The European Unions Response to the 2007-2009 Financial Crisis, Walter W. Eubanks, Specialist in Financial Economics, August 13, 2010
“The purpose of this report is to assess the response of the European Union (EU) to the 2007-2009 financial crisis in terms of the financial regulatory changes the EU has made or is planning to make. The financial crisis began in the United States during the second half of 2006 with a sharp increase in U.S. bank losses due to subprime mortgage foreclosures. Because the U.S. and EU banks were using a similar business model, the EU banks experienced similar distressed financial conditions that U.S. banks faced. Large banks on both sides of the Atlantic found themselves severely undercapitalized and holding insufficient liquidity. However, because in the European Union financial regulations are enforced at the European level as well as the member country level, finding and implementing effective remedies for the causes of the financial crisis have been slower and different than the United States.”
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