In Euro Zone, Banking Fear Feeds on Itself - NYTimes.com

  Some snippets from the article:

- American money market funds, long a reliable financing source for capital starved European banks, have sharply cut back on their exposure — starting in Spain and Italy but now also France — making it harder for European banks to loan dollars.

- The 10 biggest money market funds in the United States cut their exposure to European banks by a further 9 percent in July, or $30 billion, after a reduction of 20 percent in June, the Institute of International Finance said in a report issued Monday.

- Nevertheless, American institutions remain vulnerable to problems their French counterparts might encounter. At the end of the second quarter, JPMorgan Chase reported total cross-border exposure of $49 billion to France, while Citigroup had $44 billion and Bank of America had $20 billion.

- Meanwhile, problems in Spain were highlighted on Tuesday when one of Spain's largest savings banks, Caja de Ahorros del Mediterráneo, reported a startling increase in bad loans to 19 percent of overall lending from 9 percent at the end of last year.

- Still, the huge stockpile of euros that banks have stashed away at the European Central Bank  at rock-bottom interest rates —  last night it hit a recent high of 166 billion euros  — suggests that no bank is close to a Lehman-like failure.

See the whole article here: 

http://www.nytimes.com/2011/09/07/business/global/in-euro-zone-banking-fear-feeds-on-itself.html?pagewanted=1&_r=1

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