Credit ratings agency Fitch just blew the cover of U.S. banks' lack of European exposure. As reported from their site:

U.S. banks have manageable direct exposures to the stressed European markets (Greece, Ireland, Italy, Portugal and Spain), but further contagion poses a serious risk... ...unless the Eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen. Fitch's current outlook for the industry is stable, reflecting improved fundamentals at most banks combined with ratings lower than at pre-crisis levels. However, risks of a negative shock are rising and could alter this outlook.

(emphasis mine)

Is this a surprise?

Just two weeks ago, after an urgent request from G20 leaders, the FSB released an important list outlining the major financial institutions around the world posing the greatest threat to the financial system in the event of failure. Not surprisingly, 86% of these massive and largely interconnected "too-big-to-fail" banks are all located in the U.S. and Europe, with only a handful in China and Japan. Thus, if we look at the global financial system as a whole, the U.S. and Europe are about as disconnected as a huge plate of spaghetti, with a few random Asian noodles mixed in.

So, how are the U.S. banks exposed exactly? They won’t tell you.

Consider JPMorgan Joins Goldman Keeping Italy Derivatives Risk in Dark

JPMorgan Chase & Co. and Goldman Sachs Group Inc., among the world’s biggest traders of credit derivatives, disclosed to shareholders that they have sold protection on more than $5 trillion of debt globally. Just don’t ask them how much of that was issued by Greece, Italy, Ireland, Portugal and Spain, known as the GIIPS. As concerns mount that those countries may not be creditworthy, investors are being kept in the dark about how much risk U.S. banks face from a default. Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in such a scenario, giving only net numbers or excluding some derivatives altogether… Bank of America, Citigroup Inc. and Morgan Stanley also don’t list gross amounts of CDS on GIIPS debt in their filings. All three banks provide figures within their disclosures that they say include a net of their credit-default swaps bought and sold on the five countries.

Of course, all 5 of the major U.S. banks mentioned above loaded with trillions in European counterparty risk also happen to be on the FSB list for posing the greatest risk to the entire financial system.

Perhaps it’s understandable then why the market has been, well, a little chaotic.

The majority of the world’s “systemically important” banks are all exposed to one another and no one knows exactly how bad the exposure is since disclosing that information would mean financial suicide.

Funny thing is, even if we did have perfect information on the credit risks between every bank and financial institution, you still can’t predict with any certainty how things will play out. For that reason some would say the future is very dark. Perhaps it’s just really opaque.