of homes and value from distressed households to investment institutions. Most attention in non-US contexts has been given to what Beswick et al. ( 2016 :322,324) referred to as ''state programmes to recapitalise banks through buying up and selling on toxic debts and assets'', with many such assets being housing-related (i.e., homes or home loans) and with the sales occurring ''almost exclusively to US private equity firms and hedge funds''. Byrne ( 2016 ) examined such post-crisis programmes in Ireland and Spain; Alexandri and Janoschka ( 2018 ) in Greece and Spain. But there were other ways, too, in which non-US states smoothed or hastened the transfer of housing-related assets and asset value to investors. In the Spanish context, for example, Yrigoy ( 2020 ) highlighted how banking regulation incentivised lenders to foreclose on delinquent borrowers.
Yet while research has thus begun to highlight the crucial role of the state, relatively little attention has been given to trying to understand this role in theoretical terms. That is to say, do we have a theoretical framework that helps us understand why in the US'--but not only there'--the state acted after the financial crisis in ways that repeatedly redounded to the benefit of institutional investors rather than the households whose homes such investors acquired? Immergluck ( 2015 ) explains the inadequacy of the US government's response to households' foreclosure crisis in terms of structural obstacles (e.g., a dysfunctional loan-servicing industry), conflicting objectives among state agencies, and an inhospitable political climate. Fields ( 2018 :126) ascribes the state's support for SFR'--including the sale of government-owned foreclosed homes to institutional investors'--to its concern ''with restoring housing's role in capital circulation''. More broadly, the critical literature on post-crisis, housing-related value transfers from households to investors in both the US and overseas indexes the political power of the finance sector: a power that, in the US context, Harvey ( 2010 :11) evocatively captured with his idea of ''the party of Wall Street''. But if all such explanations undoubtedly disclose important realities, they arguably fail to provide'--individually or collectively'--a conceptual framework that can adequately account for the consistency of state action across all three areas of intervention examined in this article.
One framework that can potentially help in this regard is the emerging field of ''critical macro-finance'' (Gabor 2020 ), which is explicitly concerned with the relations between states, finance and crisis. This framework can be boiled down to a central premise and related postulate. The premise is that financial markets have become increasingly integral to the mechanisms whereby states manage economic and social life. The postulate is that, in times of crisis in particular, states therefore act in ways designed above all to stabilise market infrastructures; they ''de-risk'' markets because they depend upon markets to govern. Let us take the premise and the postulate in turn.
It is widely recognised that contemporary financial capitalism ''has evolved around market-based finance, anchored in changing practices for producing liquidity'' (Gabor 2020 :46). What has been less often appreciated, at least until recently, is that governments ''do not just govern private financial markets through rules and regulations'' (Braun and Gabor 2020 :243). They are ''active participants in the financial markets'' (Wang 2020 :190), and such participation extends well beyond governments' role as sovereign borrowers. Most importantly, they participate in markets, or actively ''use'' markets, precisely as governments'--that is, as institutions engaging in social and economic governance. The implication is that financial markets often ''provide the governance infrastructure through which public actors seek to govern'' (Braun and Gabor 2020 :243).
The quintessential example of this phenomenon is monetary policy, the administrative components of which today are arguably less material than the market-based components: open-market operations, whereby central banks buy and sell securities on the open market, are pivotal to the implementation and transmission of monetary policy. It is true, as Braun and Gabor ( 2020 :246) concede, that ''not all parts of the state rely on financial markets as governance infrastructures in equal measure''. But it is definitely not only in the realm of monetary policy that market operations undergird the state's governance of economy and society. Climate policy, for instance, is in significant part conducted via markets (e.g. Christophers 2017 ). And, in the US perhaps more than anywhere else, so too is the policy regime with which we are primarily concerned in this article'--namely, housing policy. The seminal account of the US state's longstanding use of financial markets to manage the domestic housing system'--and indeed, through it, US society more broadly'--is Quinn's ( 2019 ) American Bonds. Market-based housing policy, Quinn ( 2019 :14) writes, is part-and-parcel of ''America's complex style of statecraft''. The state's fingerprints are everywhere: the Federal Housing Administration (FHA) is the world's largest mortgage insurer; the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, are not only dominant players in the secondary mortgage market'--they effectively built it. US state officials have long been ''creative and consequential market participants''.
Scholars of critical macro-finance argue that all of this renders the state intimately beholden to markets'--Gabor ( 2021 :436) invokes ''the infrastructural dependence of the state on finance'--and thus the infrastructural power of the latter'''--and that this dependence has especially important ramifications in times of crisis. If, as Braun and Gabor ( 2020 :245) maintain, the ''effectiveness of market-based agency'' relies on ''deep and liquid markets for money and securities'', then protecting market depth and liquidity is essential. This has two sides: shoring-up systemically important liabilities on the one hand and, on the other, abetting the construction of significant new asset classes, the latter being required ''to fill growing balance sheets '... [to] attract the trillions of dollars held by global institutional investors'' (Gabor 2020 :48).3
Gabor refers to this two-part state imperative as one of ''de-risking'': reducing financial institutions' liability-exposure risk by acting as lenders or market-makers of last resort; and reducing such institutions' asset-investment risk by ensuring asset ''bankability''. Crisis management represents, on this reading, ''a form of political struggle over institutional changes necessary to stabilise the plumbing of market-based finance'' (Gabor 2020 :47). As crises progress, the state's emphasis typically shifts from safeguarding liabilities to encouraging asset creation. Only by examining and understanding states' infrastructural entanglement with various financial markets and the institutions that operate in them'--rather than with reference to, say, the finance sector's instrumental power'--are we able to explain why, in times of crisis, the state backstops some markets, assets and liabilities, but not others.
