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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (395)	10/5/1998 7:13:00 PM
From: Henry Volquardsen	Read Replies (4) \| Respond to of 2794

Sam, I generally like Cramer but sometimes he can be a pompous windbag. As much as Meriwether and his associates are concerned I would be very interested in what he believes they have done that would justify the government taking what in effect amounts to criminal action against them. Yes they were arrogant, stupid and dangerously over leveraged but last time I checked those were not against the law. If it was arrogant and stupid alone would decimate the political class. And if he is implying that they used illegal amounts of leverage, there are no laws governing derivative or bond leverage. Yes there are laws governing equity leverage but from what I have heard anecdotally they did not use illegal amounts of leverage. That doesn't mean the situation shouldn't be investigated and some illegalities found. Frankly I believe there might be issues of mail fraud regarding how they communicated with investors but in all likelihood I suspect they were careful enough to avoid that trap. But as far as wether they should lose their jobs that really is a decision for their new employers. If I were one they would lose their jobs. And the issue of them being stripped of their private assets is quite frankly absurd. This is still a country of laws and that action can only be considered when and if any illegalities are proven. No matter how much Cramer's bruised sensibilities might like to drag them before a kangaroo court. Personally I don't believe LTCM is alone in blame for this situation. Their lenders share some blame as well. Many aided and abetted LTCM by being all to willing to extend excessive leverage as they all bought into Meriwether's sand castle. But even that is only incompetence and not illegal. But the ones I would really like to see the SEC look at are those firms in which senior executives had significant personal investments in LTCM and continued to approve large additional extensions of credit despite the concerns of line management. There are serious compliance and insider dealing issues there that should be looked into. Also Cramer's ode of praise to Goldman is revolting. He should take his nose out of places it doesn't belong and get some fresh air. Goldman was in this just as deeply as any of the others in this bailout. Many have spoken here before of how LTCM should have been forced to accept the lower bid that was presented before the Fed 'strong armed' a bailout. Anyone else notice that Goldman was in both deals? Anyone else wonder about conflict of interest and self dealing? The Dominion of Diligence and Kindness? PUHLEEEESE!?! Talk about arrogance. Henry