List of states by foreign exchange reserves

(SOURCE http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves)

Note: Although foreign exchange reserves are commonly measured in dollars, recent dollar devaluation against other reserve currencies does not necessarily reflect an improvement of finances. For consistency, forward currency swap contracts are not included in this list until they mature, figures that include them may be higher than those listed here.

Rank Country/Monetary Authority Foreign exchange reserves (millions of USD) Figures as of — World (sum of all countries) $ 7,613,325 -- 1 People's Republic of China (does not include Hong Kong SAR Macau SAR) $ 1,808,828 June 2008 2 Japan $ 1,004,653 July 2008 3 Russia $ 560,300 Sep 2008 — Eurozone (EU member states which have adopted the euro, incl. ECB) $ 563,426 March 2008 4 India $ 291,210 Sep 2008 5 Republic of China (Taiwan) $ 282,090 Aug 2008 6 South Korea $ 243,200 Aug 2008 7 Brazil $ 206,510 Sep 2008 8 Singapore $ 174,964 July 2008 9 Hong Kong $ 157,700 July 2008 10 Algeria $ 149,806 September 2008 11 Germany $ 143,942 April 2008 12 Malaysia $ 122,600 August 2008 13 France $ 119,588 May 2008 14 Thailand $ 103,100 Aug 2008 15 Italy $ 102,173 May 2008 16 United Kingdom $ 99,956 March 2008 17 Mexico $ 91,837 April 2008 18 Iran $ 81,000 May 2008 19 Switzerland $ 80,669 March 2008 20 Libya $ 79,000 September 2007 21 Turkey $ 78,187 August 2008 22 Poland $ 76,966 March 2008 23 United States $ 75,850 March 2008 — European Central Bank (ECB, not owned by any single EU member) $ 65,543 February 2008

Derivatives the new 'ticking bomb'

Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen

By Paul B. Farrell, MarketWatch

Last update: 7:31 p.m. EDT March 10, 2008

ARROYO GRANDE, Calif. (MarketWatch) -- "Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffett. That was five years before the subprime-credit meltdown.

"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind.

Also fresh on Buffett's mind: His acquisition of General Re four years earlier, about the time the Long-Term Capital Management hedge fund almost killed the global monetary system. How? This is crucial: LTCM nearly killed the system with a relatively small $5 billion trading loss. Peanuts compared with the hundreds of billions of dollars of subprime-credit write-offs now making Wall Street's big shots look like amateurs.

Buffett tried to sell off Gen Re's derivatives group. No buyers. Unwinding it was costly, but led to his warning that derivatives are a "financial weapon of mass destruction." That was 2002.

Derivatives bubble explodes five times bigger in five years

Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:

1. Sarbanes-Oxley increased corporate disclosures and government oversight
2. Federal Reserve's cheap money policies created the subprime-housing boom
3. War budgets burdened the U.S. Treasury and future entitlements programs
4. Trade deficits with China and others destroyed the value of the U.S. dollar
5. Oil and commodity rich nations demanding equity payments rather than debt

In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.

To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

• U.S. annual gross domestic product is about $15 trillion
• U.S. money supply is also about $15 trillion
• Current proposed U.S. federal budget is $3 trillion
• U.S. government's maximum legal debt is $9 trillion
• U.S. mutual fund companies manage about $12 trillion
• World's GDPs for all nations is approximately $50 trillion
• Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion
• Total value of the world's real estate is estimated at about $75 trillion
• Total value of world's stock and bond markets is more than $100 trillion
• BIS valuation of world's derivatives back in 2002 was about $100 trillion
• BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

Moreover, the folks at BIS tell me their estimate of $516 trillion only includes "transactions in which a major private dealer (bank) is involved on at least one side of the transaction," but doesn't include private deals between two "non-reporting entities." They did, however, add that their reporting central banks estimate that the coverage of the survey is around 95% on average.

Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."

