Debt Crisis In The EU Reverberates In The US

14:09

September 20, 2011

International Monetary Fund (IMF) managing director Christine Lagarde in Marseille, southern France in early September. (AP)

The International Monetary Fund today downgraded its economic outlook for the U.S. by a full percentage point. The reason: The European debt crisis.

Part of the problem is that American financial institutions have been placing bets (in the form of credit default swaps) on whether or not Greece and other European countries will default on its government debt, and now they could be on the hook for billions of dollars.

How far will the European debt crisis spread? And why haven't regulators stepped in to give more oversight of those credit default swaps after they helped lead to the financial crisis of 2008?

New York Times: Clawbacks Without Claws

Guest:

Gretchen Morgenson, business columnist for the New York Times

This segment aired on September 20, 2011.