Belgium’s Dexia bank just failed. Dexia is the largest bank in Belgium and has assets greater than the GNP of Belgium. And it failed last week.
It was also was the world’s largest lender to municipal governments in the U.S. and
overseas. So US municipal governments will have a harder time getting financing. It is the biggest bank failure since the debt crisis started in 2008. It passed an official EU “stress test” just 3 months ago. Just like the same stress test that was applied to other even bigger European banks in other European countries. Its crashing was caused by run on the bank, not by customers, but by institutional investors and other big banks, the same investors that nearly every large European bank depends on for the majority of their funding.
And the same funding sources that are capitalizing a majority of the assets of some of the largest US banks.