Bank of England Chief Warns of Echoes of 2008 Crisis Amid US Loan Defaults
LONDON - bank of England Governor Andrew bailey has voiced concern over recent bankruptcy cases in the US, suggesting they may signal broader issues within the private financial sector reminiscent of the conditions leading up to the 2008 financial crisis. The warning, reported by The Guardian on October 21, 2025, centers on a growing trend of “division and fragmentation of loan structures.”
Bailey questioned whether the failures of companies like Tricolor and First brands are isolated incidents or indicative of a more ”basic” problem, stating, “I think it is indeed still a very open question in the united States. I think it’s a question we have to take very seriously.” He specifically noted that the current lending surroundings is beginning to resemble the pre-2008 period, when loans with poor collateral were packaged and sold as securities. “If you were involved before the financial crisis alarm bells start ringing at that point,” Bailey added, according to the BBC.
the concern stems from similarities to the subprime mortgage crisis – loans issued to borrowers with low creditworthiness – which triggered the 2008 meltdown. Subprime loans are loans to borrowers with low creditworthiness (who do not get loans on normal terms due to poor repayment ability).
The Bank of England plans to conduct a stress test of the UK financial system within the next nine to twelve months to assess potential vulnerabilities, as reported by Reuters. Participation in the test will be voluntary, as the central bank’s regulatory reach over many involved companies is limited. Deputy Governor Sarah breeden confirmed the planned assessment.
