Greek Default Would Spell ‘Havoc’ for European Banks a Year After Bailout

http://www.bloomberg.com/news/2011-06-19/greek-default-would-spell-havoc-for-european-banks-a-year-after-bailout.html

While European lenders reduced their risk tied to Greece by 30 percent to $136.3 billion last year by not renewing loans, writing down the value of debt and shifting it off their books, they still have almost $2 trillion linked to Portugal, Ireland, Spain and Italy, figures from the Bank for International Settlements show, leaving them vulnerable if the crisis spreads.

“We all lived through Lehman Brothers,” she told a meeting of activists from her ruling Christian Democrat party.“I don’t want another such threat to emanate from Europe. We wouldn’t be able to control an insolvency.”

Ackermann knows about contagion firsthand. He told an audience in Frankfurt’s Congress Center in September 2007 that risks from the U.S. subprime mortgage market were“manageable.” The crisis spread to other markets soon after, leading to more than $2 trillion of losses and writedowns worldwide and the collapse of Lehman Brothers a year later.

SS says

He has no clue now like he had no clue in 2007.

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