Bad banks and the urban political economy of financialization

This paper seeks to understand the urban dimensions of the resolution of financial crises. It does so by focusing on Asset Management Companies (AMCs), or ‘bad banks’, which are established by governments to acquire and manage toxic assets, often linked to real estate, in the wake of systemic banking crises. Despite the fact that AMCs are a significant financial institution with clear urban implications, they have received surprisingly little attention. Indeed, despite the widespread recognition that financialized real estate markets are inherently crisis prone, there is an absence of literature on the resolution of such crises. The paper argues that AMCs have three distinctly urban dimensions. Firstly, they continue and enhance the extraction of value from urban space. Secondly, they act as ‘market makers’ by restoring the ‘liquidity’ of financialized real estate. Thirdly, they contribute to the globalization of real estate by intensifying the circuits linking local real estate with global pools of capital. Drawing on this analysis, the paper also theorizes AMCs as what have been called ‘apparatuses of financial accumulation’ which, significantly, reveal the systematic inter-dependence of financialization and urban space.