It appears that European Banks and Financial Institutions may be affected  by the credit crunch.

While markets are behaving in a more orderly fashion than they were in August, many on Wall Street fear that the situation will get worse before it gets better. "This is just dragging on longer," said Axel Merk, a portfolio manager for Merk Hard Currency Fund. "We're very early in this."

Economists increasingly worry that banks are suffering such massive losses that they will be forced to cut back their lending to consumers and businesses. That would slow the economy, much as the savings and loan crisis did in the early 1990s. Monday, an analyst predicted that Citigroup, the world's biggest financial services company, would suffer another $15 billion in losses in the coming six months from its exposure to exotic types of debt.

That prediction, along with fresh negative data about the housing market, drove the Dow Jones industrial average down 218 points, or 1.7 percent. Financial markets are pointing to a strong possibility of even more bad news.

European Institutions will issue their financial reports in the next few days.