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To: Bobby Yellin who wrote (19683)	9/24/1998 10:25:00 PM
From: Mark Bartlett	Read Replies (1) \| Respond to of 116759

Morgy, <<"Market experts maintain that new rules over hedge funds would be unnecessary because they are only limited to sophisticated players.">> Greed transcends all levels of intelligence. It's not the rules that need changing - it's human nature. There will never be any enforceable rules to change that. Best to you, Bobby MB

To: Bobby Yellin who wrote (19683)	9/25/1998 6:13:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116759

Forex: Dollar Up Vs Yen With Support From Mark TOKYO (Dow Jones)-Japanese and overseas investors were aggressive buyers of the Deutsche mark against the yen in Tokyo Friday, helping to buoy the dollar versus the yen in the process. The dollar fell against the mark as traders flocked the German currency as a safe haven amid concerns about the financial systems in both the U.S. and Japan. Although the dollar started Friday's Asian session at levels a little lower against the yen compared with levels late Thursday in New York, a buying binge of the mark versus the yen by U.S. and Japanese institutional investors, which involves dollar-yen buying in the process, soon underpinned the dollar, putting it back above 135.00 yen, dealers said. "Right now, mark-denominated assets provide the best investment opportunity," said Tetsu Aikawa, a senior trader at Sanwa Bank. "It is the only currency whose interest rates are unlikely to go down among the three major currencies (of the U.S., Japan and Germany)." Worries about the U.S. financial system following the sudden bailout earlier this week of major U.S. hedge fund Long-Term Capital Management, were cited for the dollar's initial weakness, while the ongoing stalemate in Japan between the opposition and ruling camps over banking reform bills continues to cast a cloud over the yen. A large drop in Japanese stock prices also hurt the yen, traders said. The benchmark Nikkei stock average closed the session 481.94 points lower at 13,723.84. "U.S. investors are pulling money out of Japanese stocks and instead have begun investing the money into European securities and assets," said Shuji Takano, assistant manager of foreign exchange at ABN Amro Bank. Around 0530 GMT (1:30 a.m. EDT), the dollar is quoted at 135.25 yen, above 134.93 yen late Thursday in New York and up from 135.08 yen late Thursday in London. The U.S. currency also is at DEM1.6727, lower than DEM1.6740 late Thursday in New York and below DEM1.6771 in London Thursday. nikkei.co.jp

To: Bobby Yellin who wrote (19683)	9/27/1998 2:24:00 PM
From: goldsnow	Respond to of 116759

Congress to regulators: please explain bailout By Joanne Gray, Washington After months of warning other countries about the perils of lax financial system regulation, top US financial supervisors are now under attack about the quality of their own oversight. The US Congress has demanded that regulators testify to Congress as early as this week on the operations and regulation of the hedge fund industry after the $US3.6 billion bailout of Long-Term Capital Management, a rescue steered by the New York Federal Reserve. The US Treasury Secretary, Mr Robert Rubin, the Federal Reserve chairman, Dr Alan Greenspan, New York's Fed president, Mr William McDonough, the Securities and Exchange Commission chairman, Mr Arthur Levitt, and the Commodity Futures Trading Commission chairwoman, Ms Brooksley Born, will appear before the House of Representatives Banking Committee. They will be grilled on the bailout, the risks faced by other speculative funds, the relationship between banks and the funds they lend to and trade on behalf of, and whether their hedge funds should face tougher regulation. "We expect to look particularly at the systemic risk problem, whether some funds may be overleveraged and what does it mean for the economy as a whole," said the House Banking Committee chairman, Mr James Leach, in an interview with television network CNBC. The committee will also look at whether the Fed's role in arranging the bailout was appropriate. The finance industry and law-makers in Washington are becoming increasingly perturbed by the New York Fed's role in prodding LTCM's creditors to come up with a bailout package. Some argue that it created a moral hazard by rescuing well-heeled and well-connected investors, some of whom included Wall Street luminaries who had taken excessive risks and should have been forced to wear the losses. Mr Rubin said it was wrong to label the rescue a bailout because the cash infusion was made by its private-sector counterparts and no public money was used. He declined to comment on whether the near-collapse of LTCM meant heavier regulation of hedge funds was warranted. But he said there were questions about the disclosure of risks hedge funds took on and the issue would probably be debated. The 11-member bailout consortium said it had organised the recapitalisation of LTCM to help prevent disruption in the global financial markets because bankruptcy could have forced the sale of billions of dollars in securities. The New York Times reported that LTCM used $US2.2 billion in capital from investors to buy $US125 billion in securities, and then used those securities to enter derivatives transactions with a nominal exposure of $US1.25 trillion. The investigation will also look at how LTCM, headed by former Salomon Bros trading head Mr John Meriwether, was able to borrow so much, with such scanty levels of disclosure to creditors. Many hedge funds either operate out of tax havens such as the Cayman Islands or the US. If incorporated in the US they can operate under a 1996 amendment to the US securities laws, or an exemption to the Investment Company Act. Hedge funds can accept $US5 million or more from individuals or $US25 million or more from institutions, who may number up to 50, or 99 depending on which law they are under. Capitol Hill has also been alerted by the LTCM crisis to whether over-the-counter derivatives – tailor-made derivatives that are not traded on regulated exchanges – should be regulated more closely. Dr Greenspan and Mr Rubin have assured Congress that the off-exchange derivatives do not need more federal oversight, and blocked a bid by the CFTC, which oversees the Chicago Mercantile Exchange, and the Board of Trade to expand its jurisdiction to cover OTC products. • Wall Street afr.com.au