U.S. Banks Riskier Than Third-World Countries

The cost of insuring debt on some U.S. banks is higher than the cost of doing same for many third-world countries. Consider the spread on bank credit-default swaps, with Lehman currently more expensive to insure than Nigerian debt.

But that’s not all:

In credit derivative swaps markets, Turkey was trading at the same level as British bank HBOS , while healthy Brazil with credit derivatives swaps at 191/197 basis points was roughly level with Royal Bank of Scotland, BB Securities said.

That was despite worries over Turkey’s wide current account deficit and concerns over an attempt by the country’s secular prosecutors to ban the ruling party from politics for allegedly trying to build an Islamic state.

And the best quote from Reuters on the subject is this:

"I think with Africa people feel they know what they are dealing with," said [one bank economist]. "In contrast, everything else is a great unknown."

Now there’s a contrast for you: The U.S. financial crises is newly making African debt seem like a (relative) safe haven.

[via Reuters]


  1. Are us banks risker than third world countries banks lets look at the facts. We now live in a nation where the type of type of financial shenanigans occuring on a daily basis would only be thought of as happening in third world countries maybe south america. But now their happening here. I don"t believe that we are seeing so much of a big increase in the financial shenanigans today but less enforcment of violations of securities laws by the SEC. I can remember back in the nineteen eighities when almost two thirds of all the savings and loans were taken over by the FDIC the arm of the federal government that is suppose to regulate banks and other financial institutions. Their were thousands of persons charged with all sorts of crimes during and after the savings and loan debacle. Many of the countries major banks were on the brink of failing for most of the nineteen eighties and early nineteen nineties. The federal reserve kept many of these banks afloat. And just recently the subprime morgage bubble this was something that many of the major banks had a big hand in. So yes I would say many banks and other financial concerns were and are as bad as many banks in developing countries.