America For SaleWhen the subprime mortgage crisis struck the financial system in 2007, the US housing market was already in freefall, and was dragging millions of households down with it. By the end of 2008, house prices nationwide had fallen around 20% from their peak, with falls of more than 30% in the major urban regions of California and Florida and of upwards of 40% in cities such as Phoenix and Las Vegas. More and more homes were missing mortgage payments; and a larger and larger proportion of those who defaulted'--some 80% in California and Florida'--were ending up in foreclosure. At more than three million, the number of US foreclosure filings issued during 2008 was up approximately 80% on 2007 and 225% on 2006 (Christie 2009 ). A full-scale socio-economic disaster was in the making.
Responsibility for dealing with this disaster fell principally to the government of Barack Obama, who took office in January 2009. Obama's signature scheme for addressing mortgaged-homeowner distress and helping to keep people in their homes, announced the month following his inauguration, was the Treasury's Home Affordable Modification Program (HAMP). In theory, HAMP incentivised lenders to reduce the monthly payments of qualifying borrowers, primarily by reducing interest rates, but also, if necessary, by delaying'--or even forbearing'--payment of the loan principal. It had a counterpart scheme in the Home Affordable Refinance Program (HARP), which, introduced the following month by the Federal Housing Finance Agency (FHFA), was designed to enable underwater and near-underwater homeowners to refinance onto lower interest rates.
To say that these two schemes did not live up to their promise of enabling a significant number of households at risk of foreclosure to avoid that eventuality would be an understatement. They largely failed. The ''small 'carrots''' (Immergluck 2015 :58) that HAMP offered to banks to modify delinquent loans were outweighed by the incentives to go ahead and foreclose. Obama had pledged that HAMP would assist three to four million homeowners to modify their loans and thereby avoid foreclosure. ''Almost seven years later'', Dayen ( 2015 ) wrote shortly before HAMP was wound up, ''less than one million have received ongoing assistance; nearly one in three [of these] re-defaulted after receiving inadequate modifications; and six million families lost their homes over the same time period''.
HARP was somewhat more successful, but not, notably, in helping ''the most vulnerable families and neighbourhoods'' (Immergluck 2015 :73). Insofar as HARP's design and effectiveness improved over time, it disproportionately benefited homes in distress in the later stages of the foreclosure crisis from 2012 onwards, and these, as Immergluck ( 2015 ) has shown, were mainly middle-class, white households. Minority and lower-income families, a larger percentage of which had subprime loans, had been quicker to fall into default, and thus needed assistance precisely in the period'--2008 through 2010'--when the federal programs were most inadequate. By the time HARP became more fit for purpose, it was already ''too late for '... inner-city and predominantly minority neighbourhoods hit hardest by the crisis'', which after 2011, ''while still struggling, had moved past their peak levels of foreclosure'' (Immergluck 2015 :60).
The federal interventions' overall failure, needless to say, was a foundational component of the development from around 2012 of the SFR asset class. As the New York Times ( 2013 ) perceptively editorialised, the emergence of Blackstone and other investment firms as major landlords was structurally enabled by ''the continued failure of public policy to deal with the housing bust '... As a result, a glut of cheap homes and a ready supply of renters are available for Wall Street's taking''. Investors enjoyed substantial transactional efficiency in buying homes that lenders had foreclosed upon because such homes were generally sold in bulk at periodic auctions held at the courthouse of the relevant county. Cash-rich buyers such as Blackstone's Invitation Homes could attend auctions and buy up a large of number of homes in one swoop. ''The ample supply of properties for sale at foreclosure auctions'', Mills et al. ( 2019 :409) noted, ''provided a unique opportunity for buy-to-rent investors to purchase large numbers of properties at distressed prices''.
To be sure, there were, as Immergluck ( 2015 ) has argued, significant structural and political obstacles to a more beneficial federal response to the foreclosure crisis, which ultimately saw almost 5% of American adults, or around ten million people, lose their homes (Martin and Niedt 2015 ). But equally certainly, more forceful and effective methods to meaningfully encourage helpful loan modifications could have been employed. Immergluck ( 2015 :58), along with many others, has pointed in particular to the missed opportunity of so-called bankruptcy cramdown'--legislation allowing for the reduction of remaining loan-principal balances in bankruptcy proceedings'--together with bigger penalties for loan servicers not following HAMP guidelines.
Not only, furthermore, did policies nominally designed to assist distressed homeowners generally not do so; but they often ended up actively helping America's banks instead. Through trial loan modifications, in particular, HAMP licensed lenders to extend default periods and in the meantime extract even more cash from distressed borrowers'--in the form for instance of late fees and back payments'--before the inevitable foreclosure axe was brought down. In significant measure, HAMP became, as Dayen ( 2015 ) put it, ''a predatory lending scheme rather than an aid program''.
