---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 02/17/2000 
07:59 AM ---------------------------


Paulo Issler
02/16/2000 04:04 PM
To: Vince J Kaminski/HOU/ECT@ECT, Stinson Gibner/HOU/ECT@ECT
cc:  
Subject: LJM Update

Vince/Stinson:

I just came back from a meeting with Accounting (Ryan Siueck) and Credit (Rod 
Nelson - works with Bill Bradford) in which we presented the two-factor model 
for calculating credit loss on our LJM's position. Rod seemed positive with 
the model conceptual approach. He will position Bill Bradford on that. 
Accounting will have a meeting with AA to discuss the treatment on credit 
reserves on this deal tomorrow 9:00 AM. They feel my participation is not 
necessary. 

At year-end the difference on both valuations - without and with credit risk 
- indicates a credit loss of about 100 MM. 

Paulo Issler