Bill,
I think owning the process and being the 'font of knowledge' regarding the right and wrong application of these products is THE issue.  We constantly get the yadda, yadda..."its insured" or its "secured", or "we only have X$ exposure" then it turns out its not.  Groups like Dave Marshall's, Peter Abdo, and the legal staff tend to be good sources of ideas and contacts, but somehow the responsibility for the decisions seems to fall to RAC.  Ironically, we currently are the least capitalized to make those kinds of decisions.  Classic examples of places we do not have enough credibility are in the history and anecdotes regarding claims made and enforced or not.  Nothing like a few war stories that are verifiable by outside sources to strengthen our argument. While your and my instincts would probably suffice for the 80% solution, this seems to be a painful road at Enron, especially when the targets are so big.  We need to arm the managers and directors in RAC with enough information to be persuasive in steering transactions in one direction or another.
Ted
 

-----Original Message-----
From: Bradford, William S. 
Sent: 19 September 2001 03:14
To: Murphy, Ted; Buy, Rick
Subject: RE: Transactional Finance


Sounds like a great idea to get together and discuss.  We definitely need to own this process.  I am not sure Marshall or the orignation team has much understanding of the true value of this from of credit risk syndication.  We have reviewed some of these policies in the past and enforcing claims is not as clean as cash or l/c's.  Legal opinion was not very favorable in the past either.  I am not sure how much of this we should do and what precedent it sets for the rest of our portfolio.  If we do any it should be centralized on predictable credit exposures (A/R or annuities) and not volatile MTM exposures.  
 
That being said, we have big targets in ugly credit markets which will require we take on some more risk.  An insurance policy is better than nothing but lets make sure McMahon understands that comparables to credit policies for the gas and power market is not relevant when his business is clearly different.
 
Bill
 

-----Original Message----- 
From: Murphy, Ted 
Sent: Tue 9/18/2001 1:07 PM 
To: Buy, Rick; Bradford, William S. 
Cc: 
Subject: Transactional Finance



Rick/Bill 
The steel team (Bruce Garner et al) here is considering a credit insurance product to support their sales into uk market.  Paul Maley, who is from the insurance world, has been part of the discussions and believes that there is a viable product for a portion of the business.  Not a fix for long-dated mark-to-market exposure out of Russia, but probably could release some credit capacity for sales to weak industry names on a delivered/unpaid basis into first world legal environments.  A bit pricey but may be less expensive on a per $ basis if lots of transactions.  He has been in touch with David Marshall in Global Risk Managment (Houston Insurance guy).  I suggested that Paul and I get together with you guys to go through in some detail.   This is encouraging that people are working on such things, but it would be great if we set the pace and organized the process.  Speak to you tomorrow or Thurs.

Ted