Dexia bank; Europe Bear Stearns Moment?

Before the demise of Lehman Brothers plunged the global financial system into a temporary state of anarchy in the Fall of 2008, the collapse of Bear Stearns fired a warning shot across the bow of the world.

If past is prelude, are the troubles of Franco-Belgian bank Dexia about to lead to a repeat the Lehman moment of 2008?

Dexia plays a significant role in the $2.9 trillion global municipal debt market. The bank backstops debt on the state and local government level across the world and across America, including New York City issued bonds.

Noting that just 3 years ago the Federal Reserve was spending more money propping up Dexia than any other bank in the world, this interview notes that Dexia is now so laden with toxic loans and derivatives and has such a stunning lack of transparency that the “market has lost complete faith.”

If the meltdown of ’08 taught us anything it’s that faith is what banks can least afford to lose in a crisis. This is an explosive issue in Europe definately worth watching this weekend.

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