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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (38700)	11/17/2000 9:13:18 PM
From: patron_anejo_por_favor	Read Replies (3) \| Respond to of 436258

Recognition of credit impairment in the banks and brokers is clearly increasing (Doug Noland covers alot of the same ground in today's Credit Bubble Bulletin in PrudentBear): biz.yahoo.com Loan concerns at top U.S. banks drive spreads out By Nancy Leinfuss NEW YORK, Nov 17 (Reuters) - Rising concerns over problem loans at top U.S. banks widened spreads on U.S. corporate bank and finance sector debt this week but industry experts said banks are strong enough to weather the storm. Problem bank loans have been rising since a string of U.S. interest rate hikes by the Federal Reserve over the past year slowed the economy, putting the squeeze on some large corporate borrowers. ``Corporate leverage is increasing and more recently earnings growth has slowed, so it's not really a tremendous surprise that some banks will begin to have problems with loan quality,'' said John Puchalla, economist at Moody's Investors Service. ``The question is whether loan quality will deteriorate enough to prompt banks to pull back on their lending to new as well as existing businesses,'' he added. Most recently, First Union Corp. (NYSE:FTU - news),Morgan Stanley Dean Witter & Co. (NYSE:MWD - news) and Bank of America Corp. (NYSE:BAC - news) -- participants in a March 1998 loan of $1.7 billion to Sunbeam Corp. (NYSE:SOC -news) -- have seen spreads on their bonds widen out between 15-25 basis points over the last few days, dragging other bank and finance sector credits with them. Sunbeam has been burdened with shareholder lawsuits and other long-term effects of former chief executive ``Chainsaw Al''Dunlap, who was ousted in 1998 after cutting business lines, halving Sunbeam's work force and taking on debt to expand through acquisitions. ``In our mind, Sunbeam is but one more example of credit erosion taking place currently in corporate credits,'' Judah Kraushaar, analyst at Merrill Lynch & Co., said in a recent research report. ``The credit cycle certainly appears to be worsening both in terms of the incidence and breadth of new problems.'' Still, Moody's Puchalla said, underlying credit fundamentals are much better now than in the early 1990s, when the last credit squeeze occurred. ``At this point, unless credit quality deteriorates considerably from current levels, we're not going to have a credit crunch,'' he said. ``Earnings growth has been very strong for banks in the 1990s. Banks have diversified their earnings and so they're able to basically withstand a deterioration in their loan portfolio credit quality, probably to a much bigger extent then they were back then.'' Kraushaar is maintaining a defensive stance on major banks and brokers. ``To see a convincing bottom in financials, we feel we need to see an overt Fed easing,'' Kraushaar said. ``However, with relatively low unemployment and a strong consumer sector, we do not believe a Fed easing is around the corner. As a result, we think that there may be further earnings risk in our universe.'' Carl de Jounge, vice president of global credit research at Deutsch Banc Alex. Brown, does not see problem loan fears easing any time soon. ``Whereas people brushed off concerns about syndicated lending before, more and more people are waking up to the fact that it's going to go on -- you're going to see nonperforming assets continue to increase,'' he said. ``We could see a technical bounce, but that said, if you look out a few weeks or months, I think the sector is going to continue to perform poorly,'' de Jounge said.

To: pater tenebrarum who wrote (38700)	11/18/2000 9:26:22 PM
From: chic_hearne	Read Replies (1) \| Respond to of 436258

the idea to spin off MCI and make it pay dividends appeals to me....especially as i'm certain that dividends will become very fashionable in the future... I also believe that divs are going to make a big comeback. The long distance market is going to only get worse and worse, so I have no idea where that div will come from. I had friends in college who were from overseas that only talked to their parents over the Internet. The voice quality was terrible, but it sure beats $1 a minute. Eventually, I think everyone will be doing this as the quality and ease of use improves. In the midwest here, you can get a wireless phone from Voicesteam where your local calling area is about 10 states. All of this spells disaster for the long distance market. No wonder why they are getting trashed and I suspect it will only get worse until there is a complete shakeout and rates stabilize as only a few players will be left.