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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.54

-0.4%

1:54 PM EST

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To: kech who wrote (11544)	6/16/1998 2:48:00 PM
From: Ramsey Su	Read Replies (2) of 152472

Tom, OT, Rates really did not have that much to do with the RTC/S&L bail. When RTC closes an institution, depositors, except those who are stupid enough to have over $100K in an ailing institution, basically get paid off. If the institution is gobbled up by another, the account just changes name. What Congress gave RTC was the money to liquidate assets whereas the closed institution did not have the funds to do. Example, if xx S&L has $1 billion worth of loans secured by real estate that they foreclosed upon, they would be fine if the real estate is worth $1 billion. Unfortunately, it is only worth $500 million so they booked a $500M loss. If the bank actually sell the assets, they just realized that loss and will then failed. A lot of S&Ls tried to play all kinds of games during that period to meet reserve and capitalization requirements. A good book on this era is "S&L Hell". This is exactly the potential problem in Japan that they refused to reveal, though they are a lot more transparent than last year and are moving in the direction of full disclosure. If I understand the Japanese system correctly, they are trying to get the banks to write down assets based on current worth vs book value. The fact that they are so reluctant in doing so can only imply the real figures may be very ugly. Ramsey

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