FED'S JOHNSON WARNS U.S. BANKS ON LDC RIGIDITY
Federal Reserve Board Vice Chairman
Manuel Johnson said that some U.S. banks have been too rigid in
talks with lesser developed countries on debt refinancings and
warned that a breakdown of the renegotiation process could be
harmful.
    "There have been some difficulties in those negotiations ...
banks have sometimes been too rigid," Johnson said in response
to a question during an address before the Eastern Economic
Association, an academic group.
    "I think there have been potential breakdowns in that
process," he said, adding that an actual breakdown "would be very
unfortunate."
    He declined to comment on the situation of specific nations
and said it was not the Fed's role to become involved in such
talks.
    However, he said it was "always a little bit risky" for a
heavily indebted nation to seek refinancing without first
negotiating with the International Monetary Fund on economic
reforms. He added that he remains optimistic that current talks
would be resolved successfully.
 Reuter
