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To: jim kelley who wrote (72337)	10/15/1998 6:55:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

Short BAC? Well count me in- World economy to do better in 1999 Camdessus. Jim: Sheeeeesh, man this is not good (for the shorts).<g> =============================== "I think that despite the redoubtable contagion, despite the panic that is in many minds in financial markets, we believe that we will avoid a worldwide recession," Camdessus told a meeting of the French banking association. "We believe that sound policies being put in place in many countries around the world should end up producing the promised effect and therefore when we try to see what 1999 will bring, we see 1999 should be a little bit better than 1998," he said. foxmarketwire.com

To: jim kelley who wrote (72337)	10/16/1998 8:04:00 AM
From: Mohan Marette	Respond to of 176387

<Bank America bails out D.E Shaw another hedge fund> Jim: This what I was talking about the other day. ================================= Source:Financial Times BANKAMERICA: Bank makes $1.4bn provision Group acts to cover credit losses, writes John Authers in New York BankAmerica, the largest US bank, yesterday sent tremors through Wall Street after announcing a $1.4bn provision for credit losses in the third quarter - including a bad loan of almost $400m to a little-known New York investment bank. Analysts were taken aback after BankAmerica revealed it had in effect bailed out D.E. Shaw, the investment bank with which it formed an alliance early last year. Under the deal, BankAmerica has agreed to buy $20bn of bonds from its partner which analysts said was operating more like a hedge fund than an investment bank. BankAmerica was created this month after the merger of NationsBank and Bank of America. Yesterday's disclosures evoked parallels with recent heavy losses at UBS which became Europe's largest bank after its merger with SBC. Most of the losses stemmed from the former BankAmerica, and there was speculation that senior executives would be forced to resign - following the example of Mathis Cabiallaveta, chairman of UBS, who quit earlier this month over his bank's exposure to Long-Term Capital Management, the US hedge fund. Thomas Hanley, the respected banking analyst at Warburg Dillon Read, issued his most severe downgrading of a bank in seven years, saying the new BankAmerica "appears to be out of control". "The 'old' BankAmerica appears to be deteriorating very rapidly, and we think the blame for these problems may be placed with 'old' BankAmerica senior management. How long David Coulter survives is a looming question," Mr Hanley said. Mr Coulter is chief executive of the old BankAmerica and president of the newly merged bank. He is due to take over as chief executive on the retirement of Hugh McColl, the former NationsBank chief executive. Mr Coulter was not available for comment yesterday. But any premature departure could trigger a damaging leadership contest. Shares in the bank, which had a market capitalisation of more than $90bn at the beginning of the day, fell 11 per cent in early trading, but had recovered slightly by mid-session to stand $4 15/16, or 9 per cent, lower at $49. The most controversial aspect of yesterday's results was the effective rescue of D.E. Shaw. BankAmerica has agreed to buy bonds worth $20bn from D.E. Shaw, along with certain of its holdings in derivatives. The bond portfolio includes between $4bn and $5bn in Japanese bonds, while about half is held in US Treasury bonds and the rest in US municipal and corporate bonds - an asset allocation which analysts considered more appropriate for a hedge fund than for an investment bank. BankAmerica said it would attempt to sell these bonds "prudently" and would try to avoid any "fire sale". The deal with D.E. Shaw, masterminded by Mr Coulter, was announced last March. It had an unusual structure to take into account regulations then in force that made it difficult for commercial banks to underwrite securities. BankAmerica had no equity stake in the company, but arranged a share of earnings from the alliance. Apart from problems with D.E. Shaw, BankAmerica also announced trading losses of $529m for the third quarter. Russian securities accounted for $238m of the loss, but it also lost $196m on high-yield bonds and $91m in mortgage-backed securities. The company also saw a sharp decline in investment banking income to $376m, compared with $664m in the second quarter for the two banks combined. Overall, net operating earnings for the quarter were $893m, down from $1.77bn for the combined predecessor banks a year earlier. Once a $519m after-tax charge for the merger was included, net income was $374m.