In his own account of how the government handled the foreclosure crisis, Obama's Treasury Secretary, Timothy Geithner ( 2014 :265), conceded that HAMP and associated policies was always going to be a less productive and more circumscribed program for distressed homeowners than many campaigners'--not to mention the homeowners concerned'--had hoped for. He and his Treasury colleagues had come to the view that it would not be ''a fair or economically effective use of taxpayer resources'' to pursue what he rather patronisingly called ''the grand plans floating around for universal mortgage refinancing or widespread principal reductions''; the ''economic bang for the buck'' would be too limited. One individual to have received early evidence of the hostility of Obama's team to more substantive measures to limit homeowner foreclosure was the economist (and former Federal Reserve vice-chairman) Alan Blinder: when in 2008 he presented to Democratic leaders his own grand plan, namely for a modern version of the Depression-era Home Owners' Loan Corporation, Blinder was ''laughed out of court'' (cited in Glantz 2019 :26).
But Geithner's account was, at best, selective. A fuller story emerged in the account of the crisis period provided by Neil Barofsky, a lawyer who had been given the job of overseeing the Troubled Asset Relief Program (TARP)'--the first main plank of the US government's response to the financial crisis, signed into law by President George W. Bush in October 2008, and into which HAMP would in due course be folded. Barofsky recalled his deputy, Kevin Puvalowski, saying to him one day in regard to HAMP: ''The only ones benefiting from this debacle are the banks'' (Barofsky 2012 :156). With time, the two men would come to see that this was no accident: HAMP benefitted banks more than homeowners, Barofsky and Puvalowski concluded, because that was the Treasury's intention. And Geithner effectively had admitted as much.
The occasion was a meeting in the fall of 2009 attended not only by Barofsky but by Elizabeth Warren'--a future candidate for the Democratic presidential nomination, and at the time the chair of another TARP oversight body, the Congressional Oversight Panel. Warren, Barofsky wrote of the meeting, had ''grilled'' Geithner about HAMP, and, under the barrage, Geithner ''finally blurted out, 'We estimate that they can handle ten million foreclosures, over time', referring to the banks. 'This program will help foam the runway for them''' (Barofsky 2012 :156).
''A lightbulb went on for me'', Barofsky (
2012
:156''157) continued. ''Elizabeth had been challenging Geithner on how the program was going to help home owners, and he had responded by citing how it would help the
banks''. That, in other words, was what, for the Treasury, HAMP was primarily about. If foreclosures were to come too thick and fast, the banks would be overwhelmed. So they had to be delayed, and the foreclosure crisis stretched out, thus giving the banks more time to absorb housing-related losses. HAMP borrowers would ''foam the runway'' for distressed banks in need of a safe landing. Warren recounted the same story in her own 2014 book,
A Fighting Chance'--which, of course, was precisely what so many distressed homeowners had been denied:
There it was: the Treasury foreclosure program was intended to foam the runway to protect against a crash landing by the banks. Millions of people were getting tossed out on the street, but the secretary of the Treasury believed the government's most important job was to provide a soft landing for the tender fannies of the banks. Oh Lord. What do you say to such a thing? (Warren 2014 :118)
If there was one moment during those years of crisis management that symbolised the US government's prioritisation of Wall Street over Main Street, then this was it.
Of course, HAMP was only a small element of the broader support that the US state provided to the finance sector during and in the immediate wake of the financial crisis. If the state largely failed to help homeowners with their liabilities, it manifestly and famously proved both willing and able to help Wall Street with its. It did so in three main ways. One'--the provision of liquidity through quantitative easing'--will be discussed later in the article. A brief recap of the two others is in order here, because understanding how and why the state supported the finance sector is essential to explaining why it did not similarly support Main Street (thus crystallising large numbers of distressed property assets for Blackstone and the like to buy up). As we will see, critical macro-finance is instructive in this regard.
First, there were equity bailouts. True enough, not all distressed US financial institutions were rescued by the state; many failed. But, Lehman Brothers aside, no big, systemically important institutions were allowed to go under. The state stepped in to rescue them. The first major entities to be saved, in September 2008, were the government-sponsored (but at that stage, privately owned and publicly traded) mortgage-securitising enterprises, Fannie Mae and Freddie Mac, which were effectively nationalised. A little over a year later, the country's nine largest banks received a capital injection from the government totalling $125 billion (Tooze 2018 :197).
Second, the Federal Reserve (''Fed'') lent finance-sector actors enormous sums, essentially providing them with new liabilities to help extinguish existing liabilities, thus ensuring that the latter did not sink them. Through a veritable alphabet soup of lending mechanisms, of which the most important in terms of amounts disbursed were the Primary Dealer Credit Facility ($9.0 trillion), the Term Auction Facility ($3.8 trillion) and the Term Securities Lending Facility ($1.9 trillion), the Fed loaned financial institutions (excluding foreign central banks) over $16 trillion between 2007 and 2010, not including assistance to specific institutions outside of these formal facilities (Felkerson 2011 ).
Drawing on critical macro-finance, we can explain the state's contrasting approaches to homeowner debts and finance-sector debts in terms of the difference between systemic and non-systemic liabilities. Homeowners' loans were not, or were not considered to be, systemically important. Defaults would not cause market-destabilising runs on banks'--not, at any rate, if HAMP successfully foamed the runway for the latter, spreading foreclosures out sufficiently across the months and years. Banks' liabilities, however, were viewed as systemically important. To fund the growth of their balance sheets in the years leading up to the crisis, the banks that subsequently borrowed trillions of dollars from the Fed had taken on trillions of dollars of short-term debt obligations that unarguably did threaten market stability (Acharya and nc¼ 2013 :297), most importantly in the form of two types of instrument collateralised by financial securities of various kinds'--namely, asset-backed commercial paper and repos. Viewed in their capacity as liability holders and from the perspective specifically of a state deeply invested in financial-market durability, homeowners were small enough to fail, while banks were too big to be allowed to do so (cf. Christophers and Niedt 2016 ).
