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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Investor2 who wrote (1187)9/24/1998 1:37:00 PM
From: Alan Bell  Read Replies (2) of 15132
 
I2,

I don't believe that the US Taxpayer did come to the rescue of Long Term Capital Management. My understanding is that the NY Fed had conversations with Banks that were on the wrong side of LTCM's margin positions and convinced them to provide capital to LTCM. These banks now have a great deal of oversight and control of LTCMs activities. The original shareholders (who should have been watching) have lost much or all of their investments. I don't see any public money being put in. Have I missed something?

Leverage should be limited to the extent that it allows the hedge funds to gain control over such large positions that they can manipulate the markets and create situations that cause serious disruptions to international financial stability. Limits shouldn't be removed, however, for the purpose of protecting the investor.

FWIW,
Alan
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