The European debt crisis could quickly spread to US banks, which are heavily exposed to Europe, banking analyst Dick Bove told CNBC.com.
Bove, of Rochdale Securities, released research showing the massive exposure US banks such as JPMorgan Chase , Morgan Stanley and Citigroup have to European debt.
Worries about the spreading debt crisis in Europe helped trigger a selloff in US stocks, which quickly escalated after an apparent trader error.The Dow dropped nearly 1,000 points before closing down nearly 350 points.
"The five biggest banks in the United States have a substantial risk to what's going on in Europe," Bove said in a telephone interview. "We've argued for a couple of days that Greece will default because it has no other option....Where are they going to get the funds to repay?"
Greek citizens took to the streets to protest a vote by parliament agreeing to austerity measures linked to a European Union bailout. Bove said the demonstrations sent the message that while the government may agree to financial belt-tightening, the public would not.
"There is simply a growing recognition that Greece has got to default," Bove said. "The riots in the streets showed the decision to repay the debt was not going to be made by the people in Germany, France and Switzerland. It's going to be made by people in Greece and they're not going to repay it.
"Anyone seeing the riots is going to recognize that this government is going to be thrown out," Bove added. "And anything replacing this government is going to be far more leftist leaning and they're going to repudiate."
Global ramifications could be profound, with five major US banks facing $2.5 trillion in exposure.
"What you're faced with is you simply do not know which countries are solvent, which countries are insolvent," Bove said. "You do not know who the counterparties are for these insolvent countries, so you run for the hills."