The exposure of U.S. financial institutions to a meltdown in Europe is supposedly contained. But as financial journalist Felix Salmon points out, our big banks have a terrible history of accurately assessing their exposure to risky sovereigns.
He cites the example of Citigroup's Argentina debacle. In December 2001, Citigroup was said to be at risk of losing — "in an absolute, worst case scenario" — just $200 million from Argentina's meltdown.
Ultimately, Citigroup lost at least $2 billion in Argentina.
So take the reassurances about exposure to Greece, Italy, Spain, and France with a grain of salt.
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