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There's little debate about who the biggest losers are in the



accounting-fraud debacle: individual investors who still own the stock and the thousands of employees of the long-distance carrier who could begin getting pink slips as soon as Friday.

With the telecom giant appearing to be headed toward bankruptcy, angry stockholders looking to recoup some of their losses -- WorldCom's stock last traded at about 20 cents a share -- might want to consider using their stock certificates for scrap paper. That's because once a company files for bankruptcy, the existing stockholders rarely, if ever, get anything of value at the end of the process. Bankruptcy experts say you'll get better odds gambling at the track than buying shares in a bankrupt company.

Meanwhile, bankruptcy or not, on Friday WorldCom is expected to begin laying off up to 17,000 employees.

The other losers in this mess, of course, are the dozens of big financial institutions that either own WorldCom shares, loaned the company an estimated $2.65 billion or bought some of the $30 billion in corporate bonds it issued. For the most part, it appears the losses suffered by this consortium of banks, brokerages, insurers, mutual funds and pension funds will prove manageable and not particularly crushing.

Unlike Enron's sudden collapse, which caught many in the financial world off guard, the fall of WorldCom has been a soap opera that's been playing out for many months. And that gave these sophisticated Wall Street institutions time to hedge themselves and limit their exposure by unloading some of their holdings in secondary markets.

Right now, it appears the big commercial banks stand to emerge from the WorldCom affair in the best shape of all. Roughly three dozen banks participated in a $2.65 billion loan package to WorldCom, and in the world of high finance the potential liabilities of these banks are relatively small -- in many cases ranging between $100 million to $200 million. A loss of that magnitude probably translates into an eventual charge against earnings of a "couple pennies a share," says Legg Mason bank analyst Christopher Mutascio. "In the broader scope, it's not devastating," he says.

Sources close to

J.P. Morgan Chase

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, for instance, put the bank's total exposure to all WorldCom bank and bond debt at around $25 million.

Mellon Financial


says its exposure to WorldCom loans is $100 million.

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Bank of America

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won't comment on its bank debt exposure, but Mutascio estimates it may be around $150 million.

The one U.S. bank with the most potential exposure to WorldCom appears to be


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and that's because the financial giant not only was one of WorldCom's biggest lenders, it also was a lead underwriter on many of WorldCom's bond offerings.

Citigroup estimates the banks' potential losses on all WorldCom debt is $375 million, but approximately two-thirds of that stems from its WorldCom bond holdings. Chief Financial Officer Todd Thomson, in a prepared statement, says the impact on the bank "should be relatively modest."

Indeed, the institutions with the most to lose may be the ones still holding WorldCom bonds. Moody's Investors Service, the corporate-bond rating agency, estimates that U.S. life insurers at the end of last year owned about $5.4 billion in WorldCom bonds. Arthur Fliegelman, a Moody's senior credit officer, estimates that

American International Group

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, with $415 million in WorldCom bonds, is the most exposed U.S insurer. Other insurers with sizeable bond holdings, he says, are

Prudential Financial

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with $321 million and Northwestern Mutual Life with $285 million.

General Electric

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, in a conference call during which it reaffirmed its earnings outlook for the year, said it will take an after-tax loss of $110 in the second quarter on WorldCom bonds held in its insurance portfolio.

In all, there may be several hundred WorldCom bond holders looking to get something for debt notes. Andrew Rahl, a bankruptcy partner with the New York law firm Anderson Kill & Olick, says during a conference call Wednesday for WorldCom bond holders some 350 parties participated. Rahl, who wouldn't identify his clients, says the bond holders include many well-known financial institutions in the U.S. and Europe, along with a number of institutions that specialize in investing in so-called distressed debt.

If WorldCom files for bankruptcy, it would automatically default on its bond obligation. But unlike stockholders of a company, bond holders usually emerge from a bankruptcy proceeding with some money -- even if it's only pennies on the dollar for a note they own.