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News Briefs I

Schroeder, Social Democrats Seek Coalition With Greens

The Washington Post

Chancellor-elect Gerhard Schroeder said Monday that his Social Democrats would seek to form a coalition government with the environmentalist Greens party.

A day after dethroning Chancellor Helmut Kohl's Christian Democrats as the largest party in Parliament, the leaders of the Social Democrats voted unanimously to open negotiations with the Greens on Friday to thrash out a policy agenda.

Results from Sunday's election showed that a "red-green" alliance between the Social Democrats and Greens would command a 21-seat majority in the new 669-seat Bundestag, the lower house of Parliament.

The Greens have advocated such radical notions as tripling the price of gasoline to $12 a gallon, legalizing marijuana, and dissolving the North Atlantic Treaty Organization. But Schroeder said he was confident that Green moderates such as party leader Joschka Fischer, whom he cited as a possible foreign minister in his government, would prevail in Greens party debates.

With left-of-center governments already in office in Britain, France and Italy, and soon to be in office in Germany, Schroeder said a historic opportunity exists for Europe's four largest nations to coordinate solutions to joblessness and other social and economic problems.

Banks Near Final Accord on Investment Funds' Rescue

The Washington Post
New York

The consortium of banks rescuing Long-Term Capital Management L.P. were expected to reach a final deal Monday night after wrangling all weekend - without the continued coaching of the Federal Reserve Bank of New York - over their $3.6 billion arrangement to prop up the speculative fund.

The historic rescue deal, designed to avert chaos in world financial markets, nearly collapsed several times, executives involved in the meeting said, as dozens of bankers and lawyers from 14 of the world's most powerful investment houses locked horns.

Among the most contentious issues was how to deal with a $483 million revolving credit line made to Long-Term Capital by a syndicate led by Chase Manhattan Bank. Chase executives argued that it should be paid down immediately, several sources said. But "most of us felt we would rather not have that money go out the door the same day," said a banker involved in the talks. Chase, the sources said, ultimately backed down.

New York Fed President William McDonough was by all accounts a forceful coach in the original talks last Wednesday, providing a neutral space for the parties to meet. The spokesman said the Fed felt its duty was fulfilled. But an executive from a member of the consortium said McDonough removed himself from the talks after widespread criticism over the Fed's unprecedented help in stabilizing a fund for wealthy investors.

McDonough's absence, bankers said, made it tougher to get through rancorous issues. Several sources said Merrill Lynch & Co. President Herbert Allison took charge Monday.

The fund's lenders said they were largely kept in the dark over where their loans were going, though many argue that such secrecy is common.