Debtors' Revenge

In 1993, Tomaso and Anna Longo took out a loan with the Banca di Roma to buy a two-bedroom house in the fashionable Prati section near the heart of Rome. The interest was a painful 12.5%, but the Longos had little alternative, since that was about the average rate on a home mortgage in those days. Anna, a civil servant, says that life became a matter of pinching lire. "We couldn't ever go away anywhere," she recalls. "We didn't even go out to the cinema."

Then a miracle happened. Italy's efforts to join the euro led to...