1. Prepared

    U.S. Banks Ready for European Defaults

    JP Morgan Chase building sign, Friday, Feb. 4, 2011 in New York.  E-mails and other internal documents show that executives at JPMorgan Chase were complicit in Bernard Madoff's massive fraud, lawyers seeking to recover funds for his victims said Thursday.

    Bebeto Matthews / AP Photo

    Five large U.S. banks have more than $80 billion of exposure in Italy, Spain, Portugal, Ireland, and Greece—money the banks could lose if those countries default because of the European financial crisis. Fortunately, they have made use of credit-default swaps, a type of financial insurance, which have allowed the five banks to offset their potential losses by $30 billion. Citigroup has 47 percent of its exposure potentially protected—the highest percentage of any U.S. bank—while Bank of America purchased protection for just 12 percent. A Bank of America spokesperson said, “We carefully manage our risk while still supporting our clients in Greece, Italy, Ireland, Portugal, and Spain.”

    Read it at The New York Times