It is not JUST a problem... it is the weight that will bring down the world economy.
As EU banks fall apart, US banks holding derivatives on these banks and EU bonds will be on the hook to pay. Desperate and facing prospect that if they did not the entire global system will collapse, the Fed Reserve will instruct the banks thru informal channels to take money out of customer accounts and plug the global gap. Why? From the Fed Reserve, banker and US Treasury viewpoint if the system collapses the customers will lose everything anyway so they might as well as take the customer money and use it to deal with the current shortfalls and deal with the angry customers later. With this desperation and mentality all savings accounts, brokerage accounts, 401k, mutual funds, etc that bankers and Wall Street firms can access are in danger of being seized, firm declares bankruptcy and all remaining ones are frozen by the bankruptcy trustees that takeover and decide which creditor is paid off first (big bankers get first divs along with federal/state/local taxes) and what is leftover goes back to the customer. Of course the little guy can go to court and spend five to six years in legal fees to get his money back. What are the well connected doing, they are taking their paper currency out of their banking accounts and buying hard assets that will soar in value while everyone else will lose everything they had saved from the bank holiday.
Don’t we have FDIC? Remember MF Global. All customer accounts were suppose to be safe. Yet the gov regulators sat while the firm declared bankruptcy and customer accounts were seized/frozen by the bankruptcy trustees. Big creditors go paid while customers could not access their accounts.
bump for later