At the Front of the QueueInvitation Homes' acquisition of single-family homes was concentrated in the latter months of 2012 and in 2013. During that relatively short window, when at one point it was buying more than $100 million worth of homes every week, it bought up nearly 40,000 dwellings'--equivalent to about 80% of the homes in its portfolio when it listed on the stock market as a real-estate investment trust in 2017. Many of those 40,000 homes were acquired from lenders who had foreclosed on homeowners in mortgage default; and much of this buying from lenders occurred at foreclosure auctions.
The state was not directly involved in this. And yet in multiple ways it shaped the processes whereby lenders disposed of distressed single-family stock. Two such ways demonstrably favoured large investor-buyers such as Blackstone.
Firstly, the state actively legitimated the large-scale SFR model adopted by Blackstone and others. Prior to the financial crisis, that model did not exist: even as the US rental market contained in the region of 10 million single-family homes, few landlords owned more than a handful of dwellings and none owned more than 1,000 (Glantz 2019 :143). During 2011''12, however, in an object lesson in the fashioning of new asset classes described by critical macro-finance, the Fed performed crucial discursive work in making conceivable and creditable large investor-owned portfolios such as Blackstone would subsequently build: it gave the model a seal of approval. Both Elizabeth Duke ( 2011 ), a Fed governor, and Ben Bernanke ( 2012 ), the Fed chair, publicly made the case for converting foreclosed homes into investor-owned rental properties. And this paved the way for the FHFA to effect just such a conversion with foreclosed homes owned by Fannie Mae, which in 2008 had been taken into government conservatorship: seven pools of Fannie homes were sold to large investors in 2012. The numbers of homes were small, but as Mari ( 2020 ) has noted, the message was more important than the transactions themselves. Actively enabling institutional-investor single-family-rental by auctioning off some of its own stock ''gave the government's imprimatur to the concept''.
Secondly, financial policymaking undertaken during the crisis years put large investors such as Blackstone in pole position to beat out the competition when it came to buying foreclosed homes from lenders. It did so by creating a distinctly un-level playing-field. On the one hand, the unconventional monetary policy known as quantitative easing (QE) dramatically lowered borrowing costs for financial institutions. The significance of this for a firm such as Blackstone cannot be overstated. Not for nothing is Blackstone's modus operandi often labelled ''leveraged buyouts''. Leverage'--that is, borrowing'--is at the heart of its business model, a key source of its reputedly superior returns. In a ratio typical of Blackstone's portfolio companies, Invitation Homes was funded approximately three-quarters with debt, and just one-quarter with equity (Invitation Homes 2017 :63). In substantially lowering its cost of capital, QE enabled Invitation Homes to bid more aggressively for properties than it would otherwise have been able.4
Meanwhile, the state's financial policymaking made things more, not less, difficult for institutional investors' main class of competing bidder at foreclosure auctions: namely, ordinary households. With a loosening of mortgage lending standards in the early 2000s having been widely identified as a key factor in causing the financial crisis, the US government from 2008 onwards applied pressure to lenders to retighten those standards'--to demand of borrowers higher down-payments and higher credit scores. Unsurprisingly, this shrunk the population of potential homebuyers. Already by mid-2011, a dearth of mortgage credit was, Morgan Stanley ( 2011 :4) reported, ''severely hindering'' home-buying by potential owner-occupier households. In 2012, home-purchase lending to Whites was 41% lower than it had been in 2001; for Blacks, the most affected group, it was 55% lower (Goodman et al. 2014 ). In other words, not only was it the case that financing was considerably cheaper for the likes of Blackstone than for prospective owner-occupiers, which in and of itself gave the former an advantage; but for many in the latter group, financing was simply not available, at any cost. This cleared the way for investors such as Blackstone to dominate the acquisition of lender-owned distressed stock; and it was government policymaking that had established this advantage.
While Invitation Homes was acquiring single-family homes directly (that is, by purchasing the homes themselves), another Blackstone portfolio company was acquiring them indirectly'--by purchasing distressed mortgages, and then, if and when borrowers defaulted, by frequently taking possession of the dwellings to which those mortgages applied. The company in question was the Florida-based Bayview Asset Management. Blackstone bought a 46% stake in Bayview in 2008, giving it the power to approve or veto strategic decisions made by Bayview's board. Immediately upon buying into Bayview, Blackstone made $2 billion available to it to buy bundles of ailing mortgage assets (Sender 2008 ). Bayview remained a Blackstone portfolio company for a decade, during which time it bought tens of thousands of delinquent loans.
The state's role in enabling Blackstone's acquisition of single-family homes'--and on highly favourable terms'--was much more hands-on and direct in the case of Bayview than of Invitation Homes. The reason is simply stated: many of the soured mortgages that Bayview acquired whilst a Blackstone portfolio company were acquired from the government.
