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Please address, and I'll check with Legal as well. We typically only book
deals when everything is signed off. Jeff ----- Forwarded by Jeffrey A Shankman/HOU/ECT on 01/26/2001 11:58 AM ----- David Hoog 01/26/2001 09:37 AM To: Jeffrey A Shankman/HOU/ECT@ECT cc: Subject: multi-trigger option contract following up on our discussion yesterday; for these types of deals, i dont think its necessary to have all the documentation of our counterparty's authorization to enter into the agreement. these are short term transactions and requiring this documentation will cause us to lose business because competitive alternatives do not have such burdensome requirements. the primary reason we need these things is for the scenario where a muni does a derivative deal with an open-ended downside, loses $50 million, and then claims that it was not a valid contract. in our case, they are only hedging. we are collecting a premium up front and their total cost is known up front. therefore they will not attempt to make this claim. even if they did, our risk is limited to the premium , not some big payout. the risk of losing business is far greater than the risk of a counterparty trying to get their premium back. seems like a 5 second decision to me. is it possible to combine the standard isda and our confirm into a single long form? by going away from the standard isda maybe we can eliminate these requirements because the payout liability is only 1-way.
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