>>> raghu <[EMAIL PROTECTED]> 9/19/2007 9:54 PM >>> Here's the official Greenspin on the LTCM bailout. http://www.telegraph.co.uk/money/main.jhtml;jsessionid=FZXBJGVHNZ5VXQFIQMFSFFWAVCBQ0IV0?xml=/money/2007/09/19/cngreen119.xml&page=2
------------------------------------snip The story of how McDonough godfathered LTCM's bailout by its creditors has been told so many times that it is part of Wall Street lore. He literally gathered top officials of 16 of the world's most powerful banks and investment houses in a room, suggested strongly that if they fully comprehended the losses they would face in a forced fire sale of LTCM's assets, they would work it out, and left. After days of increasingly tense negotiations, the bankers came up with an infusion of $3.5bn for LTCM. No taxpayer money was spent (except perhaps for some sandwiches and coffee), but the Fed's intervention touched a populist raw nerve. "Seeing a Fund as Too Big to Fail, New York Fed Assists Its Bailout," trumpeted the New York Times on its front page. A few days later, on October 1, McDonough and I were called before the House Banking Committee to explain why, as USA Today put it, "a private firm designed for millionaires [should] be saved by a plan that was brokered and supported by a federal government organisation". But telling the banks involved with LTCM that they might save themselves money if they facilitated an orderly liquidation of the fund was by no stretch of the imagination a bailout. By facing the harsh reality and acting in their self-interest, they saved themselves and, I suspect, millions of their fellow citizens on both Main Street and Wall Street a lot of money. ^^^^^^^ CB: Lets say the banks didn't do what they did. To whom would all that money have been " lost " ? Where was the money "saved" from going ?
