In the pre-2008 lending boom, American banks sold their dodgiest “subprime” loans to investors around the world. When the U.S. housing bubble burst and borrowers defaulted en masse, a global financial crisis ensued.
Brussels now wants to loosen the rules governing the practice, meaning banks would need to put aside less capital against the loans they trade, as well as easing due diligence and reporting rules around the practice. But the Commission insists enough safeguards will remain to protect against a repeat of 2008.
Pint-sized market
The European market is pint-sized compared with others globally: It shrank from being worth around €2 trillion at its precrisis peak to €1.2 trillion now. The U.S. market has grown from being worth $11.3 trillion (€9.76 trillion) in 2008 to $13.7 trillion (€11.83 trillion) now — leading senior officials at the Commission to…
