Sept. 6 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke told two lawmakers in mid-July that U.S. financial companies’ exposure to Europe’s sovereign-debt crisis is “manageable.”
Analyses by Fed banking supervisors suggest that “in general, institutions’ direct net exposures to Greece, Ireland and Portugal, including to the banks domiciled there, are manageable relative to their capital,” Bernanke said in identical letters to the Republican senators, Tom Coburn of Oklahoma and Bob Corker of Tennessee. The comments, dated July 14, were obtained today by Bloomberg News in Washington.
The senators wrote to Bernanke on June 16, citing a report by the Bank for International Settlements showing almost $200 billion in exposure at U.S. financial firms to the debt of Greece, Ireland and Portugal. Since Bernanke’s response, the Standard & Poor’s 500 Index has tumbled more than 10 percent in part on investor concern that Europe’s debt crisis will worsen.
Bernanke warned in the letters that the crisis “could affect a broad range of markets and financial institutions, including potentially those outside of peripheral Europe.”
Coburn and Corker had asked the Fed chief to provide information on how U.S. financial institutions would be affected if one or more European countries in Europe defaulted.
--Editors: Scott Lanman, Christopher Wellisz
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