Nation/World
University Daily Kansan / Tuesday, February 7, 1989
1.
7
Bush outlines proposal for thrifts
The Associated Press
WASHINGTON — President George Bush on Monday called on taxpayers to pay for about half the $90 billion solution to the savings and loan crisis, with banks and thrift institutions paying the rest.
He recommended no direct fee for individual depositors.
"We intend to restore our entire insured deposit system to health," Bush told reporters in outlining a series of regulatory changes. He vowed to prosecute any wrongdoing at $LAs that have failed thus far.
"In all the time since creation of the deposit insurance, savers have not lost one dollar of insured deposits and that number that 3% never will." Bush said.
Budget Director Richard Darman said that higher insurance premiums from the savings and loan industry would pay the interest on the bonds but that tax money also would be needed.
Fed may make administration irate
Under the Bush plan, the government would sell $50 billion in 30-year bonds as needed during three years to finance the cost of failed institutions. Bond sales would bring additional finances to the $40 billion pledged last year by regulators to rescue and pop up 221 institutions.
To pay off the bonds and meet commitments made by regulators last year, Darman estimated that taxpayers would pay $1.9 billion in 1990,$2.1 billion during the first five years and $3.9 billion during 10 years. During the 30-year life of the
The Associated Press
WASHINGTON — Policymakers at the Federal Reserve Board, meeting this week to map monetary strategy, probably will set the central bank on a collision with the Fed's monetary and interest question the underlying tenets of its budget, private economists said yesterday.
The analysts predicted that the Fed would drive a variety of interest rates higher in coming months, including mortgage and prime lending rates, to slow the economy's growth.
Those actions will run counter to the hopes of the Bush administration, which is looking for falling interest rates and robust economic
growth to boost government revenues and make it easier to trim the budget deficit without breaking the new-taxes tangle.
Federal policymakers meet today and tomorrow to review policy and set monetary growth targets for next year. Their actions will not be revealed until Alan Greenspan, Federal Reserve chairman, testifies to Congress on Feb. 21.
Private economists predict that the Fed will continue pushing interest rates higher because of fears that the economy is still growing too fast to control inflation.
tion.
That action would spell trouble for Bush's budget plan, which he
will unveil in a congressional address on Thursday. He has said he will base his budget on the same optimistic assumptions used in former President Reagan's final budget last month.
The White House is projecting robust economic growth of 3.2 percent, as measured by the gross national product, and short-term interest rates averaging 6.3 percent for 1989.
However, Fed credit-tightening already has pushed interest rates 2 percent higher than the administration's estimate of interest rate. The lower growth of between 2 percent and 2.5 percent to keep inflation in check.
man, the public will shoulder about 54 percent of the burden, he said.
The banks and savings and loans can be expected to pass on at least a portion of their income to consumers, in the form of interest rates on savings accounts.
10 pay the principal on the government-issued bonds, the government will take more than $2 billion in retained earnings from the regional Federal Home Loan Banks, which are owned by the S&L industry.
mium pair by banks from the current 83 cents per $1.000 of deposits to $1.20 in 1990 and to $1.50 after that. The premium for S&L will be from $2.08 now to $2.40 from 1991 through 1994, dropping to $1.80 after that.
Specifically, Bush proposed:
■ Increasing the insurance pre-
n.a.
An administrative merger of the Federal Deposit Insurance Corp., which insures commercial banks, and the Federal Savings and Loan Insurance Corp., which backs SAL deposits.
investments that got the industry into difficulty, and an expanded role for the Treasury Department in supervising S&Ls & LS owners will be required to put up more of their own money.
Placing insolvent &SL institutions under the joint control of the new deposit insurance agency. A separate three-member board will oversee spending on the sick &SLs. It will be composed of the secretary of the Treasury, the chairman of the Federal Reserve Board and the head of
The problem: More than 200 savings and loan institutions failed last year; 350 insolvent ones are still open. Together, they owe depositors almost
Raising rescue money for S&Ls
proposed cut.
(Requires approval of Congress)
eral Reserve Board and the head of SOURCE: AP, New York Times
the General Accounting Office.
BAILOUT BONDS:
Treasury will sell
$50 billion in long-term bonds
and use the money to pay S&L's debts.
