Battalion/Page 5
December 14, 1982
local / state
iet Banks, S&Ls compete
or high-interest funds
r workandi:
■thing ab] 1
at, Robertson
artmentotl
one I worltj
by Tom Dobrez
Battalion Reporter
Bie government has created
uld often |, ne " ^ e ^ era ^y insured bank
iathehitcfJi unt J t ° hel P banks and sav '
ings and loan companies com-
I I' : |lete with high-interest money
said funds. But in Bryan-
Hege Station, the real battle is
tn whoKai"® een regulated banks and
said that k Iftf institutions,
datives Ho;,;W ae main reason for setting
in Amtini B 16 accounts on the national
iidtheyweS was to hd P. iur< ; the $227
enttoseetltj
Bin invested in the money
)t believe it ra ( et back ‘ nto g over ninent-
n “Bred accounts.
■.orally, experts agree that
■ should happen and that
Hey market brokers aren’t
■ |ng to attempt to compete.
B )av i s McGill, branch mana-
■for A.G. Edwards in Bryan,
Hained the brokers’ attitude.
HvV e have to take care of our
^Jt,” McGill said. “If the
Jts offer a better investment,
in going to tell my investors to
be taken as itk# it. 1 figure if I take care of
anging raa leni, they will take care of me.”
eased. EMihe new program set up by
the businesmDepository Institutions De-
rcent of ikHlaiions Committee allows
jors said tlieH|ks and savings and loan com-
loniftheyco'Janies to offer a better deal,
or. Brst, the new account allows
interest in Ifaiennstitutions to set. their own
1 business surest rates. In the past, a ceil-
lid she hopeHwas placed on the insured
asis placed iccoiints. The popular 5.25 per-
of Business p| passbook account is a prime
Texas AMppipie of this type of regula-
teronesckjon.
hip in thenHecil Peters, senior vice presi-
ireneurial s:lent in charge of marketing for
with (tkitzos Savings in Bryan, said
said. fi|g able to set interest rates is a
re would ng plus for the new accounts,
each small wOur rate will vary from day
e from? pd a } > but we will never be lower
esdowntoAi the money market fund,”
d. “Whatsuiters said. “Their rate is based
uldgivetolkpinarket conditions. Our rate
icket chaif Hbe set at whatever we want.”
at a large coifs'
The same advantage also can
be detrimental to a bank or sav
ings and loan company. Glynn
Williams, president of First Fed
eral Savings and Loan Associa
tion of Bryan, said the industry
should be cautious when setting
rates.
“The banks and savings and
loans should not set rates that
are unreasonable,” Williams
said. “They should be aggressive
“If the banks offer a bet
ter investment, I’m
going to tell my inves
tors to take it. ” — Davis
McGill, branch mana
ger for A.G. Edwards in
Bryan.
as far as business, but they
shouldn’t put themselves on the
line by trying to lure new cus
tomers with unreasonable in
terest rates.”
Besides high interest rates,
the new accounts offer a second
advantage over money markets
— the depositor’s money is in
sured. Although few people
have lost money in the market
funds, the added incentive of a
depositor being guaranteed re
turns adds sauce to the banks’
already juicy deal.
Williams said the insured
clause will help lure investors
who are using tne market funds
for their high interest rates.
“There are a few benefits the
market fund offers but the idea
of our accounts being insured
will cause a great deal of inves
tors to switch,” he said. “This
takes all the risk out of the in
vestment.”
Moreover, the banks and
thrifts suggest that the local
money flowing into the new
accounts will be used to finance
local housing needs and com
munity projects. In contrast,
money funds often “distrubute
local capital elsewhere, much of
it overseas,” Peters said.
“The money market’s hands
are tied,” he said. “They must
invest in securities. While at Bra
zos Savings, we can take the
money and invest it back in the
community if we choose.”
The fourth, and perhaps the
most important advantage, is
the flexibility of the new
accounts. Depositors will be able
to take their money out when
they want to, unlike some money
markets that require a day or
two notice. At the beginning of
the new year, many of the new
accounts will be converted into
checking accounts and still will
receive high interest.
Brazos Savings already has set
a date for the convergence.
“On Jan. 5, these accounts will
become checking accounts re
ceiving the high interest,” Peters
said. “This interest will be com
pounded daily until the person’s
balance goes under $2,500, the
minimum balance required to
start an account.”
The minimum deposit was set
by the DIDC upon request from
the industry in order to prevent
depositors from transferring
money from low-interest pass
book accounts to the higher-
yielding accounts.
But locally, bankers don’t see
minimum deposit requirement
as a major problem.
“The percentage of our assets
located in the passbook accounts
is not significant enough to hurt
us even if everyone transfer
red,” Williams said.
But will the new account be
the end of the passbook savings
accounts that earn 5.25 percent
or less?
Peters doesn’t think so.
