Tags: us | bank | europe | contagion

Fitch: US Banks Face ‘Serious Risk’ From Europe

Wednesday, 16 Nov 2011 04:09 PM

Contagion stemming from the European debt crisis is threatening ratings applied to the U.S. financial sector, according to Fitch, one of the world's top ratings agencies.

U.S. banks are exposed to European economies, especially the troubled ones in Greece, Ireland, Italy, Portugal and Spain, and while that risk has been manageable for now, further contagion poses a serious risk, Fitch analysts conclude in a report.

"Fitch believes that unless the eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen," Fitch says in a statement.

"Fitch's current outlook for the industry is stable, reflecting improved fundamentals at most banks combined with ratings lower than at pre-crisis levels. However, risks of a negative shock are rising and could alter this outlook."

The report, released during the last hour of regular stock-market trading Wednesday, sent stock prices reeling.  Traders are wondering when the market will sail into calmer waters and do away with the bipolar swings of the past several months.

"The market has got such ADD [Attention Deficit Disorder].  It goes from one thing to another, it’s like my beagle puppy, who can’t focus on anything other than what is right in front of her," says Robert Pavlik, chief market strategist at Banyan Partners, according to MarketWatch.

"We're capped at least, until we can knock Europe off the front page."

Many economists lately have said the outlook for the U.S. economy appears to be brightening. That optimism may be waning, as concerns that one or more European countries will default and disrupt financial systems across Europe and even in the U.S. have experts growing increasingly worried, including Federal Reserve economists themselves.

"A European sovereign debt default may well sink the United States back into recession," according to a recent Federal Reserve Bank of San Francisco report.

"However, if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013."

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Contagion stemming from the European debt crisis is threatening ratings applied to the U.S. financial sector, according to Fitch, one of the world's top ratings agencies.U.S. banks are exposed to European economies, especially the troubled ones in Greece, Ireland, Italy,...
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Wednesday, 16 Nov 2011 04:09 PM
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