WorldCom woes not expected to weaken banks.(Chicago Tribune)

The WorldCom debacle might dwarf Enron when it comes to profit misfires, but it doesn't have anything on the energy giant in terms of bank entanglements.

Enron's failure last year put a dent in bank earnings that dragged down share prices of even the most staid lenders, including Chicago-based Northern Trust Corp. Its ties to the industry reached far beyond loans to include complicated derivatives instruments that cost some of the nation's savviest banks billions of dollars.

WorldCom, by contrast, appears to be a plain vanilla, loans-and-bonds kind of company. Despite a $3.8 billion earnings restatement last week, the long-distance phone company's missteps are not expected to have a significant impact on U.S. bank profits.

Banks _ which spread the risk very thin by parceling out pieces of loans to dozens of banks around the world _ also had far more advance warning that WorldCom was in trouble. The telecommunications industry has been troubled for months, and WorldCom debt in particular had been declining. It was deemed noninvestment grade by Fitch Ratings in early May.

Enron debt dropped from investment grade to default within 30 days last fall, according to Fitch Ratings.

"Banks were gradually whittling down the loans they'd held to WorldCom. They were selling off," said Hal Schroeder, a money manager specializing in the financial services industry at Carlson Research & Analytics.

WorldCom reportedly owes banks worldwide roughly $4.5 billion in loans, Reuters News Service reported. On Monday, WorldCom said that lenders on two lines of unsecured credit totaling $4.25 billion had declared the company in default, Reuters said. It has drawn down $2.65 billion of the $4.25 billion credit lines.