Last week in a post on the Greek crisis, I said that the extent of US banks’ liability for risky debt (either in the form of loans that may go bad or credit default swaps that may turn out to be bad bets) was not clear. Recall that banks give out loans to governments and then take ‘insurance’ on those loans in the form of credit default swaps (CDS) in case the governments cannot pay back the loans. But if the loans go bad and the banks that issued the CDS cannot pay up on the insurance claims, these banks could face huge losses.

Now a news report says that Goldman Sachs and JP Morgan Chase have involvements totaling more than $5 trillion of debt globally but they are not divulging how much if that is in the troubled PIIGS countries (Portugal, Ireland, Italy, Greece, and Spain). Bank of America, Citigroup, and Morgan Stanley also have taken similar risks.