The financial crisis had seen the aggregation of large numbers of distressed residential mortgages within several different federal-government domains. One was the GSEs, Fannie Mae and Freddie Mac, which were effectively nationalised when taken into government conservatorship. These companies acquire mortgages in the secondary market. Some they securitise and sell on; others they retain on their balance sheets. Many of those they retain defaulted during the crisis. Of those deemed unmodifiable, some, as we already know, were foreclosed upon'--the seven pools of foreclosed Fannie homes auctioned by the FHFA in 2012 came from this source. Other delinquent mortgages considered unmodifiable, however, the GSEs looked to sell.
A second key federal institution holding distressed mortgages by dint of the crisis was the Department of Housing and Urban Development (HUD). During the 1990s and 2000s, the Federal Housing Administration (FHA), which is part of HUD, had insured increasing numbers of risky loans, many of which went into default when the crisis struck. When default occurred and could not be relatively harmoniously resolved, there were three main possible outcomes. One was that the lender foreclosed, HUD paid out on the insurance, and the property itself became HUD's to sell. The second possible outcome was that the lender modified the loan in such a way as to help the borrower avoid foreclosure; HUD, which favoured this outcome, provided lenders with insurance benefits to finance such modifications. The third and final outcome was that the lender assigned the loan to HUD for it to sell, with HUD paying off the lender's insurance claim in recompense. This is the outcome that concerns us here; HUD pursued it where loan modifications by the lender proved unsuccessful, as a last recourse to avoid the otherwise inevitable foreclosure. As we will see, HUD wagered that the entities to which it sold these assigned loans would be more likely to enable delinquent borrowers to keep their homes than the original lenders had been.
In what follows, our focus will be on loan sales by HUD rather than the GSEs. As it happens, the sale programs were of very similar magnitude: both entailed the disposal of between 110,000 and 120,000 delinquent mortgages during the decade following the GSEs' nationalisation in 2008. Both programs, furthermore, saw loans being sold overwhelmingly to private-equity groups and other institutional investors. And yet, for reasons that remain unclear (to this author, at any rate), Blackstone'--via Bayview'--was a prodigious buyer of loans from HUD but only a very modest buyer from the GSEs. Of the 117,446 non-performing loans with an aggregate unpaid principal balance of around $22 billion sold by Fannie Mae and Freddie Mac between 2014 and mid-2019, Bayview bought just 953, worth a paltry $202.5 million, in two pools sold by Freddie'--less than 1% of the total. By way of comparison, Goldman Sachs, the biggest single buyer, purchased over 20,000 GSE loans, worth $3.8 billion (FHFA 2019 ).
HUD's disposal operation began life in 2010 as the Single Family Loan Sale Program (SFLS'--all the mortgages were on single-family residential units), which saw the sale of 2,055 loans (HUD 2016 :5). In mid-2012, SFLS become DASP'--the Distressed Asset Stabilization Program'--and the pace of disposals greatly accelerated, a further 108,709 HUD loans, with an aggregate outstanding balance of $18.4 billion, being sold by the end of 2016. All the SFLS/DASP loans were highly delinquent, averaging two-and-a-half years of missed payments (HUD 2020a :1).
Bayview was comfortably the single largest purchaser from HUD. It bought 567 of the SFLS loans5 and no fewer than 31,213 of the DASP loans (HUD 2020a :8), giving a grand total of 31,780 mortgage assets, equating to a share of HUD disposals of just under 30%. Back in 2009, Blackstone's chief executive, Stephen Schwarzman, had announced that Bayview had ''a solid track record of facilitating loan modifications and workouts'' for distressed borrowers and that, by investing in the company, Blackstone would be ''helping strapped home owners stay in their homes'' (Blackstone 2009 :16). But the reality, at least where the HUD mortgages were concerned, turned out to be very different. As of February 2020, 25,797 of the 31,213 DASP loans that Bayview had acquired had a known status outcome. In as many as six out of every ten such cases (15,592), Bayview had taken possession of the borrower's home, either by foreclosing, or, less commonly, by virtue of the borrower providing a deed in lieu of foreclosure'--that is, conveying the property to Bayview to satisfy the delinquent loan (HUD 2020b ). Indeed, Goldstein ( 2015 ) suggested that Bayview and the other major investor-buyers of HUD loans ultimately proved ''even less helpful '... in negotiating loan modifications with borrowers'' than had been the banks who originally assigned the loans to HUD.
Three particular aspects of DASP policy are crucial to our account of the US state's post-financial-crisis underwriting of the transfer of value from distressed homeowners to Blackstone and other investors. First, in selling those delinquent loans, HUD explicitly prioritised such investors. The fact that the loans were sold in large pools made it very difficult for organisations other than such deep-pocketed for-profit buyers to compete, not least not-for-profit groups and community development organisations, which, despite their efforts to acquire the loans in order to endeavour to assist distressed mortgagors, won auctions for only around 1% of the total debt sold off (Gittelsohn et al. 2014 ). HUD, as Greenburg ( 2017 :890) has remarked, put private-equity investors firmly ''in the driver's seat''. It was an archetypal example of what Gabor ( 2021 ) refers to as the state ''escorting'' institutional investors into new asset classes.
