Years of 'reckless risks' caused current turmoil - EC

EC internal market and services commissioner Charlie McCreevy believes years of high liquidity levels coupled with low money market interest rates created a “favourable breeding ground” for irresponsible risks. “This ‘plethora’ of liquidity led some market participants to forget some basic banking, lending and underwriting principles,” McCreevy says. “In particular the most basic principle of all: that the only way to prudently lend money is on the basis of a realistic assessment of the capacity of the borrower to repay.” McCreevy says expectations of a short-lived credit crunch have now...