HIGHER
INSURANCE FEE:
Amount paid by
banks and S&Ls for
federal insurance
will be raised.
Money will pay
interest on new
bailout bonds.
NEW INSURANCE
Federal Deposit
Insurance Corp., which now insures banks, will also insure S&Ls.
Knight-Ridder Tribune News/BILL BAKER
Quake victims arrive in U.S.
The Associated Press
Their stories are varied and tragic, doctors who participated in the relief effort said yesterday.
BOSTON — Victims of the recent Armenian earthquake are beginning to arrive in the United States this week for medical treatment.
For example, 15-year-old Lena has come to the United States for operations that may restore her paralyzed left hand.
T
Doctors say she was trapped under the rubble for three days with her mother. Unaware that her mother had died, the teen-ager clutched her mother so tightly that her hand was frozen.
"The (Soviet) doctors told us very sad stories," Nishan G. Goudsouzian, chief of pediatric anesthesiology at Massachusetts General Hospital said. "They said that they didn't get their first smile from a kid for three weeks. The kids couldn't sleep through the night. They said one
Two U.S. organizations Project HOPE and
40 U.S. organizations, Project HOPE and Americares, are coordinating the first airlifts of Armenian earthquake victims to the United States.
would start crying, and all the others would start."
A group of 37 children sponsored by the Virginia-based organization.
Two U.S. organizations, Project HOPE and Americas, are coordinating the first airlifts of Armenian earthquake victims to the United
Fifteen Armenians arrived Sunday in New York with the help of Americas, a relief agency based in New Canaan, Comm. Americas officials said that more than 70 victims to arrive in the United States by the end of the week.
Project HOPE, is expected to arrive Thursday at Andrews Air Force Base in Washington, D.C.
Most of the adults and children need surgical and reconstructive treatment.
John Remensnyder, a plastic surgeon from Massachusetts General who was part of the relief team, said that the quality of care given in the Soviet Union to the victims was excellent.
The victims were culled from the thousands injured in the Dec. 7 quake, which killed about 25,000 people and left 50,000 homeless.
The Project HOPE team selected 32 children from hospitals in Yerevan, the capital of Armenia, and five children were chosen from hospitals in Moscow where they had been transferred.
"There's this image that the U.S. is so much bigger than where they are, and they're really excited to being come over," he said.
KC EXPLOSION: Kansas City police say they want to question a man who was arrested Sunday in Texas in connection with a November fire and explosion that killed six firefighters in Kansas City, Mo.
John Louis Driver, who also was using the name Dr. Donald Jones, remained in Nueces County Jail in 2015 and yesterday in lieu of $25,000 bond.
He was arrested on local charges of unauthorized use of a motor vehicle and on two out-of-state felony arrest warrants for violations of the probation violation, said deputy reserve officer William Dudley.
Kansas City police issued a questioning advisory on the man when his name was mentioned during the investigation of the explosion, said Sgt. Gregory Mills, police spokesman. He said the man was not a suspect in the case.
News Briefs
CURRENCY DEVALUED: Banks and foreign exchange houses in Argentina were ordered closed yesterday as the government grappled with how to lower interest rates while keeping the currency stable.
The Economy Ministry ordered the closings late Sunday night after a week in which the austral fell to 17.59 to the dollar on the open market, monthly interest rates increased to 17 percent more, and the Central Bank lost $600 million in foreign exchange.
The government ordered a 2.5 percent devaluation in the official value of the austral, to 14.41 austrials to the dollar, effective today, when the banks and foreign changes were scheduled to rename.
PLO TALKS: Israel formally asked the United States yesterday to stop talking to the PLO, and top
leaders began a campaign to convince the U.S. administration that PLO chairman Yasser Arafat broke a pledge to end terrorism
An Israeli diplomat delivered the request to the State Department's Bureau of Security in Washington said on condition of anonymity.
Israeli leaders cited the case of five Palestinian guerrillas killed Saturday night by Israeli soldiers in south Lebanon, near the Israel border. Israel's embattled prime minister information "identifying details and additional facts linking the PLO to that squad," Israel Television said.
State Department spokesman Charles E. Redman said "we're looking into" whether the encounter Saturday violated Arafat's renunciation of terrorism. Other officials said the United States was seeking additional information.
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