Cleaning Up Toxic Loans Was Meant to Be a Great Investment. Then Coronavirus Hit.

With Europe still reeling from last decade’s debt crisis, Banca Popolare di Bari SCpA, a cooperative bank in southern Italy, was under pressure from regulators to clean up a big pile of bad loans that were weighing on its results. So in 2017, the bank tapped a government plan to package the nonperforming loans, or NPLs, and sell securities backed by them to investors. Other…

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