European Bank Fortis Propped Up

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The Wall Street bailout package negotiated over the weekend may not be enough to prevent the turmoil from spreading overseas. European banking officials have been working through the weekend to deal with the financial turmoil hitting Fortis, the largest retail bank in Belgium and Luxembourg.

STEVE INSKEEP, host:

And the financial crisis is spreading to Europe now. The governments of Belgium, Luxembourg and the Netherlands have nationalized a major European bank. In another effort to stop the contagion, British officials took over one of their banks as NPR's Carrie Khan's reports.

KHAN: European banking officials worked through the weekend to deal with the economic crisis hitting the Fortis Financial Group, the largest retail bank Belgium and Luxembourg. And in Britain government officials told Bradford & Bingley depositors that they will be protected. Brad Setser, an economist with the Council on Foreign Relations, says the US bailout is necessary to stop the fallout from spreading across the globe but Setser warns the US Congress has limited influence.

Dr. BRAD SETSER (Fellow for Geo-Economics, Council on Foreign Relations): Those countries that have relied on exports to the U.S will face difficulty and those countries in Europe that had a similar kind of economic boom driven by rising home prices are also going to face trouble, so you can stop the worst but you can't stop a broad deterioration in global economic conditions.

KHAN: Britain has suffered a similar housing boom and bust as in the US. Earlier this month the government stepped in to broker a takeover of the country's largest home lender. Carrie Khan, NPR News.

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