Calls Grow for Foreigners to Have a Say on US Market Rules

Some US homeowners have adjustable rates on their home mortgages. As interest rates rise, they struggle to repay loans and keep the homes. The problem went global after lenders sold those loans: Financial firms packaged mortgages with other types of debt; US credit-rating agencies slapped high rates on the packages; and investors in Asia and Europe purchased the loan packages, assuming that the home mortgages carried low risk and added safety to the deals. As analysts sort through the mess, foreign representatives call for international regulations and oversight on complex financial products. Government and financial officials in China, France, Australia and other nations press for international transparency and regulation. US officials are not keen on sharing oversight, but may have little choice if the government and consumers can’t slow their heavy borrowing. Other nations, like China, vow to develop their own financial products, setting up competition for US and UK firms, current leaders in such deals. If foreign entities stop buying US debt products, interest rates will increase, adding to the woes of homeowners with adjustable rates and others around the world who seek cheap credit. Lack of trust in financial markets leads to uncertainty, raising prices and slowing growth. – YaleGlobal