How Much Exposure to Europe to US Banks Have?

With the European debt crisis continuing and seemingly getting worse, a big question is how much exposure do US banks have to European sovereign debt?  Fitch downgraded the US banks today. 

In Bloomberg:

“Fitch believes that unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen,” the New York-based rating company said today in a statement. 

In addition:

Banks in the U.S. have manageable exposure tied to stressed European markets in Greece, Ireland, Italy, Portugal and Spain, “but further contagion poses a serious risk,” Fitch said. Gross exposures to larger European countries and major banks are greater than those of the five stressed countries, the rating firm said. It didn’t explain what it meant by contagion.

US markets were up at one point today on rumors that the Fed may be preparing to pump more money into the system to help with the crisis.

Unless we see the ECB committing to its role of lender of last resort along with central banks of developed countries priming the pump this can be a disastrous scenario.  Austerity at this point will not cut it.  Germany needs to realize that inflation is simply not in the cards right now so stop insisting that monetary policy remain too tight for the times.

In addition, the way fiscal policy is progressing on both sides of the Atlantic is a major contributor to this mess.  On the US side we have paralysis along ideological lines while the Europeans lack the coordination that is required in order to right the ship.

The bottom line is that things are getting worse, not better.  The implementation of technocrats in Italy and Greece might look good on paper but it's basically a comb over a bald spot.  Leaders right now need to step up and lead.