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To: Bucky Katt who wrote (7053)	11/19/2000 11:19:13 AM
From: KM	Read Replies (1) \| Respond to of 13094

OT Interestingly enough, consumer bankruptcy rates in the E.D. Tx. stayed pretty high even during the economic boom (I think mostly attributable to Plano, which is an upscale bedroom community north of Dallas with a lot of $30,000 per year millionaires if you know what I mean by that). By next year, they'll probably be amazing and I have noticed the bankruptcy court hiring people down there <G> We dealt a lot with several names mentioned in that article as clients in the previous bust cycle and I'm amazed to see them being dropped back in the grease again, or maybe not. <<One of the little-noticed disasters in the sector has been CompuCredit, a fast-growing sub-prime credit-card lender. Its shares fell only 0.25 to 18.88 last week, but they're down from an October peak of 66, before the company announced higher-than-expected loan chargeoffs in the third quarter. There's a big battle on the Street between CompuCredit bulls, who believe it's the next Providian, and bears who think the company will be overwhelmed by credit problems.>> Unless (or hell, even if) there are more Chapter 13s filed as a result of means testing this go-around, I'd be a bettor against this company. Remember, the deadbeats can file Chapter 7 again I think it's 7 years after their previous case was discharged, so using the assumption that the last bust cycle ended around 1993-1995, plenty of them will be eligible again. And filing Chapter 13 doesn't guarantee much better return to the creditors, because if the debtors have sufficiently low income and high debt, the plan may only pay 10 or 15 cents on the dollar to unsecureds or even less, and after expenses incurred to appear and file your claim, and previous collection efforts, how much does the lender actually get back. It will also be interesting to see if we return to the appraisal problems on the real estate loans that go bust. The FDIC was pretty tough by the end of the last mess but it's been awhile and happy days were here again so I wonder if there were appraisals for sale, etc. I guess we'll find out soon enough when these deals start to go belly up. It's kind of sick but I really enjoyed that work. Very very interesting. It's been awhile since we had some really big Chapter 11s with a lot of issues but 2001 may be a banner year. Personally, I wouldn't want to win this election and be walking into this. Clinton is going to look really good in retrospect Maybe trading ideas for this? Short makers of auto and consumer loans other than banks, all subprime lenders, long AMRESCO (they're the outfit that outsourced a lot of the FDIC work, at least here in Texas). What else? Shorts REITS maybe? Upscale retailers such as Tiffany or Nordstrom?

To: Bucky Katt who wrote (7053)	11/20/2000 10:49:16 AM
From: KM	Read Replies (1) \| Respond to of 13094

OT - One more interesting comment on this subject (sorry, Jim, this is where I find this guy <G>) Credit crunch 11/20/00 10:19 AM ET There is a great piece, Crunch Time, this morning from Morgan Stanley's Richard Berner that you can read on the Morgan economics site -- msdw.com (it's free, but you have to register). Outlines how banks are getting more stringent in their lending standards to businesses. We've seen IPO money dry up, we've seen high yield spreads blow out, and now we're seeing the banks get tougher (and after that Sunbeam fiasco, that seems healthy). The upshot is companies' access to capital has tightened significantly. One telling bit from Berner's report: "The Fed's November Senior Loan Officer survey on bank lending practices fairly bristles with caution. 'Over the past three months, large fractions of foreign and domestic banking institutions - 80 and 44 percent respectively - reported tightening lending standards for C&I loans to large and medium-sized firms, and many respondents tightened loan terms as well,' the Fed reported. 'Over the past year, domestic banks applied tighter standards and terms most aggressively on C&I loans intended to finance mergers and acquisitions (M&As) as well as to new customers seeking loan commitments.' The percentage of respondents tightening both standards and terms is larger than at any time since 1991