Fed official says Europe’s debt crisis poses risk to US, global recoveries

Fed official: Europe’s crisis poses risks to US

WASHINGTON — A Federal Reserve official says Europe’s debt crisis poses serious risks to the unfolding economic recoveries in the United States and around the globe.

Federal Reserve Governor Daniel Tarullo, in prepared remarks to a House subcommittee, says the timing of Europe’s problems on the heels of the global financial crisis is a “potentially serious setback.”

If the crisis were to crimp lending and the flow of credit globally that would endanger both the U.S. and global recoveries, he says.

Tarullo says: “Although we view such a development as unlikely, the swoon in global financial markets earlier this month suggests it is not out of the question.”