Despite accusations that the International Monetary Fund's intervention in Asia amounts to a bailout of reckless lenders, U.S. banks are expected to suffer substantial losses.

The IMF funds benefit U.S. banks indirectly, by preventing Asian borrowers from defaulting. But the banks will still have to write off some loans and restructure others at below-market interest rates.

For example, U.S. banks this month agreed to roll over $24 billion of short-term debt to Korean banks. In exchange, the Korean government is guaranteeing repayment at 2.25 percentage points above the London interbank offered rate for one-year loans, 2.5 points above Libor for two-year loans, and 2.75 points above Libor for three-year loans.

The banks are sacrificing hundreds of basis points in interest.

"We are not able to act simply out of what might be best for our own individual banks," a money-center banker said. "We are being asked to cooperate in an effort to stabilize the situation."

In addition, banks have been forced to increase their loan-loss reserves-a direct hit to their bottom lines. J.P. Morgan & Co. designated about $587 million of derivatives exposure to Asian counterparties as nonperforming, and its fourth-quarter earnings fell 35% from a year earlier.

What's more, the banks' regulators are more closely scrutinizing risk management systems to ensure they will protect the institutions from losses.

"Banks should be assessing their exposures and making appropriate adjustments to their loan-loss reserves," said Federal Reserve Board Governor Susan M. Phillips, who added that most banks with Asian exposure are prudently increasing reserves.

To be sure, without IMF intervention, many U.S. banks would have lost billions of dollars as banks and other borrowers in Korea, Indonesia, and Thailand defaulted.

Instead, the monetary fund and similar organizations have bolstered central banks' hard currency reserves. Korea alone has been pledged more than $57 billion in currencies such as U.S. dollars and Japanese yen.

Using these reserves, foreign central banks can convert local currencies into U.S. dollars. Local companies can then use the dollars to repay dollar-denominated loans from U.S. banks.

Is this just a case of redirecting U.S. taxpayer dollars into U.S. bank coffers, as anti-IMF critics have charged?

"If we were to put a purple dye on the taxpayers' money that we are today sending these countries under the auspices of the IMF, the Wall Street fat cats will be walking around with purple pockets tomorrow," said Rep. Ron Paul, a Texas Republican on the House Banking Committee.

"This is not an Asia bailout," said John Gamboa, executive director of the San Francisco-based Greenlining Institute. "It is an American bank bailout."

Even Treasury Secretary Robert Rubin said in a recent speech that he would not be willing to give a "single nickel" to any bank with Asian loans. But he said the crisis is so severe that the United States must help, even if it means some lenders benefit.

"A byproduct of programs designed to restore stability and growth may be that some creditors will be protected from the consequences of their actions," Mr. Rubin said.

Other voices are rising to the defense of the aid strategy.

"To say this is simply a bailout of the banks is quite unfair," said a money-center banker involved in the Asia negotiations. "We are being asked to do our part. We are not monsters."

"The notion that this is just a bank bailout is incorrect," said Comptroller of the Currency Eugene A. Ludwig. "The IMF is not bailing out banks. They are stabilizing these economies."

Each side in this debate may be at least partially right.

"Are there elements of bailout to it? Sure," said Karen Shaw Petrou, president of the Washington consulting firm ISD/Shaw Inc. "This is a complicated and extremely undesirable situation.

"But the midst of a market panic is not the time to become profound about public policy. It is the time to simply act and do what the IMF and the U.S. government did. You need to prevent the panic from spreading."

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