I think this is Kinneman's decision.  To the extent that an agreement uses a 
rate that may result in P&L when it is pulled out of the book, that is his 
risk.  Not too big of an issue from my perspective.


From: Sara Shackleton on 02/16/2001 09:22 AM
To: Tanya Rohauer/HOU/ECT@ECT
cc:  
Subject: Bear Stearns "Securities Loan Agreement"

Tanya:

We finally agreed on the guaranty form (the cap is $25 million) and are about 
ready to execute the actual agreement.  I have one question:  in the ISDA 
world, we use "cost of funds plus 1%" as the default interest rate.  The Bear 
document provides:

"...interest thereon at a rate equal to (A) in the case of purchases of 
Foreign Securities, LIBOR, (B) in the case of purchases of any other 
securities (or other amounts, if any, due to Lender hereunder), the Federal 
Funds Rate or (C) such other rate as may be specified in Schedule B, in each 
case as such rate fluctuates from day to day, from the date of such purchase 
until the date of payment of such excess."

What is your preference:  Bear's standard language or do you want to specify 
another rate?


Sara Shackleton
Enron North America Corp.
1400 Smith Street, EB 3801a
Houston, Texas  77002
713-853-5620 (phone)
713-646-3490 (fax)
sara.shackleton@enron.com