U.S. Exposed to Euro Debt Crisis

    FRANKFURT AM MAIN, GERMANY - SEPTEMBER 27:  The European flag flatters in the wind past the headquarters of the European Central Bank (ECB) on September 27, 2011 in Frankfurt am Main, Germany. Europe is continuing to wrestle with the ominous prospect of a Greek debt default that many fear could spread panic and push the already fragile economies of Italy, Portugal and Spain into a crisis that would rock the Eurozone and lead to global repercussions. On Thursday the Bundestag, under the urging of German Chancellor Angela Merkel, is expected to pass an increase in funding for the European Financial Stability Facility (EFSF), a measure many see as necessary for financial markets to regain confidence in the European banking system.  (Photo by Ralph Orlowski/Getty Images)

    Ralph Orlowski / Getty Images

    Senior U.S. officials are alarmed by the European debt storm as they see more and more American assets being connected to the euro zone. Banking officials say that as the crisis spreads to Italy, spillovers will inevitably occur across the Atlantic, mainly due to holdings of U.S. money-market funds in European securities. Those funds were also responsible for the catastrophic "breaking the buck" during the 2008 financial collapse. Jeffrey Lacker, president of the Richmond Federal Reserve Bank, said: "I'm less confident about the money-market funds and their ability to weather major problems at European institutions."

    Read it at Reuters