8B
Campus/Nation
Wednesday September 30,1998
Rate cut could help borrowers
Students may have smaller payments on loans, mortgages
By Chris Fickett Kansan staff writer
The Federal Reserve's decision to lower short-term interest rates could have ramifications in Lawrence.
Students may not see an immediate change in the amount of interest their savings accounts earn, or how much they pay on credit card
balances, auto loans or mortgages.
balances, auto loans or mortgages. Joe Oberzan, vice president and branch manager of Capitol Federal Savings, 1025 Iowa St., said his bank would have to see how other financial institutions reacted to the interest rate change before making any decisions.
"We would probably take a look at what Greenspan has done and wait and see who takes the first step." he said.
Oberzaan said that if banks were to drop their interest rates on mortgages, they would be more affordable.
He said that lower interest rates did
not favor savings account holders.
"For borrowers, it could be good because they could have a little more discretionary money to spend at the end of each month," Oberzan said. "If they're on the savings side, it may be a little bit tougher on their savings account."
"In terms of students, they should have a special fixed rate," he said.
Brendon Allen, Phoenix, Ariz., junior, said that because students were targeted by credit card marketing, they should reap the benefits of lower interest rates.
The Fed's interest rate cut did not take Mark Hersey, graduate
research assistant of finance, by surprise.
Hersey said that interest rates were lowered by the Federal Reserve in reaction to falling world markets.
Hersey said that interest rates across the globe had fallen.
"I don't think Greenspan set the interest rate," he said.
He said that the interest rate in Japan was between one-half and three-quarters of 1 percent, which is extremely low.
Hersey said that the cut was only a modest change.
"It's a short-term attempt to bolster the economic situation," he said.
Fed lowers interest rate .25 percent
The Associated Press
WASHINGTON — The Federal Reserve moved to inoculate the U.S. economy against a spreading global crisis yesterday, cutting a key interest rate for the first time in nearly three years.
The quarter-point cut in the federal funds rate to 5.25 percent will mean slightly lower borrowing costs for millions of Americans on everything from auto loans to home equity lines of credit if commercial banks follow suit in coming days by lowering their benchmark prime lending rates as expected. The prime rate is currently at 8.5 percent.
The Dow Jones industrial average dropped 100 points after the
Fed's announcement, but it recovered all but 28 points by the end trading.
Private economists said yesterday's decision to lower the federal funds rate, which has been at 5.5 percent for 18 months, still represented a remarkable turnaround for Fed policy-makers, who as recently as July were leaning toward raising rates to fight inflation.
Federal Reserve Chairman Alan Greenspan first signaled the Fed's change of heart earlier this month when he warned that the United States was unlikely to remain an oasis of prosperity in the face of a currency crisis that began in Asia, then spread to Russia and is now threatening countries in Latin America.
The main impact on the United States has been to send the trade deficit to record levels. American exporters have lost valuable overseas markets, and Asian products, made cheaper by currency devaluations, have flooded this country.
But Russia's botched devaluation of its currency brought the crisis closer to home by disrupting a number of Latin American countries.
Greenspan indicated last week that the Fed stood ready to do its part to calm turbulent markets. U.S. companies depend on Latin American countries for many of their sales.
Lower U.S. interest rates help to
While a number of banks in Canada, a nation whose economy is closely tied to the United States, announced cuts in their prime lending rates immediately after the Fed's announcement, officials at major U.S. banks said they were still considering whether to lower their rates.
Private analysts said they expected U.S. banks would lower their prime rate within the next few days. Some suggested that the delay would last until tomorrow, the first day of October, so the banks would not have to pass on lower rates to consumers holding adjustable home equity loans for another month.
Grant could be delayed by Lewinsky situation
By Julie M. Sachs
Kansan staff writer
Monica Lewinsky may be having an adverse effect on research at the University of Kansas.
Stephen Schroeder, director of the Lifespan Institute, said that he believed the Lewinsky matter might be contributing to Congress's delay to pass the budget for 1999.
The delayed budget, Schroeder said, may halt the payment of
one of Liespan's federal grants
Schroeder was told yesterday that he might receive the funding next week. Although he was only waiting for one grant, Schroeder said that other grants possibly could be affected by the budget.
Lewinky; Could be inadvertently slowing work on budget.
delayed funding.
The National Institute of Child Health and Human Development, a division of the National Institutes of Health, denied that any 1989 grant was unpaid.
But George Gaines, legislative officer at the National Institute of Child Health and Human Development, said 1999 awards might be held up.
Sen. Sam Brownback (R-Kans.) said that Congress was working hard to pass the budget.
"Sometimes the legislative process takes a long time to come together, and this year is no exception," Brownback said. "As the saying goes, 'There are two things you never want to actually see being made: sausage and legislation.' Too often that saying becomes a reality on Capitol Hill."
Brownback did not comment on whether the Clinton-Lewinsky situation.
Individuals at the National Institute of Health also said the presidential situation had nothing to do with the budget remaining in congressional limbo.
Mark Stern, news chief at the National Institute of Health, said that the passing of budget wasn't taking any longer than usual.
"It has nothing to do with anything going on in Congress," he said.
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