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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (6070)	6/28/1998 9:50:00 PM
From: michael c. dodge	Respond to of 10921

The Japanese banks have had at least 7 or 8 years to establish adequate reserves against these bad loans. Maybe the market value of the other assets held, such as corporate securities and real estate, and corporate securities affected by real estate values, has declined more, and more steadily, than anticipated. Apparently nobody outside the bank in question (or inside ???) can tell what the true value of the loans is ??? Why not ??? The FSLIC and FDIC had no trouble over-reserving loans when they took over S&Ls and banks. Just drive the capital negative. Actually, all levels of loan buyer were accommodated, until the FDIC learned to bundle and package the loans in mega-bundles for institutional sale.

To: Zeev Hed who wrote (6070)	6/28/1998 10:01:00 PM
From: Ramsey Su	Read Replies (2) \| Respond to of 10921

Zeev, Assets is assets. That should include all loans, real estate, branches and even "blue sky". Bank regulations here require banks to set aside reserves for deposits, loans and bad loans. As an example, (if I remember some of these numbers correctly) most loans require around an 8% reserve. So if a bank takes in $10 in deposits, they can, in theory, only loan out $9.20, keeping $.80 in reserve. If a loan is in default, the reserve requirement shoots up to around 16%. Further more, write downs are required as the underlying security diminished in value. Eventually, if an institution has a disproportional amount of bad debt on their books, they will not be able to meet the reserve requirement. One more astonishing figure that I did not mention in the last post. As of Mar 31, Sumitomo was posting a PROFIT of 131 billion Y while LTCB is posting 164 billion Y, again PROFIT. Based on these figures, I am not sure what is the "overblown" Japan bank problem. Needless to say, I think this points to the extent of potentially hidden problems that I hope will surface soon. Ramsey