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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (24785)	10/1/1998 1:58:00 PM
From: derek cao	Respond to of 70976

Off topic: Re: "Still, it demonstrates that they have learned nothing in the last 8 years. They are not going to increase transparency, or impose market discipline, or let insolvent countries/banks/companies fail. At least, not until a lot more money is wasted. " What do you think when American start doing it also? Do you remember massive the saving and loan bail out not a long time ago? Sometimes people have a very short memory and a "very good" reason why they did the bad things is good. usatoday.com "Greenspan defends Fed role in bailout WASHINGTON - Federal Reserve officials stepped into talks leading to the $3.6 billion private bailout of a major hedge fund to avert the possibility of global disruption, Federal Reserve Chairman Alan Greenspan said Thursday. He defended the central bank's involvement in the rescue, which partially protected wealthy investors in Long-Term Capital Management LP, who had bet big on interest-rate swings and lost. ''Financial market participants were already unsettled by recent global events,'' Greenspan said in testimony prepared for the House Banking Committee. ''Had the failure of LTCM triggered the seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own,'' he said. Greenspan, appearing with William J. McDonough, president of the New York Federal Reserve Bank, who helped arrange the Sept. 23 rescue of the hedge fund by a group of major banks and brokerage firms, acknowledged there was ''moral hazard'' in partially protecting the fund's owners. But, Greenspan said, Fed officials were worried about the potential for a disruptive ''fire sale,'' if the fund were liquidated, that would have risked a credit crunch for other borrowers - what Greenspan called ''a severe drying up of market liquidity.'' ''In situations like this, there is no reason for central bank involvement unless there is substantial probability that a fire sale would result in severe, widespread and prolonged disruptions to financial market activity,'' he said. He said the Fed participated ''solely to enhance the probability of an orderly private-sector adjustment,'' that no Federal Reserve funds were put at risk and that none of the firms in the rescue group were pressured to participate. He said there was a long tradition of such rare interventions, dating back to the Panic of 1907, when J.P. Morgan convened a meeting of the world's most powerful bankers in his library. By The Associated Press" Derek