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And I'm Renee Montagne. The Bernard Madoff financial scandal has now spread to Europe. And the reaction there has been similar to that in the U.S. - disbelief that so much money could have disappeared with so little scrutiny. In a moment we'll hear from an American journalist who sounded a warning bell back in 2001. First to European banks which seemed to be weathering the financial storm that's hammered U.S. financial institutions. As NPR's Rob Gifford reports, those banks did not escape the Madoff debacle.

ROB GIFFORD: Just this fall, as the rest of the world's banks seemed to be collapsing, Emilio Botin, the head of one of Europe's largest banks, Santander of Spain, explained how his institution had survived the worst of it.

Mr. EMILIO BOTIN (Chairman, Banco Santander): If you don't fully understand an instrument, don't buy it. If you will not buy for yourself a specific product, don't try to sell it. If you don't know very well your customers, don't lend them any money.

GIFFORD: But it seems Botin should have been taking his own advice. Santander says it has total exposure of about $3 billion to the Madoff scam. Swiss bank Union Bancaire Privee has $1.25 billion. British bank HSBC, $1 billion. French banks, a total of about a billion, too. The list goes on.

Dr. HELGE BERGER (Chair of Monetary Economics, Free University Berlin): It's really interesting to see that some of the more conservative players at the European scene have been involved in this.

GIFFORD: Helge Berger is a professor of economics at the Free University of Berlin. He says Santander had seemed like the classic savvy, more conservative European bank.

Dr. BERGER: You cannot be savvy all of the time on all fronts. And they made some big mistakes here on the asset side that, you know, eventually caught up with them. You know, if you look for high profits, you have to face higher risk. And that's what eventually caught up with them.

GIFFORD: According to European newspapers, many of the wealthy clients who've been left exposed to the fraud were put in touch with Bernard Madoff through word of mouth in the networks of Spain's high society. These have included some of Spain's financial aristocracy. A company run by Emilio Botin's son and son-in-law is reported to have marketed Madoff's funds to wealthy Spanish investors. Politicians across Europe, like British opposition leader David Cameron, have been pushing not just for more regulation, but also for punishment of the guilty parties.

Mr. DAVID CAMERON (Leader, British Conservative Party): There should be a day of reckoning for those whose behavior helped to bring about the financial crisis.

GIFFORD: But if you heard a slamming noise, that was, of course, the sound of the stable door being closed after this particular horse had bolted. Confidence in the city of London, Europe's largest financial center, is already rock bottom because of the turmoil of the last few months. And Stephen Pope of brokerage Cantor Fitzgerald says there's concern there could be more Bernie Madoffs out there.

Mr. STEPHEN POPE (Chief Global Market Strategist, Cantor Fitzgerald Europe): If this can happen under the eyes of the SEC, where else in the world is it going on? Who is running the schemes? Who is exposed? And while those doubts are around, confidence in partners for trading, etcetera, is falling apart.

GIFFORD: For now, no large-scale scams have come to light in London or elsewhere in Europe, but Helge Berger says that doesn't mean that none have taken place.

Dr. BERGER: Frankly, I mean, you know the competence level of regulators in Europe is not any higher than it is in the U.S. German and French and others cannot claim that they have been ahead of the game. They have just been lucky in terms that their financial systems are structurally a little bit more conservative than the American or the British ones.

GIFFORD: Perhaps, say many analysts here, in weeks to come that luck will run out. As Warren Buffett is fond of saying, it's only when the tide goes out that you see who's been swimming naked. Rob Gifford, NPR News, London.

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