Bubbles, domino effects and the 'bad 2%'

However, while that may be true as far as the parties to an individual deal, there are broader risks to the world's economies. Remember back in 1998 when LTCM's little $5 billion loss nearly brought down the world's banking system. That "domino effect" is now repeating many times over, straining the world's monetary, economic and political system as the subprime housing mess metastasizes, taking the U.S. stock market and the world economy down with it.

This cascading "domino effect" was brilliantly described in "The $300 Trillion Time Bomb: If Buffett can't figure out derivatives, can anybody?" published early last year in Portfolio magazine, a couple months before the subprime meltdown. Columnist Jesse Eisinger's $300 trillion figure came from an earlier study of the derivatives market as it was growing from $100 trillion to $516 trillion over five years.

Eisinger concluded:

"There's nothing intrinsically scary about derivatives, except when the bad 2% blow up." Unfortunately, that "bad 2%" did blow up a few months afterwards, even as Bernanke and Paulson were assuring America that the subprime mess was "contained."

Bottom line: Little things leverage a heck of a big wallop. It only takes a little spark from a "bad 2% deal" to ignite this $516 trillion weapon of mass destruction. Think of this entire unregulated derivatives market like an unsecured, unpredictable nuclear bomb in a Pakistan stockpile. It's only a matter of time.

World's newest and biggest 'black market'

The fact is, derivatives have become the world's biggest "black market," exceeding the illicit traffic in stuff like arms, drugs, alcohol, gambling, cigarettes, stolen art and pirated movies. Why? Because like all black markets, derivatives are a perfect way of getting rich while avoiding taxes and government regulations. And in today's slowdown, plus a volatile global market, Wall Street knows derivatives remain a lucrative business.

Recently Pimco's bond fund king Bill Gross said "What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August."

In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't "figure out" the world's $516 trillion derivatives.

Why? Gross says we are creating a new "shadow banking system." Derivatives are now not just risk management tools. As Gross and others see it, the real problem is that derivatives are now a new way of creating money outside the normal central bank liquidity rules. How? Because they're private contracts between two companies or institutions.

BIS is primarily a records-keeper, a toothless tiger that merely collects data giving a legitimacy and false sense of security to this chaotic "shadow banking system" that has become the world's biggest "black market."

That's crucial, folks. Why? Because central banks require reserves like stock brokers require margins, something backing up the transaction. Derivatives don't. They're not "real money." They're paper promises closer to "Monopoly" money than real U.S. dollars.

And it takes place outside normal business channels, out there in the "free market." That's the wonderful world of derivatives, and it's creating a massive bubble that could soon implode.

Comments? Yes, we want to hear your thoughts. Tell us what you think about derivatives: as "financial weapons of mass destruction;" as a "shadow banking system;" as a "black market;" as the next big bubble dangerously exposing us to that unpredictable "bad 2%."

Proposed Wall St bailout to cost $700bn

Proposed Wall St bailout to cost $700bn

By FT reporters

Published: September 20 2008 17:49 | Last updated: September 21 2008 00:35

Senior Democrats signalled hard bargaining ahead on the Bush administration’s proposed $700bn bailout for the country’s financial institutions as officials met members of Congress over the weekend to seek bipartisan agreement on the package.

The plan to quell turmoil on the financial markets would allow the government to buy the toxic assets of any US institution for the next two years, raising the legal ceiling on the national debt from $10.6 trillion to $11.3 trillion.

By JULIE HIRSCHFELD DAVIS and DEB RIECHMANN,

Associated Press Writers 1 hour, 31 minutes ago

WASHINGTON - The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.

...

Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.

...

Palin’s Pipeline to Nowhere

Mark Hosenball

NEWSWEEK

From the magazine issue dated Sep 29, 2008

The principal achievement of Sarah Palin's term as Alaska's governor, a natural-gas pipeline project backed by $500 million in state tax money, might never be built unless Canadian authorities can strike a deal with some of the country's angry Indian tribes.

Approximately half of the proposed pipeline would run through Canada; native tribes who live along its route complain they haven't been consulted about it and are threatening to sue unless they are compensated. Representatives of the canadian tribes, known as First Nations, say Palin and other pipeline proponents are treating them with disrespect. The tribes' lawyers warn that the courts are on their side and say the Indians have the power to delay the pipeline for years—or even kill it entirely by filing endless lawsuits.