Second, HUD sold the loans at substantial discounts to face value'--ordinarily for just 50''70% of the unpaid principal balance. These prices were, as Greenburg ( 2017 :917) noted, ''dramatically lower'' than the market values of the underlying properties as assessed by HUD itself'--typically 20''30% lower. Sometimes, the discounts even exceeded the upper end of these ranges. In December 2013, for example, HUD auctioned off 13,661 loans with a cumulative unpaid balance of $2.6 billion, and where the aggregate market value of the underlying homes was estimated to be $2.0 billion (the mortgages, in other words, were deeply underwater). Of the 14 pools into which these loans were divided for the purposes of the auction, Bayview acquired no fewer than six, accounting for more than half of the individual loans that were for sale. The $641 million it paid in total for the 7,731 mortgages that these six pools contained represented discounts of, respectively, 32% to the estimated aggregate market value of the mortgaged properties ($944 million), and fully 56% to the aggregate unpaid principal balance on those loans ($1.46 billion) (HUD 2013 ).
Third and finally, the loans sold by HUD came largely unencumbered by obligations to treat the distressed homeowner generously; they were, in the terminology of critical macro-finance, suitably ''de-risked''. Not only did sale of the loans strip them of the original borrower protections associated with FHA insurance, including HUD's guidelines regulating lenders' loss mitigation options. But only very limited requirements were imposed on the loans' purchasers, the most substantive of which was the stipulation that, absent extenuating circumstances, the loans could not be foreclosed upon for six months (extended to 12 months in 2015). The theory was that the generous discounts afforded to Bayview and other acquirers would provide them with scope to avoid foreclosure and to instead provide the affordable loan modifications not forthcoming from the original lenders. ''HUD essentially believed'', wrote Greenburg ( 2017 :920), that ''the new lenders, after purchasing the loans for a price significantly lower than the unpaid principal during the bidding process, might be willing to agree to principal reductions''.
This was an approach of striking naivety. Notably, it seemed to disregard precedent specifically in the resolution of home loans soured by the subprime crisis and sitting on the government's own books. In 2008, the government had taken effective ownership of large numbers of delinquent mortgages not only by nationalising the GSEs, but also, inter alia, when IndyMac, a California-based lender, failed, and was taken into conservatorship by the Federal Deposit Insurance Corporation. In the case of IndyMac, as (later) with HUD, the government sold the loan assets to investors, namely a group of high-net-worth individuals led by Steven Mnuchin, formerly of Goldman and later to become Treasury Secretary under President Trump. Then, too, the sale, closed in 2009, was at a substantial discount to asset value, coming with a generous loss-share agreement for good measure. And then, too, the government failed to impose checks that might meaningfully disincentivise foreclosure (Glantz 2019 :78): having bought IndyMac, the investor team proceeded swiftly to take possession of tens of thousands of borrowers' Californian homes, earning Mnuchin the moniker of ''foreclosure king'' (Kolhatkar 2020 ). The lesson, clearly, was not learned. But if selling de-risked mortgage assets to investors like Blackstone was arguably na¯ve, it was also, of course, an approach perfectly aligned with the contemporary state's imperative of cultivating new asset classes circulating in deep and liquid financial markets.
Market SupportThe third and last key area of government intervention driving Blackstone's profits on its investment in US single-family housing was one we have briefly touched upon already: monetary policy. As noted, quantitative easing (QE) benefited Blackstone by markedly lowering the cost of the debt that it used to finance the purchase of residential-property assets. But, as we shall now see, it benefited Blackstone and other SFR investors in another crucial way, too.
Initiated by Bernanke in 2009, QE saw the Fed provide a vast quantum of cheap liquidity to the financial markets through the purchase, mainly from banks, of various types of financial securities. It came in three stages. Under QE1 (2009''10), the Fed mainly bought mortgage-backed securities (MBS), albeit only those issued by Fannie Mae and Freddie Mac, the two GSEs, which by that point had of course been nationalised. Under QE2 (2010''12), the Fed mainly bought Treasury securities. Under QE3 (2012''14), it resumed its buying of GSE-issued MBS.
As Tooze ( 2018 :370''371) has observed, QE from the start had two principal objectives. One was simply to keep banks afloat with cash, as a supplement to the vast pool of emergency loan capital that, as we saw earlier, the Fed had been dispensing to the finance sector since 2007: ''For every billion dollars' worth of securities the Fed purchased, it credited an account with a corresponding amount of dollars''. The other primary objective was to absorb the maturity mismatch with which the banks were widely afflicted: they had been borrowing short-term (especially via repos and asset-backed commercial paper) and investing long-term (not least in mortgage-backed securities); the Fed took the long-term asset onto its balance sheet, providing immediate liquidity in return.
But by the later months of 2010, a third worry was in the air: housing. The number of home sales nationwide had recovered somewhat in 2009 after hitting rock bottom in 2008, but sales numbers fell again in 2010. Given the importance of a robust and dynamic housing market not just to the US economy more broadly but to a state long reliant on using the market for housing finance to implement housing and social policy (Quinn 2019 ), this troubled policymakers, even as they recognised the importance of the tighter lending standards discussed earlier. Thus, as Tooze ( 2018 :366) noted, US monetary policy would henceforth be shaped not just by the two aforementioned goals, or indeed the general continuing sluggishness of US and global economic recovery, but also by concern for a US housing market that was ''still in shock''.
While QE2 was not specifically designed to help stimulate the housing market, QE3, commenced in September 2012, partly was. Not for nothing did the Fed resume buying mortgage securities. It announced that it would be buying vast quantities: a minimum of $40 billion per month to begin with, lifted to a minimum commitment of $85 billion per month from December of the same year. One of the key objectives was clear. ''The use of MBS'', wrote Jensen ( 2012 ), ''is an attempt to further lower the mortgage rate''. Or as Lange and Schnurr ( 2012 ) put it, even more explicitly: ''The Federal Reserve's new economic stimulus plan involves printing vast sums of money to help people buy homes'' (emphasis added).
