Sunday, June 26, 2011

US taxpayers may pay for EU bank losses

to rescue financial giants across the pond as European regulators fail to address Greece's financial woes.

Greek parliament is set to vote Tuesday on a wildly unpopular austerity plan devised by the International Monetary Fund and EU regulators. International lenders say must be passed for the financially strapped country to get its next round of aid.

But even if the austerity measures -- the equivalent of Uncle Sam seeking to slash Social Security checks -- don't go through, Greece may still get a handout from European regulators because they understand that the continent's big banks aren't prepared to deal with the fallout of the country officially going broke.

"Regulators and banks are kicking the can down the road," says Nicholas Economides, a professor of economics at the New York University Stern School of Business. "Banks don't want to take losses. It's something similar to what banks were doing in the United States before the 2008 housing crisis."

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