“As far as investment pur
poses, the passbook is pretty
much of a dinosaur,” Peters
said. “But lately there has been a
resurgence in old-fashioned
thrift. Passbooks are still very
buyable, especially when times
are tight. People can save their
money until they reach the mini
mum balance and then switch.”
Oh the surface, the minimum
deposit appears to be the only
drawback, but bankers foresee
other trouble spots.
“We have enough rope to
hang ourselves,” Peters said.
“The banks must express ex
treme caution in investing these
funds because we have the pow
er to self-destruct.
“From the customer’s point of
view there is no risk or major
disadvantages. But the banks
must apply prudent strategies to
invest properly or we’ll shoot
ourselves in the foot. It’s a chal
lenge facing the whole finance
industry. It will be a difficult job
to invest money wisely.”
In essence, the new accounts,
which originally were set up to
help banks and savings and loan
companies compete with money
market funds, the battlelines are
drawn between the banks and
thrift institutions themselves.
“There will be all sorts of gim
micks to capture new custom
ers,” Williams said. “Some of
them will be bordering on de
ceptiveness. The key will be to be
competitive but also possess
sound management.”
Wood jury requests
FBI evidence tapes
United Press International
SAN ANTONIO — Jurors
requested tapes of the secretly
recorded conversations of hit
man Charles Harrelson, ac
cused of killing Federal Judge
John W’ood, to launch their
third day of deliberations
Monday.
The panel recessed at 6
E .m. Sunday, ending 9'A
ours of deliberation during
the weekend without verdicts
for Harrelson, his wife, and
Elizabeth Chagra.
The panel was scheduled
to hear four of the tapes re
corded by the FBI during the
3‘/2-year investigation of
Wood’s death. The tapes were
submitted as evidence in the
nine-week trial.
Art Nicholson, a clerk for
presiding Judge William Ses
sions, played the tapes of Har
relson recorded by Harris
County Jail inmate John Lee
Spinelli, who cooperated with
the investigation in return for
transfer to a federal prison.
Harrelson’s attorney, Tom
Sharpe of Brownsville, said he
was not surprised the jury was
taking several days to deliber
ate the case.
“How long does it take for
people to regurgitate nine
weeks of testimony?” he asked
reporters outside the cour
troom.
Harrelson was accused of
shooting Wood outside his
San Antonio apartment May
29, 1979, for a $250,000
payoff from Las Vegas gamb
ler Jimmy Chagra. At the
time, a drug smuggling trial
for Chagra was scheduled in
Wood’s court, and Chagra
had said he feared a life sent
ence.
Chagra is to be tried for
murder later.
Jo Ann Harrellson was
tried for obstruction of justice
for pressuring her daughter,
Teresa Starr, and other
friends not to cooperate with
the FBI or testify to the grand
jury that investigated Wood’s
death.
Chagra’s wife Elizabeth was
also on trial for conspiracy
and obstruction of justice.
Prosecutors claimed she en
couraged her husband to kill
Wood and then delivered the
payoff money to Starr.
•/•vi' '■
.rtf ”
'•.s-b'"' . •
That means
should be careful
institutions
to keep in
terest rates as high as possible,
but not so high that the institu
tion can’t pay them.
jJlack votes protected
y Court’s decision
aid that so*!
hat teai
rses wo
f their
them the ifi
mial necessr
eir careers,
aid progress
tlging the aw United Press International
> classesdiHfWASHINGTON — The Sup-
w curriculi'jieme Court, on a 6-3 vote Mon-
the alkotdiy, upheld a federal court’s au-
rld help, shlhority in a voting rights case to
Ber changes in the system of
Bering city commissioners in
Port Arthur.
EThe justices put their stamp
pf approval on orders by a U.S.
District Court in Washington
l] Biat were expected to enhance
the voting power of blacks in the
southeastern Texas border
town.
■Justice Byron White, writing
for the court, said the changes
were “a reasonable hedge
against the possibility that the
i|(voting) scheme contained a
Bipjsefully discriminatory ele-
Int.”
The dispute stems from a city
pansioniri 1977 and 1978 that
rered the percentage of black
pulation within Port Arthur’s
rders from 45.2 to 40.6 per
il.
At the same time, the city
he Bart.
commission was to be expanded
from seven to nine members.
Under the Voting Rights Act,
the election changes had to be
approved.
After several new election
plans were rejected, the federal
court offered to approve one
proposal — but only with a con
dition.
The plan had to be changed
so that two at-large commission
ers would be elected not on a
majority vote, in which a winner
must garner more than 50 per
cent of the votes, but by a plural
ity vote that awards the seat
automatically to whichever can
didate gets the most.
The plurality method would
give blacks a greater chance of
winning the seats.
The city appealed to the Sup
reme Court, claiming the plural
ity condition was not needed be
cause its voting plan already
gave the city’s black voters at
least one-third of the council’s
positions.
Justices Lewis Powell, William
Rehnquist and Sandra Day
O’Connor dissented, saying they
thought the condition unneces
sary.
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