The Fed's support for the housing market via QE3 was essentially unconditional and open-ended. Unlike the cases of QE1 and QE2, there would be no maximum amount or time limit. Hence the nickname it was given: ''QE Infinity''. ''The indefinite time period'', noted Jensen ( 2012 ), ''is an attempt to avoid the situation where the market receives a boost, then crashes at the end of the program''. In other words, what the Fed was saying was that it was in it for the long haul. It was not giving the economy and the housing market a one-off shot; it was going to provide, if necessary, permanent support. Echoing the famous words of Mario Draghi, the president of the European Central Bank, Bernanke ( 2015 :563) would recall in his memoirs that, with QE3, the Fed was indeed declaring ''we would do whatever it takes'''--all he neglected was to add, ''not least to ensure the housing market recovers''.
And it worked. The market did recover. Home sales numbers increased again. And, having bottomed out in mid-2012, so also, fuelled by QE3, did home prices (Figure 1). In committing in mid to late 2012 to not let things deteriorate any further under any circumstances, the Fed effectively put a floor under the housing market, indicating that from that point on the only way was up. It was a floor that Blackstone would enthusiastically stand upon. The beginning of Invitation Homes' most intense period of buying of single-family homes coincided precisely with the commencement of QE3. While it is impossible to say to what extent the latter prompted the former, it seems unlikely that Blackstone was ignorant of how significant for the housing market the implementation of QE3 would be. And whatever the degree of influence of the Fed's monetary-policy experiment on Blackstone's thinking, it plainly had a profound influence on Blackstone's profits: as US house prices soared in the years following 2012, so, inexorably, did the value both of Invitation Homes' portfolio and of Blackstone's shareholding.
What is striking, of course, is exactly how the Fed inserted that floor under the housing market. It did not do so by providing assistance to the legion struggling homeowners (to say nothing of those who had already been ejected from the market). As one of its own, Carlos Garriga ( 2012 ) of the St. Louis Fed, wrote at the time: ''The Fed's QE3 policy may do little to help the 23 percent of homeowners (11.1 million) who are currently underwater'--owing more on their mortgages than their homes are worth''. Rather, to the extent that the Fed was aiming to help existing homeowners, QE3 targeted those more fortuitously positioned'--''it could'', Garriga continued, ''allow the remaining 77 percent (48.3 million) with positive equity and stable jobs to refinance their mortgages at lower interest rates '... This support should stimulate consumption spending and house prices could increase''. And Garriga added a prophetic addendum: ''QE3 should also provide funding for renters or investors to purchase part of the existing stock of homes'' (emphasis added). As we now know, it did exactly that, or at least, for investors it did. In any event, Garriga's intervention made clear one thing above all else: that QE3 was fundamentally about support for the housing market, not for households per se, and still less for those households who actually needed support. In this, QE3'--much like HAMP and the government's foreclosure-prevention program more widely, which, as Immergluck ( 2015 :73) observed, ''no doubt helped '... [in] saving the housing market as a whole'''--was emblematically a project of critical macro-finance's market-backstopping, market-dependent state.
Having responded rationally to Bernanke's signal and, beginning in the final months of 2012, ploughed vast resources into the US single-family market comfortable in the knowledge that the Fed now backed that market, Stephen Schwarzman led Blackstone to a stellar 2013. By December, Blackstone's share price had nearly doubled since the beginning of the year. That month, at a Goldman Sachs-hosted conference, Schwarzman lauded the propitious market conditions that QE3 had generated. ''Overall'', Schwarzman said, ''this is a very good set of circumstances for us and I anticipate that is going to continue for some period of time'' (cited in Gara 2013 ). And so, Schwarzman continued, he had personally thanked the man behind QE3. ''I saw him last Thursday'', Schwarzman said of Bernanke, ''and I thanked him''. That, said Schwarzman, is what you do ''when you have a year like this in finance''. Blackstone's long-time leader can be'--and has been'--accused of many things, but failing to show gratitude to those most responsible for his and his firm's financial success is not one of them.
ConclusionIn October 2014, about a year after Schwarzman had thanked him for making Blackstone so successful, and shortly after he had stepped down from his position as Fed chair, Ben Bernanke went into his local bank to try to refinance his mortgage'--Bernanke had come to central banking not from Wall Street but from the more humble origins of academia. His bank turned him down. ''I think it's entirely possible'', the event led Bernanke to wryly reflect, that in tightening lending criteria in the wake of the financial crisis, the country's banks ''may have gone a little bit too far on mortgage credit conditions'' (cited in Campbell and Woellert 2014 ).
