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To: kech who wrote (11544)	6/16/1998 2:40:00 PM
From: Joe NYC	Respond to of 152472

Tom, Drop the yen so that the value of those assets abroad stays high relative to obligations in Japan. It seems like a lot of what they are doing is already helping the banks. I am not sure if it is a good idea for wounded banks to play the currency market. I think the problem in Japan is that yield on long term bonds are lower than what the saver can get from the post office savings. BTW, the whole post office savings thing is a disaster of a magnitude similar to the banking crisis. The post office savings are invested in dubious projects with very low probability of being repaid. I guess the politicians are not likely to touch it. The postal savings are very popular. Joe

To: kech who wrote (11544)	6/16/1998 2:48:00 PM
From: Ramsey Su	Read Replies (2) \| Respond to 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