Palin's advisers say they considered these risks before they committed state funds to the project earlier this year. The state hired Canadian lawyers, who produced a lengthy report warning about possible lawsuits and cautioning that First Nations in Canada's Yukon Territory could be among the "most litigious." The report estimated that the Indians could delay the pipeline for up to seven years. But Jeffrey Rath, a lawyer for First Nations, says this timetable is "wildly optimistic." He notes that one of his clients, the 250-member Prophet River First Nation, litigated an unrelated land claim for 11 years before recently settling. Liz Logan, chief of a First Nations umbrella group in British Columbia, told NEWSWEEK that TransCanada, the company Palin's administration selected to pursue the project, has "very much downplayed the extent of the legal difficulties they face in Canada." One of Canada's top pipeline experts, Professor Andre Plourde of the University of Alberta, agrees that the seven-year timetable proposed by Palin's lawyers for sorting out First Nations claims is "optimistic indeed."

Kurt Gibson, one of Alaska's top officials overseeing the pipe-line project, says it is "premature" in the process to start consulting with Canadian Indians. "This is what I would call a commercial dance of the fireflies," he says, meaning that the two sides are each jostling for economic advantage. But Robert C. Freedman, a lawyer for the Dene Tha' First Nation, says that if authorities keep putting off dealing with the natives, "it's going to be a pipeline to nowhere when it crosses into Canada." In an interview with NEWSWEEK, Patrick Galvin, Palin's revenue commissioner, conceded that "there are risks associated with this project … Nobody has said that this project is absolutely going to happen, guaranteed."

$376 Billion in Chinese Agency Bond Holdings Subject to Taxpayer Bailout

Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds

$376 Billion in Chinese Agency Bond Holdings Subject to Taxpayer Bailout Proposals According to FreedomWorks Analysts

Last update: 11:08 a.m. EDT July 11, 2008

WASHINGTON, Jul 11, 2008 (BUSINESS WIRE) -- As politicians call for taxpayer bailouts and a government takeover of troubled mortgage lenders Freddie Mac and Fannie Mae, FreedomWorks would like to point out that a bailout is a transfer of possibly hundreds of billions of U.S. tax dollars to sophisticated investors and governments overseas.

The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities."

FreedomWorks President Matt Kibbe commented, "The prospectus for every GSE bond clearly states that it is not backed by the United States government. That's why investors holding agency bonds already receive a significant risk premium over Treasuries."

"A bailout at this stage would be the worst possible outcome for American taxpayers and mortgage holders, who have been paying a risk premium to these foreign investors. It would change the rules of the game retroactively and would directly subsidize the risks taken by sophisticated foreign investors."

"A bailout of GSE bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics."

SOURCE: FreedomWorks

FreedomWorks
Adam Brandon, 202-942-7612
abrandon@freedomworks.org

Copyright Business Wire 2008

The worst is yet to come

By Jonathan Burton, MarketWatch

Last update: 4:07 p.m. EDT Sept. 18, 2008

SAN FRANCISCO (MarketWatch) -- An influential investment strategist has a dire forecast for U.S. stocks, credit markets and the continued independence of some of the nation's top financial institutions.

Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse.

In the deteriorating climate he sees unfolding, Gundlach said, the Standard & Poor's 500 Index

Gundlach based his assessment on a belief that housing prices still face several more years of decline, a protracted slump, he said, not seen since the Great Depression. Moreover, Gundlach said it's possible that home prices could be sluggish until 2022.

"If it's like the Depression experience -- and it sure is shaping up that way -- it could take several years. Maybe we won't see a bottom in home prices until 2014," he said.

Write-offs could top $1 trillion

As a forecaster, Gundlach didn't just climb aboard the gloom-and-doom wagon. He was early to spot the cracks that subprime loans were making in the financial system, and among the first to warn that an era of easy money would come to a bad end.

