Word: chases
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...result, by last week a bidding contest was under way as banks rushed to drop the prime rate that they charge corporate borrowers. First New York's Citibank led a group of institutions that lowered their prime from 11.75% to 11.50%. Then another wave of banks, including Chase Manhattan and San Francisco's Bank of America, pushed the prime down...
...worthiness of borrowers. Result: a portfolio that included $2.3 billion in bad loans. At some other ailing banks, problems can be traced further down the organizational ladder. Inexperienced traders at Chase Manhattan lost some $285 million in 1982 by lending U.S. Treasury bonds, notes and bills to Drysdale Government Securities, a renegade Wall Street firm that had parlayed $5 million in capital into as much as $4 billion in holdings before it failed. The tiny company had bought securities in expectation that interest rates would go higher. When they did not, Drysdale lost its gamble...
This foreign debt is owed primarily to nine major institutions: BankAmerica in San Francisco, First Chicago and Continental Illinois in Chicago, and Citicorp, Chemical, Chase Manhattan, Manufacturers Hanover, Morgan Guaranty and Bankers Trust in New York City. Together they have $54 billion on loan to Latin America and the Caribbean. That represents a disturbing 157% of the banks' capital, which is the portion of their assets that belongs to the institutions themselves and their shareholders, rather than depositors. In a more limited way, dozens of regional banks, including Milwaukee's First Wisconsin Corp., National Bank of Detroit...
Some bankers were initially hesitant. Lawrence Brainard, a former vice president of Chase Manhattan, remembers the day that the bank first faced the issue: "In early 1974 I joined a small group of senior bankers discussing a request by Denmark for a balance of payments credit. The key question in the meeting was whether private commercial banks had any business making unsecured loans to sovereign borrowers [governments]. After much soul searching, we turned down the request." Next day, however, a competitor stepped in to make the loan. "Within several months," recalls Brainard, "the resistance of my banking colleagues to sovereign...
...bankers that they might be lending too much overseas, but he did nothing to curb the loans. For the most part, they ignored the warning. Financiers were confident that countries like Mexico, with its oil reserves, and Brazil, with abundant mineral resources, were good credit risks. Recalls a former Chase Manhattan banker in Asia: "The world beckoned, and there was a strong feeling that we were laying the foundations of the American century...