But Bernanke did not need to worry about refinancing for long. Six months later, it was announced that he would take on senior advisory roles with both Citadel, one of the world's largest asset managers, and PIMCO, another leading global investment management firm (Ablan 2015 ). Whereas banks' refusal to refinance home loans had seen millions of other US households lose their homes (including to investors such as Blackstone), for Bernanke such refusal represented nothing more than an amusing anecdote to be trotted out on the after-dinner speaking circuit. And if there was a certain irony in Bernanke having had his refinancing application turned down, there was no irony in him now taking institutional investors' coin. Consider all he had done for them; they, like Schwarzman had, were now simply paying their dues. They would pay those dues to Treasury Secretary Timothy Geithner, too. Geithner left the Obama administration in January 2013; in March 2014, he became the president and managing director of Warburg Pincus, one of the world's premier private-equity firms (Banerjee and Katz 2013 ). It would not have been a surprise to see Geithner move instead to Blackstone itself, with which he had long had close links: the chairman of the Federal Reserve Bank of New York who in 2003 recruited Geithner to the position of bank president (a position he held until moving to the Treasury) was Peter Peterson, also chairman of Blackstone; and the man Geithner promoted in 2010 to head up the Treasury's new Capital Markets and Housing Finance division, where the government's inadequate foreclosure-prevention policies were distilled, was Matt Kabaker, an ex-Blackstone managing director (Solomon 2010 ).
Yet it was not just Geithner, or Bernanke, or even primarily them, that failed distressed US homeowners during the foreclosure crisis and facilitated the transfer of so much value from them to Wall Street. On entering office in 2009, President Obama seemingly had an unprecedented opportunity to release the US political economy from Wall Street's vice-like grip. His Republican opponent for the presidency, John McCain, had seen his campaign undermined by journalists asking how many homes he owned (he could not remember) while many ordinary Americans were losing the one house they did have; the banking system was in meltdown; Obama had zero complicity in the build-up to the crisis; he had a Democrat majority in the House and the Senate'--indeed, Congress, to say nothing of the US population at large, was in principle dead-set against any measures that would benefit the banks; he had, in other words, on the face of things, a free-hands, two-year run. But he failed.
Now, there is no doubt that Obama could have done some things differently: for instance, he did not have to put a Wall Street insider, which is what Geithner was, in charge of the Treasury; he could have introduced bankruptcy-cramdown legislation; and more. But to understand what Obama and those working with him could and could not have done about Wall Street's grip on the economy, it is necessary to understand the nature of that grip. The crucial insight of the critical macro-finance literature has been to show that the power of the finance sector is not only instrumental: it is not just about lobbying and revolving-doors. It is also infrastructural. Financial institutions enjoy power vis- -vis the state because it is increasingly through financial markets themselves that the state pursues certain important policy objectives. If markets constitute an infrastructure of governance, safeguarding markets in times of economic crisis takes on a significance that the state diminishes at no small risk, not least to itself; and to one degree or another, safeguarding markets always entails backstopping those institutions holding the systemically important assets and liabilities circulating in those markets.
None of this is to say that states are impotent or that the power of finance is unassailable. But states' freedom of action with regards to finance today is clearly constrained by the extent to which the state and state-policymaking has itself become operationally entangled with market mechanisms. The key question'--and one to which the critical macro-finance literature has yet to offer a satisfactory answer'--is by how much state action is thereby constrained. Whatever the answer, the actions taken by the US state in the wake of the financial crisis and which resulted in a vast quantum of value being transferred from distressed mortgaged households to the institutional investors that bought their homes were all actions consonant with the strategic prioritisation of de-risking markets and maintaining their depth and liquidity: that is, with stabilising, in Gabor's ( 2020 ) terms, the ''plumbing'' of market-based finance. If this reading is correct, one obvious implication is that reducing the power of finance'--and making any crisis-resolution mechanisms enacted in the context of future crises less likely to result in the types of value redistribution examined in this article'--would require undoing the state's deep infrastructural entanglements with finance as much as tackling finance's more overt instrumental influence.
AcknowledgementsMany thanks to the anonymous referees and the editor for helpful guidance on this article. I am responsible for any remaining errors of fact or interpretation.
Endnotes 1 In 2020, Blackstone dipped its toes back into the SFR sector, taking a minority stake in Tricon Residential, which owns around 23,000 US single-family rental homes. And as this article was going to press in June 2021, it re-entered the sector in more emphatic fashion, by striking a deal to wholly acquire Home Partners of America, which has around 17,000 SFR homes. The present article's analysis of Blackstone's SFR activities, however, is concentrated solely on the period up until its exit from Invitation Homes in 2019. 2 Charles ( 2020a ) argues that the value transfer from households to investors was also ''state-sponsored'' inasmuch as investors frequently established investment vehicles benefiting from ''highly favourable'' tax treatment (specifically, real-estate investment trusts, or REITs) to house their SFR businesses'--drawing on a similar argument by Waldron ( 2018 ) in the Irish context. The present article does not discuss the significance (or otherwise) of investors' REIT status, however. For one thing, the article is focused on actions taken by the state after the financial crisis; America's REIT statutes are longstanding, dating to the 1960s. Furthermore, while a REIT is indeed itself largely exempt from income tax, its shareholders are not: all dividends received are taxable, and in the US a minimum of 90% of a REIT's taxable income must be distributed as dividends. Although the US's REIT provisions certainly impacted the ultimate distribution of the value transferred from households to investors, this author's view is that they neither substantively enabled that transfer nor materially influenced its scale. 3 Acharya and nc¼ ( 2013 :297) define systemically important liabilities as ''those liabilities of highly leveraged entities that are assets of other highly leveraged entities and therefore, when faced with haircuts in case of default, would trigger runs on other entities''. 4 For an extended discussion of this point, see Christophers ( 2021a ). 5 Figures collated from the HUD sale results summaries at https://www.hud.gov/program_offices/housing/comp/asset/sfam/sfls. References
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