"The subprime market is a total unmitigated disaster and it's going to get worse," Gundlach told money managers and financial advisers at an investment conference in June 2007. See full story.

And Gundlach has put his shareholders' money where his mouth is, shunning derivatives and counterparty risk in his bond fund portfolio.

That defensive posture should offer protection in the continuing credit storm that Gundlach foresees. In this bleak scenario, an unprecedented -- and growing -- number of home foreclosures, along with mortgage loans that are under water as soon as they're originated and a glaring lack of buyers for even modestly risky assets keeps the financial system under enormous stress.

Expect loan default rates to rise, Gundlach said, not just in the subprime market, but among the top-drawer prime borrowers as well. The prime default rate could approach 10% from a current 2% before the carnage is over, he said.

"The current environment is maybe a little worse that what was experienced in the Depression in terms of the housing market," Gundlach said.

More troubles ahead

Accordingly, financial institutions may suffer write-offs that could surpass $1 trillion before conditions improve, he said. As of late August, credit losses and writedowns at the world's 100-largest banks and brokerages topped $506 billion, he noted.

Among the casualties, Gundlach said, could be Citigroup. The company earlier this week made public a memo to employees from CEO Vikram Pandit highlighting Citigroup's balance sheet strength and solid cash position.

Gundlach disagreed with that assessment. He said Citigroup has balance sheet problems that he likened to that of insurer American International Group, which the U.S. bailed out this week.

"I would give a very meaningful probability to the biggest, next AIG-size debacle being Citigroup," the strategist said.

"I would definitely not be a buyer of Citigroup stock," Gundlach said.

"If I were going to buy financial market stocks," he added, "I would be a buyer of Wells Fargo (WFC)

Other financial giants also won't escape the crisis unscathed, Gundlach said. "I don't see how Wachovia can make it as a stand alone," he said. He expressed the same sentiment about Morgan Stanley.

Indeed, late Wednesday the New York Times reported that Morgan Stanley was exploring a merger with Wachovia or another bank. See full story.

Europe's financial giants are in similar or even worse shape than their U.S. counterparts, Gundlach said, with "substantial exposures to assets which U.S. banks are now getting taken to the woodshed over. I would rate all European banks as not a buy."

The breakdown will take a further toll on U.S. stocks, Gundlach added. The S&P 500 will tumble below 800, he said, about 35% below its 1156 close on Wednesday.

Said Gundlach: "None of us have ever seen this, and it's no market for old men, but risk aversion is the order of the day."

Jonathan Burton is an assistant personal finance editor for MarketWatch, based in San Francisco.

