Recently, it has been suggested that attractor networks may provide a mechanism for context-dependence in hippocampal place codes. We have proposed that context may be coded by ''latent attractors'' - mutually competitive and internally cooperative cell groups which channel the system's response to afferent stimuli. We have also argued that it is the disynaptically recurrent dentate gyrus-hilus (DGH) system which embodies these latent attractors in the hippocampus. Others have suggested the CA3 network - with its monosynaptic recurrence - is the site. While latent attractors (and, thus, context-dependent coding) can be implemented by a 1-layer or 2-layer recurrent network, we show that a 2-layer recurrent network can implement a sparse context-dependent place-code using latent attractors much more flexibly than a 1-layer network.