This paper engages recent arguments regarding the transformation of credit (default) risk within US mortgage markets. With the growing integration of mortgage lending into volatile circuits of finance, emergency interventions during financial crises have become productive moments for credit risk, securing the broader norms of risk taking by selecting out problematic loans—a distinctive orientation to risk that I characterize as the financial exception. I develop this argument by focusing on emergency interventions during two signal moments in the recent history of US mortgage markets—the late 1980s banking crisis and the post-2007 mortgage crisis. In both cases the regulatory practices of isolating system-threatening risk-segmented borrowers into distinct market spaces, deepening and extending particular forms of credit risk inherited from the New Deal financial system.
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