Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (14671)	1/5/1999 5:58:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 86076

Monday January 4, 11:10 pm Eastern Time Time limit was key in LTCM rescue - Fed governor By Marjorie Olster NEW YORK, Jan 4 (Reuters) -- Federal Reserve Gov. Laurence Meyer said on Monday time constraints were the primary reason the Fed organized the 11th-hour rescue of hedge fund Long Term Capital Management last September. Fourteen brokerage firms agreed to inject $3.6 billion to recapitalize troubled LTCM after day-long talks organized by the Federal Reserve Bank of New York on Sept. 23. The multi-firm deal emerged as a more viable option than a tentative offer by one of the leading U.S. brokerage firms to take over the once high-flying hedge fund. Meyer told the North American Economics & Finance Association at the Allied Social Science Association's conference the Fed would have preferred to see a takeover rather than a bailout if there had been time to work it out. ''It would have been much better if a group of private firms had gotten together to do something,'' he said. Meyer said the offer from the brokerage firm to acquire LTCM came while September's marathon bailout talks were under way at the New York Fed. But the Fed was concerned the complex terms of a takeover could not be worked out to avert a full-blown crisis in U.S. capital markets. The Fed felt immediate action was critical, Meyer said. ''We couldn't dictate the terms. It was not appropriate for the Federal Reserve to say 'this (offer) is more appropriate, the rest of you guys go home,'' Meyer said. Meyer was asked whether the Fed's involvement in organizing the bailout exerted pressure on the brokerage firms at the September talks to secure their participation. ''No promises or penalties were promised or threatened,'' he responded. Meyer also reassured his audience that the Fed had no intention of extending the safety net currently available to protect depositors from bank failures to include a broader scope of financial institutions. He said the LTCM bailout raised some significant questions in regard to that safety net. ''I want to find ways to limit extension of the safety net beyond very large banks and depository institutions to protecting markets. I don't want to be pushing in that direction,'' Meyer said. Meyer reiterated that the Fed's role in LTCM could not be construed as a bailout or an extension of that safety net because no public funds were used.