(Lenders, after all, have no way to know which loans will be repaid at the end of the month and which loans will stay on the books).
The property values against which loans were secured collapsed, as did Barclays' profits.
Some allow investors to choose which loans they underwrite, others bundle them.
And those loans it couldn't put back to the originator, because Citi didn't know exactly which loans they were.
"It is very hard for Wall Street to know, from where it sits, which loans are predatory," Mr. Raines said.
One reason for the increased failure rate, Mr. Garmaise said, could be the pace at which loans are underwritten.
Jos?anuel Barroso, the president of the European Commission, will decide Wednesday whether to propose formally a mechanism under which loans to Greece would be coordinated.
But the advent of securitization, in which loans are bundled and sold to investors, required that loan documents move quickly from one purchaser to another.
Chuka Umunna, the shadow Business Secretary, said: "The freezing of the level at which loans are repaid will increase graduate repayments by thousands of pounds.
Mr. Giannoulias, 33, has ducked all but the most general questions about which loans he approved that might have contributed to the bank's trouble.
Current rules refer to "incurred losses," in which loans are written down as it becomes clear that a particular loan is likely to default.
