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

To: Henry Volquardsen who wrote (933)	4/18/1999 5:36:00 PM
From: accountclosed	Read Replies (2) \| Respond to of 2794

Thanks Henry. As a follow up, you said My biggest concern for this sector would be if it appeared we were going to see a recession or a return to inflation. I believe the pain for banks in a recession scenario is fairly plain. More bankruptcies and thus more loan defaults...Fewer new loans being created due to slowed business conditions. However, I am less clear on how inflation impacts banking these days. In the past the answer would clearly be that the banks had lent long and borrowed short and would get squeezed. But with the matching of maturities of banks' portfolios and with the derivative based environment where the rate exposure is sold to the marketplace rather than kept in the portfolio, the impact is less clear to me. Could you comment further? tia