Quick lesson on deregulation of financial markets. The case of mortgage borrowers led consumer uprising against a Polish bank
Department of Sociology and Social Antrophology AGH University of Science and Technology Krakow, Poland
There is no subprime mortgage market in Poland but due to sudden plunge in the Polish zloty exchange rate and drop in prices on the real estate market loans denominated in Swiss Frank (CHF) and taken out before CFH appreciation can become undersecured. By most of borrowers such risk was not anticipated and it is interesting to look how do they confront it now. Paper will focus on borrowers campaign against one of Polish bank accused of predatory lending in order to investigate how popular economic representations are produced through social action. Economic knowledge will be treated as important element for explaining economic behaviour.
Loans of borrowers involved in protest have variable rate but it is not adjusted up or down to any market index. In period when CHF London Interbank Offered Rate (LIBOR) was rising rate floating was seen as connected to LIBOR. Eventually when CHF LIBOR had started to fall down bank did not started to cut down the interests. Bank is accused of using loopholes to obtain additional profit. Protest is organised entirely on-line and mainly through social networking. Many borrowers have poor formal training in economic theory but they pragmatically elaborate representations stemming from their connections with the few markets they are involved in and gain economic knowledge through the news media. Knowledge is roughly fitted to borrower's pragmatic interests vis-à-vis bank. Arguments against bank goes beyond predatory lending and hit banking system itself, deregulation of financial market and the role of state. Piecemeal understanding of a particular economic context and financial market is produced in order to comfort each other, deny prior wrong economic decision and asymmetry in conflict with bank. Protest leaders serve as intermediaries translating economic insights into borrowers action.