President Barack Obama’s plan to overhaul financial regulation covers everything from mortgages to hedge funds. But reform efforts in Europe may prove more significant for U.S. companies. European regulators are hashing out new rules for banks, insurers, and money managers that could put U.S. firms at a disadvantage.

Why is Europe reaching across the Atlantic? European policymakers, like those in the U.S., want to show decisive action in the wake of the financial crisis and prevent another. The new rules and proposals take aim at U.S. financial firms, a big source of dubious mortgage securities and other investments. U.S. firms will have to play by the new rules—or find a way around them. Otherwise, they risk losing a large pool of buyers, including European pension funds, insurers, and other big investors.
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