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Aalbers, M. B. (2006). ‘When the banks withdraw, slum landlords take over’: The structuration of neighbourhood decline through redlining, drug dealing, speculation, and immigrant exploitation. Urban Studies, 43(7), 1061-1086.

Summary: Rather than viewing neighborhood decline as a natural process resulting from the in-flow of low-income households, this study uses a socio-spatial approach that looks at the structuration of neighborhood decline by emphasizing the power of agents/actors, linking the structure of the real estate industry to the development of the neighborhood. Landlords and banks are not merely automata of the price mechanism that steer the natural operation of the market, but should be seen as intentionally and unintentionally restructuring the local real estate market and thus possibly producing, or contributing to, processes of neighborhood decline. This paper presents the Tarwewijk (Rotterdam, the Netherlands) as a case study of neighborhood decline. Attention is paid to the social and physical decline of the neighborhood, drug dealing, undocumented immigrants and processes impacting the housing market such as speculation, blockbusting, milking and redlining. It is argued that the retreat of ‘formal’ actors, such as banks and bona fide landlords, stimulates the rise of the underworld in both the housing and drugs markets.

Questions to Consider:

1. How is “neighborhood decline” conceptualized? What are key indicators of “neighborhood decline”?
    
2. What is redlining and blockbusting?
    
3. Should these behaviors be considered a form of white-collar crime or just dishonesty on the part of the real estate and loan industry?
    

Palmer, D. & Maher, M. W. (2010). The mortgage meltdown as normal accident wrongdoing. Strategic Organization, 8(1), 83-91.

Summary: We argue that the mortgage meltdown can be considered a “normal accident”. Our analysis suggests that the mortgage industry’s complex and tightly coupled technology made it vulnerable to failure, irrespective of the level of greed and fraudulent behavior exhibited by mortgage industry executives. Our normal accident analysis also suggests that insufficient regulatory oversight contributed to the debacle. But our analysis suggests that simply increasing the amount of regulation over the mortgage industry is unlikely to reduce its susceptibility to failure. Indeed, if inappropriately designed, increasing the amount of regulation could increase the likelihood of future failure.

Questions to Consider:

1. What are the claims of normal accident theory?
    
2. How is wrongdoing distinguished from a “normal accident” and are the two distinct concepts? How are “normal accidents” and wrongdoing related?
    
3. How are the two concepts of “normal accident” and wrongdoing evident in the American mortgage crisis?