McCain, Obama Blame Regulators; McCain Shifts on AIG

McCain, Obama Blame Regulators; McCain Shifts on AIG (Update1) By Kristin Jensen and Kim Chipman Sept. 17 (Bloomberg) -- Republican presidential candidate John McCain, shifting his position, suggested the government's $85 billion takeover of American International Group Inc. was unavoidable as both he and rival Barack Obama blamed regulators. ``On the bailout itself, I didn't want to do that,'' the Republican presidential nominee said on ABC's ``Good Morning America'' program today. ``But there were literally millions of people whose retirement, whose investments, whose insurance were at risk here, and they were going to have their lives destroyed because of the greed and excess and corruption.'' Twenty-four hours earlier, McCain said that he didn't want taxpayers to be ``on the hook'' for AIG. ``We cannot have the taxpayers bail out AIG or anybody else,'' McCain said yesterday on NBC's ``Today'' show. Obama, the Democratic nominee, blamed policies pursued under President George W. Bush and said the takeover must not result in a bailout for AIG corporate officers or investors. ``The Federal Reserve must ensure that the plan protects the families that count on insurance,'' Obama said at a campaign event in Elko, Nevada. ``It must not bail out the shareholders or management of AIG that are making big profits when times are good. They shouldn't be bailed out when times are bad.'' `Stark Reminder' Earlier in the day Obama issued a statement calling the crisis ``a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary.'' McCain, an Arizona senator, said regulatory agencies were ``asleep at the switch'' and said in his own statement that the takeover must not assist people ``who created this mess.'' During a later event at a General Motors Corp. assembly plant in Lake Orion, Michigan, McCain pledged to fight ``greed and irresponsibility on Wall Street,'' saying he has a record of taking on special interests. ``I am here to send a message to Washington and to Wall Street,'' McCain said. ``We're not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayers' dollars to Wall Street.'' As the crisis in the financial markets dominated the presidential campaign, Obama released a new two-minute television ad that stressed his proposed solutions for a troubled economy. The issue, he said, is ``how we get America back on track.'' Campaigns Today In Elko, Obama continued to argue that McCain is a longtime supporter of the same policies that brought on the financial ``meltdown.'' The Illinois senator mocked McCain's pledge to take on the ``old boys' network,'' pointing out that some of McCain's top advisers have worked as corporate lobbyists. ``The old boys network? In the McCain campaign that's called a staff meeting,'' Obama told the crowd of more than 1,500 people. Obama next holds a rally in Las Vegas; his running mate, Delaware Senator Joe Biden, is campaigning in Ohio today. McCain started his day in Ohio before moving onto Michigan. Later today he will host his first joint town hall meeting with his running mate, Alaska Governor Sarah Palin. She is expected to take questions from the audience at the event. As polls show the race between McCain and Obama a dead heat nationally, both are emphasizing their prescriptions for the economy and dealing with the financial market turmoil. Fed's Move The Federal Reserve announced yesterday it will provide a two-year loan to AIG, the U.S.'s biggest insurer, and take over 80 percent of the New York-based company's stock. The Fed also will replace the company's management. The action follows the collapse of Lehman Brothers Holdings Inc. at the start of the week, the bailout of Bear Stearns Cos. in March, and the takeover of Fannie Mae and Freddie Mac earlier this month. Stocks in the U.S. tumbled today with the S&P 500 losing 4.7 percent and the Dow Jones Industrial Average declining 4.1 percent. About $4.4 trillion of market value was erased from global stocks since Lehman's bankruptcy. McCain's campaign has ties to AIG. Harvard economics professor Martin Feldstein, whose advice has been sought by McCain, is on the board of directors. One of McCain's top fundraisers, Wayne Berman, is registered to lobby for AIG, federal records show. AIG paid Berman's firm, Ogilvy Government Relations, $100,000 during the first six months of the year. McCain's congressional liaison, John Green, formerly lobbied for AIG at Ogilvy. He has taken a leave of absence from the firm to work on the McCain campaign. Corporate Ties McCain has criticized Obama for his corporate ties, saying his message of change conflicted with the fact that he ranked second among members of Congress in donations from employees of Fannie Mae and Freddie Mac. McCain also reminded supporters that Obama originally put former Fannie Mae Chairman James Johnson in charge of the search for his running mate. Employees of New York-based Lehman, the fourth-largest U.S. investment bank, have been among the most generous donors to both candidates. They have given $370,524 to Obama through July 31, making those workers and their families his 10th biggest source of campaign cash; they were the 15th largest contributors to McCain's campaign, with $117,500. To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Kim Chipman in Nevada at kchipman@bloomberg.net; Last Updated: September 17, 2008 16:34 EDT

Standards differ for government bailouts

MSNBC.com

---

Standards differ for government bailouts

Jobs, nationwide impact of companies matter, but timing plays a role too

The Associated Press

updated 3:29 p.m. MT, Mon., Sept. 15, 2008

WASHINGTON - Bear Stearns got one. Lehman Brothers didn't. Life can seem unfair in the world of government bailouts. But decisions about who gets help from the government are based on circumstances and pressure generated by the political or financial crisis of the moment.

An overriding factor explains why The Bear Stearns Cos. Inc. won and Lehman Brothers Holdings Inc. lost: speed.

Bear Stearns suffered a sudden, massive heart attack that could have roiled a shocked and surprised financial industry. Until its collapse earlier this year, it was among the largest global investment banks and brokerage firms. The Bush administration felt immediate surgery was needed to prevent a meltdown.

