As you can probably tell, I'm very skeptical about the reassurances U.S. financial institutions have tried to provide about their potential losses related to European troubles.
The basic reason for my skepticism is the lack of transparency. Banks tell us almost nothing about their exposure, guarding the details of their positions like they were state secrets. From anecdotal evidence, I'm pretty convinced the top levels of management at the biggest banks do not really have a grasp of their positions. For the most part, the people in charge get net and gross numbers, with very few details.
John McDermott at FT Alphaville at the Financial Times has done a heroic job of pouring through the officially disclosed data to try to pinpoint a dollar figure of U.S. exposure to Greece, Ireland, Italy, Portugal and Spain.
What he discovered is that this is an impossible task.
"Thus, 'real' exposure lies somewhere between $46.4 billion and $767.5 billion," McDermott concludes.
In short, it might be bad. Or it might be really, really bad.
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