European financial trouble could cross the pond

The impact of COVID-19 on European lenders is still unknown. The head of banking supervision at the European Central Bank (ECB), Andrea Enria, has said today that banks are responding with widely varying approaches to asset quality deterioration. The true state of borrowers' financial health is difficult to determine because of extensive government support during the pandemic.

What happens over there will come our way eventually. There is such a thing as a financial virus pandemic, as we saw in 2008. Lending institutions need to be evaluating their portfolios with care and not just hoping for the best. "Health inspections" by U.S. financial regulators under the new Administration need to go the "last mile" to protect the country's financial system.