Determining the exact amount of exposure is nearly impossible until governments start stepping up to the window created by the European Union and the International Monetary Fund to stem the crisis in Greece and elsewhere on the continent.

But one rule-of-thumb formula puts potential US exposure at $54 billion should the entire IMF loan fund be tapped.

And that doesn't count the added exposure created by the Federal Reserve's decision over the weekend to participate in currency swaps to provide liquidity to jittery European banks. The swaps move resembles the Term Auction Facility the Fed instituted when the worst of the US financial crisis hit in 2007-08.

And the entire bailout package has been nicknamed "Le Tarp" by some for its similarity to the Troubled Asset Relief Program that bailed out US companies with taxpayer-backed loans.

Jeff Cox
Staff Writer
CNBC.com

US involvement in the European crisis already has drawn critics from Congress and economists who think the domestic financial issues should be cleared up first.

"Inflation and debt is not the answer to a problem caused by inflation and debt," said Michael Pento, chief economist at Delta Global Advisors and a critic of both the European plan and the Fed's approach to US fiscal stability. "It's a European problem that should have been dealt with by Europeans."

In Washington, Senior administration officials said taxpayers will not be liable for the European bailout. (See video)

The US is a participant in the IMF, which has agreed to work with the European Union to help countries that come under debt duress.

The IMF has pledged a one-third share of the 750 billion-euro ($952 billion) rescue package—typical of the fund's arrangements with central banks in such cases.

That would come to 250 billion euros, though that is only a rough figure and dependent on a variety of circumstances, according to an IMF official who spoke on condition of anonymity because of the uncertainty still involved.

The US would be responsible for 17.09 percent, or $54 billion, of the cost using a quota contribution system the IMF uses in such instances. The US is the leading contributor under the quota setup.

But pinpointing the exact figure is difficult because all loans are not created equal, and will depend on the currencies in which they are issued and the arrangements between the parties.

Also, the basis of the loans won't be solely on the quota calculation, which accounts for only half the formula. The other half is a pro-rated basis for which the US does not currently have an agreement but is likely to in the future. That pool comes from wealthier countries with "useable resources," with the typical arrangement for the US being higher than the 17 percent for the quota share.

"How the fund actually raises the resources for the specific loan depend on a number of different criteria, one of which is currency that the country is borrowing in," the IMF official said. "Those details are somewhat complex."

Moreover, no lender to the IMF has ever lost money because the agency is usually among the primary creditors and so gets paid first.

The US also is exposed in currency swaps, where the Federal Reserve loans dollars to foreign banks in exchange for euros, which it then holds for a period that can range from overnight to three months. The currency is sent to central banks such as the European Central Bank as well as those in Japan, Switzerland and Canada, which in turn then direct the money to banks seeking the safety of the world's primary reserve currency.

That arrangement, too, has drawn criticism in part because of the danger of default and worries over the rapidly devaluing euro.

But these swap trades are virtually without risk as the ECB is the entity responsible for backing up the swaps. The ECB is responsible for returning the money to the US along with a slight interest appreciation on the loan.

"These (swaps) operations will be a net positive for fiscal conditions," said Zach Pandl, economist at Nomura Securities International in New York. "They contain no credit risks whatsoever. The counterparty is the foreign central bank. There's basically no debt. The European Central Bank is going to pay back the loan."

The swaps, though, will make the Fed's balance sheet grow to perhaps $2.5 trillion from its current $2.3 trillion, said Delta's Pento.

Putting more US money into circulation at a time when the central bank is trying to shrink its balance sheet will only add to inflationary pressures down the road, he said.

"With an over-$2 trillion monetary base, the damage is already there," Pento said. "You've lit fire to a building that is already burned down."

Pandl said the swaps transactions could total as much as $100 billion, "which is nothing to sneeze at. But compared to the Fed's balance sheet, it's still a relatively modest sum."

Correction: An earlier version of this story overstated the risk that US taxpayers face in the European bailout fund. In both loans to the IMF and currency swaps, the risk to taxpayers is limited.