It's less well known than it should be, but Europeans banks have long been gaming their regulators, having far less than the actual capital reserves that they needed given their balance sheets. AIG filled the hole, selling credit defaults swaps to European banks via which they could tell regulators that they were adequately covered -- at triple-A, no less -- while carrying less cash than required. http://seekingalpha.com/article/97958-how-the-u-s-saved-europe-s-banking-system?source=more_author_recent_similar_articles
In New York, investment firm executive Marc der Kinderen said that collapsing trust in US financial institutions was potentially the most damaging aspect of the crisis.
"The worst thing that is happening right now is that there is absolutely no trust, no faith in the system as a whole," der Kinderen told AFP.
"That makes a horrible way for companies to do business with each other ... Banks are the infrastructure of finance, like a highway system, and right now, every ramp to the highway system has effectively been shut down." http://www.breitbart.com/article.php?id=080930072942.bkkh6c8f&show_article=1
