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To: John Hunt who wrote (31251)	4/6/1999 10:17:00 AM
From: IngotWeTrust	Respond to of 116786

HuntPosts: Since most of the banks derivative positions are hedged with offsetting positions with other counterparties (called "netting"), one would be lead to assume that any real risk of loss is almost insignificant. However, there are many different kinds of exposure to derivative-loss risk, and credit and systemic risk is perhaps the most likely to occur. Systemic risk is when the failure of one party fails to meet their obligations to the other party when the derivative agreement becomes due. If LTCM had been a party for which the banks were relying on for counterparty netting, then the subsequent failure of LTCM could have caused a huge backlash and disrupted the entire global banking infrastructure. remember when the word netting usta mean that woven, web-looking stuff draped below a high-wire walker for safety? My,MY how things change in this day of the Naked "Spin" Emperor O/49r