Bloomberg
June 23, 2011
Federal Reserve Chairman Ben S. Bernanke said a default by Greece would have little impact on U.S. banks, which aren’t “significantly exposed” to European nations struggling to meet debt payments.
“We have asked the banks to essentially do stress tests and ask, looking at all their positions, all their hedges, what would the effect on their capital be if -- if Greece defaulted,” Bernanke said to reporters today at a press conference after a meeting of the Federal Open Market Committee. “The answer is that the effects are very small.”
Bernanke and Fed Governor Daniel Tarullo have led sweeping changes in the central bank’s approach to supervision, establishing the Large Institution Supervision Coordinating Committee. The multi-disciplinary group focuses on the biggest banks and draws on dozens of Fed economists, examiners, and computer modelers to identify risks in the financial system.
Bernanke said the Fed has also kept “a close eye” on money-market mutual funds, which hold dollar liabilities issued by European banks to fund their holdings of dollar assets.
“With very few exceptions, the money-market mutual funds don’t have much direct exposure to the three peripheral countries which are currently dealing with debt problems,” Bernanke said.
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