CHINESE DERIVATIVES

BANZAI7 NEWS--A senior Chinese economic official blamed "fraudulent practices" at some international investment banks for large losses incurred by Chinese state-owned companies on derivative contracts, in the government's strongest criticism yet of the role played by foreign banks. The very same banks that typically headline the field of banks underwriting huge IPOs of Chinese state-owned companies.

Li Wei, a vice chairman of the State-Owned Assets Supervision and Administration Commission, cited contracts tied to energy prices sold by banks including Goldman Sachs Group Inc., Merrill Lynch & Co., and Morgan Stanley to aviation and shipping firms.

Mr. Li, writing in the latest issue of the Study Times, a newspaper published by the Party School of the Central Committee of the Communist Party, also criticized Citigroup Inc., along with Merrill Lynch and Morgan Stanley, for developing "extremely complicated" derivatives products that were hard to understand.

You put your finger right on it Mr. Li.