BancWest Has No Special ''Vulnerability''

Any limited set of numbers can be taken out of context to reach a faulty conclusion. Of the dozens of ratios used to measure a bank's financial health, ''Is Wachovia's plight a warning?'' (News: Analysis & Commentary, July 3) picked three, then used them to construct a list claiming to identify banks most ''vulnerable'' to a recession because of poor loans. BancWest Corp. was on that list.

We respectfully disagree. We lend conservatively. Annual net loan losses never exceeded 6% of total loans despite recession and economic stagnation in Hawaii throughout the 1990s. Unlike some other banks, we never had to announce a special charge against earnings to cover nonperforming loans through this entire downturn.

Our 1999 loan losses (0.42%) were virtually equal to peer banks' (0.41%), according to Federal Reserve data. BancWest's loss rate in 2000's first quarter was even lower. Also, nonperforming loans are going down. BancWest's ratio of nonperforming assets to total loans has declined each year since 1995 and has continued to drop in 2000.

Finally, our reserves are adequate. BancWest's relatively heavier proportion of consumer loans has made loss rates more stable and predictable. Our reserve (1.29% of total loans and leases yearend) was triple our 1999 loss ratio.

Would an economic downturn be tough on banks, along with the rest of the economy? Of course. But nothing in BancWest's financial data suggests any special ''vulnerability'' to a future recession.

Walter A. Dods Jr.
Chairman and CEO
BancWest Corp.
Honolulu

Social (In)Security: Bush and Gore Miss the Mark

Business Week editors have fallen under the spell of ''don't worry, be happy'' after drinking from the New Economy fountain (''Social Security: Safer than you think,'' Editorials, July 3). Your premise assumes the factors bringing the U.S. its unprecedented favorable economic and productivity growth this past decade will continue long into the future. The editors could be correct, but chances are that long boom cycles are followed by long bust cycles, which have a tendency to have a negative impact on the ''rose-colored'' averages mentioned. Comparing Japan of the 1980s with the Japan of the 1990s is a case in point.

The retirement plans put forward by both Bush and Gore are political in nature, long on promises and short on specifics. Bush's plan of allowing citizens to keep 2% of their Social Security contributions is flawed. The Social Security system is already underfunded in the out years (2030 or so), when the largest numbers of baby boomers begin collecting monthly stipends en masse. Eliminating 2% of the 12.4% in annual contributions will only accelerate the day of reckoning. Any pension plan losing 16% of its annual contributions will soon find itself with large benefit cuts or payroll tax increases. Also, promising twentysomethings that their 2% contributions invested in stocks will grow into a large fortune flies in the face of reality. Instead of ''buy low, sell high,'' they have to buy high and hope for the best.

Although I endorse Al Gore's commitment to pay down the national debt with the federal government surpluses, his retirement plan creates another government entitlement program--on top of the ones we already can't afford now. Also, I resent redistribution politics--in which any taxpayer receives $1,500 for putting only $500 down. This policy is an unintended bonus to citizens who operate in the underground economy, who understate their income, and who cheat on their income taxes, while penalizing honest citizens.

James H. Nicholas
Sellersville, Pa.

Why Is the Record Industry So Scared of Napster?

I read with great interest ''Can Microsoft's nemesis save Napster?'' (News: Analysis & Commentary, July 3) and look forward to seeing the legitimacy of Napster as a useful (yes, useful) product proven in court.

I am a perfect example of why the Recording Industry Assn. needs to support Napster strongly. I have purchased six CDs since discovering it on the Internet three months ago. If Napster is successfully influencing its users (i.e., consumers) to buy more music, what is the recording industry so afraid of?

Tisha Nemeth
Painesville, Ohio

Sell More Drugs over the Counter

The safety of selling what used to be prescription medications over the counter (OTC) is established on several continents, including Europe--contrary to what you state in ''Lots of drugs should stay behind the counter'' (News: Analysis & Commentary, July 3). There, medical utilization is considered ''too high,'' not decreased, as author Amy Barrett fears.

For mental health, such availability would be a boon. First, the new psychotropics are safer than OTC nostrums. They have not caused the permanent comas of aspirin or the internal hemorrhages of naprosyn. Second, people with mental disorders may be too withdrawn to see a new doctor or to go through an ''intake process'' at a clinic. Partially successful self-medication may inspire them to do so.

Third, the low doses that are available OTC are often as effective as more problematic prescription doses. Come on, the U.S. consumer can handle this as well as his Mexican and African friends.

David Behar, M.D.
Narberth, Pa.
James Schaller, M.D.
West Chester, Pa.

AT&T's Investments Are Paying Off

''One tough call'' (News: Analysis & Commentary, July 10) was wrong about our investments. They are indeed paying off, although they are masked somewhat by an industrywide decline in consumer voice revenue. In fact, excluding our consumer voice business, AT&T's 1999 pro forma revenue of about $42 billion grew at more than 12%. Not many businesses of that size can make the same claim.

Richard J. Martin
Executive Vice-President
AT&T
Basking Ridge, N.J.

Online Trading Has Its Limitations

''Trading online: It's a jungle out there'' (Business Week Investor, May 22) raises interesting points but reflects a flawed understanding of the different kinds of market centers, specifically electronic communications networks (ECNs), vs. market makers.

You suggest that individual investors who enter limit orders online should contemplate switching to a broker who makes ''heavy use of ECNs,'' the logic being that ECNs ''match buyers and sellers automatically at a single price without the dealer spread.'' The advice is like recommending that a traveler with an urgent need to be in Cleveland tomorrow log on to Priceline.com and pin his hopes on a discounted fare. While he conceivably might end up saving money, he also risks not getting off the ground.

What's more, limit orders executed by a market maker are not subject to such a spread, either. In fact, limit orders sent to ECNs often do not get executed at all. Investors' limit orders are far more likely to be filled--and more quickly--at a market center that receives a large volume of order flow. Moreover, when investors want to buy or sell securities with limited volume--say a stock outside of the Nasdaq 100--the chances of getting their orders executed through ECNs decrease concomitantly. But unlike ECNs, which are essentially passive limit order files, market makers risk their own capital to take the other side of a trade. Committing capital adds liquidity, the lifeblood of the marketplace.

Michael T. Dorsey
Senior Vice-President
and General Counsel
Knight Trading Group Inc.
Jersey City, N.J.