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To: Ramsey Su who wrote (6750)	9/26/1998 12:50:00 PM
From: Sam	Read Replies (1) \| Respond to of 9980

Ramsey, "LTCM's positions" are not LCTM's anymore. They are the banks, the institutions that provided the liquidity. That is what is missing here. I don't know if the principals of LCTM went to the Fed or not; it is possible that the banks or someone connected to the banks went to them. Given their leverage, if they failed, they could have started a chain reaction of failures. Go to Clark's "Derivative: Darth Vader's Revenge" thread. Read it. He has been warning about this since its inception (in fact, I think he started warning about the possible chain reaction on this thread before he opened that one). What is scary is the possibility that other hedge funds abused leverage in the same way. Obviously, there is a limit to how many leaks of this magnitude can be patched. Hedge funds must be regulated in some way, but their offshore nature--not to mention the very complexity of derivatives--makes it almost impossible. There will always be a "government" somewhere willing to allow such things. As always, corrupt governments are the fly in the institutional ointment.

To: Ramsey Su who wrote (6750)	9/26/1998 5:22:00 PM
From: Tundra	Respond to of 9980

Ramsey, Re: LTCM You raise several legitimate questions, in my view. It will be interesting to watch the events unfold. My initial take on the Feds action came from a slightly different standpoint. The Fed recently criticized hkma with respect to its market intervention tactics. Even without the foregoing, the Fed is smart enough to know that its "involvement" in the transaction would give rise to the argument of at least an appearance of impropriety. The Fed despite, likely cognizant of the future criticisms, acted anyway. This suggests to me further negative news is out there with respect to LTCM or related type of funds. I guess time will tell. Regards, Tundra