Vecchio told CNNMoney, "There is a disconnect here with the ratings. People fled to Treasuries after the downgrade…The problems in the periphery in Europe hit close to home in France. It has much bigger exposure to the soft underbelly of Europe than the United States."
Commenting on the possibility of a downgrade in France's credit rating, Moretti told Fox Business, "It’s not surprising that they were placed under review by (ratings firm) Moody’s." On the impact a downgrade would have across Europe on Greece's economic troubles, Moretti said, "It will be far more expensive for the other countries to bail out Greece if France is downgraded," but added, "Every effort will be made to avoid a downgrade of France."
Dow Jones, through the Wall Street Journal, cited a note recently written by Moretti and Vecchio on the risks posed to U.S. banks by European debt. In it, Moretti and Vecchio say, "Although U.S. ownership of the European periphery's sovereign debt is relatively small -- roughly $18 billion -- the indirect exposure of U.S. institutions to the EU sovereign-debt crisis is in fact significantly larger than it first appears." In their note, they added, "Collateral damage is likely to spill over to U.S. institutions as increasing funding costs and other adversity hits the European banks to which these institutions are creditors."