Lehman Brothers was showing coronary symptoms for months, and there was time for the financial world to react. No surprise. No government triage.

Looking back, firms and industries bailed out by the government won help for many reasons: potential job losses, a wipeout of lifetime savings, the lifeline provided by airlines and the health of the financial system.

For example:

After the Sept. 11, 2001, terrorist attacks, Americans still had to fly. Congress authorized $5 billion in cash to help shore up the airline industry, following up with $10 billion in loan guarantees.

Jobs were at stake when Chrysler received loan guarantees in 1979 near the end of the Carter administration. The president and lawmakers in states with auto plants helped push through a package of $1.5 billion in loan guarantees while demanding concessions from labor unions and lenders.

The government took control recently of the giant mortgage finance companies Fannie Mae and Freddie Mac to stabilize the housing market and prevent chaos in the nation's financial system. The key factor was that companies own or guarantee about $5 trillion in mortgage loans, about half the nation's total.

The savings and loan industry was bailed out in the late 1980s. The U.S. financial system wouldn't have collapsed, but political pressure escalated from lawmakers whose constituents were losing their life's savings. President George H.W. Bush in 1989 authorized spending $166 billion over 10 years to close and merge insolvent savings and loan institutions.

The effect on financial institutions led to the government brokering a $3.6 billion private bailout in the 1998 collapse of the Long-Term Capital Management hedge fund. But no government money was involved.

Other bailout recipients have included Lockheed Aircraft in 1971 and Continental Illinois bank in 1984.

"Bear Stearns took everybody by surprise; it looked like an imminent meltdown and you had to act quickly," said Alice Rivlin, vice chair of the Federal Reserve System's Board of Governors from 1996 to 1999. "Lehman had a lot of time to think about this. It had access to Fed liquidity pools and hadn't used them. It didn't look like a disorderly route. It looked like the process could be managed in an orderly way."

Another key difference between financial firm bailouts and those of other industries: jobs.

In the case of Chrysler, "It was a question of preserving jobs," Rivlin said. "Nobody has been worried about bailing out financial institutions to preserve jobs, although a lot of jobs are at stake."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/26726788/

---

MSN Privacy . Legal

© 2008 MSNBC.com

Lehman’s outstanding debts total $600bn

By Stacy-Marie Ishmael and agencies

Published: September 15 2008 12:26 | Last updated: September 15 2008 12:26

Lehman Brothers Holdings owes more than $600bn to creditors scattered across the US, Europe and Asia, according to the investment bank’s Chapter 11 petition.

The largest unsecured creditors include Citigroup and Bank of New York Mellon, who have around $138bn of exposure to Lehman’s bond debt as indenture trustees.

Indenture trustees act as agents on behalf of bondholders, and while they help enforce the rights of creditors, they are not necessarily creditors themselves.

Bank of New York Mellon has an additional $17bn in exposure to both subordinated and junior subordinated debt, again as an indenture trustee.

Apart from the trustees, Japan’s Aozora Bank, which is part owned by Cerberus, is owed $463m.

But Aozora said its actual exposure to Lehman would be ”significantly lower” due to collateral and hedging, Reuters reported.

”Whatever may appear in a filing by Lehman in terms of gross exposure will be very different from what we have net of our hedges and net of our collateral,” Richard Layton, Aozora’s chief financial officer, told Reuters in a telephone interview on Monday.

Other Japanese banks cited in the filing include Mizuho Corporate Bank, with a $382m exposure in the form of a bank loan, Shinsei Bank with $231m and UFJ Bank with $185m. Japanese markets were closed on Monday for a holiday.

The top European creditor is BNP Paribas, which according to the filing extended a $250m bank loan to the investment bank. Shares in the French bank fell 7.2 per cent to €59.88 in midday trade in Paris.

Other European banks named in the filing include Svenska Handelsbanken, KBC, Lloyds TSB, Standard Chartered and DnB.

Copyright The Financial Times Limited 2008

Electoral College Polling Trend (KarlRove&Co)