<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Mark Whitehouse</p>&#xD; &#xD; <p>The situation is bad enough when investor worries about the financial system's ability to weather another crisis send bank stocks plummeting. It's worse when bankers themselves start to share those concerns.</p>&#xD; &#xD; <p>One key gauge of banks' worries about each other -- the difference between interbank lending rates and central-bank lending rates -- is heading up to levels not seen since the last time the European debt crisis flared&#xA0;in mid-2010. As of Wednesday morning, the spread for dollar lending (known as Libor-OIS) stood at about 0.20 percentage point, up from 0.12 on Aug. 1 but still below last year's high of 0.34. The spread for euro lending (known as Euribor-OIS) stood at 0.70 percentage point, above last year's highs but still below the 2.07 percentage points reached during the darkest days of the financial crisis in 2008.</p>&#xD; &#xD; <p>The rising jitters demonstrate that Europe's bank stress tests didn&#x2019;t do their job of erasing uncertainties about banks' health, and that European leaders' moves so far have failed to inspire confidence that they understand the magnitude of the crisis they face. Even the bankers don&#x2019;t seem to know who stands to lose how much -- and who will get bailed out -- if and when some European governments default.</p>&#xD; &#xD; <p>In the short term, central banks have the power to step in and ease bank borrowing difficulties. But the longer the fundamental uncertainties are allowed to fester, the more damage they will do.</p>&#xD; &#xD; <p>(Mark Whitehouse is a member of the Bloomberg View editorial board.)</p>&#xD; &#xD; <p> <br></br> </p> </body> </html>