■
What do you want to do with your lite?
I The Battalion
lol. 87 No. 39 C1SPS 045360 10 pages College Station, Texas Friday, October 23, 198 7
A female A&M student checks out more than her books Thursday afternoon in front of the Sterling C. Evans Library.
Reagan sees
no indicators
of recession
WASHINGTON (AP) — Presi
dent Reagan said Thursday night he
is willing to talk with congressional
leaders about a tax increase to cure
the nation's economic ills, and de
clared he sees “no indicators” of a re
cession ahead despite the battered
stock market.
At his First White House news
conference since March, Reagan
said he believes Soviet General Sec
retary Mikhail Gorbachev will visit
the United States this year to sign a
path-breaking arms reduction treaty
but has no firm word that the meet
ing will take place.
The president also defended the
United States’ naval presence in the
Persian Gulf and said, “We are not
there to start a war. We are there to
protect neutral nations’ shipping in
international waters.”
Reagan opened his first formal
meeting with Washington reporters
in seven months with a quip. “Seems
like only yesterday,” he said as
laughter filled the East Room.
Reagan began with a progress re
port on first lady Nancy Reagan,
who underwent breast cancer sur
gery last Saturday and returned to
the White House earliet Thursday.
“It sure is good news to have
Nancy back home, and she’s doing
just fine,” he said.
The news conference came at a
particularly difficult time in Rea
gan’s administration. In addition to
his wife’s cancer, the president has
had to grapple with the economic
difficulty and a tense situation in the
Persian Gulf and is awaiting word
from Secretary of State George
Shultz on possible progress toward
an arms control treaty with the So
viet Union.
Reagan said there may be other
volatile days ahead for the battered
stock market, but “there are no indi
cators out there of a recession or
hard times at all.”
The president stressed that he was
prepared to meet personally with
congressional leaders to seek a defi
cit-reduction plan.
“I’m putting everything on the ta
ble with the exception of Social Secu
rity,” Reagan said. "I call on the
leaders of Congress to do the same.”
Treasurer: A&M System puts hold on investments
By Tracy Staton
Staff Writer
I The Texas A&M University Sys-
fein is waiting until the dust settles
■i Wall Street to make any changes
[in its investment strategy. System
■ reasurer Ralph Parman said
Hhursday.
I "We have been advised b\ our in-
lestment advisory group to hold for
Iglit now,” Parman said. “We stayed
On the sidelines and watched every
body run around when the market
Slopped 500 points and have not
ptten back into the market since
hen.”
About 10 percent of the System’s
tiarket portfolio is invested in stocks
[nd 90 percent, is in “low-risk” in-
jestments such as U.S. Treasury
Bills, Parman said. He estimated that
these investments had a market va-
lie of $375 million before stock
puces began dropping sharply last
week, but could not estimate their
Current value.
“I don’t have a final figure on
bhat we have lost or gained,” Par
ian said. “I can’t even make an
hverall rule-of-thumb estimate. We
|ave purchased stock at many price
levels, so we have even experienced
dome appreciation.”
I Parman favors staying in a hold-
ing >attern until better predictions
Stocks foil in frantic trading, dash hopes for quick recovery
NEW YORK (AP) — Stocks tum
bled in frantic trading Thursday,
dousing hopes of quick recovery
from the market’s historic crash and
raising fears of more violent finan
cial spasms despite President Rea
gan’s fresh assurances that the econ
omy remains strong.
The Dow Jones average of 30 in
dustrial stocks, the nation’s best-
known barometer of stock values,
fell 77.42 points to 1,950.43 at clos
ing. Losing stocks swamped gainers
by a 5-to-l margin on the New York
exchange. Volume exceeded 392
million shares.
Stocks also dropped sharply in
London, wiping out more than two-
thirds of the gains in Wednesday’s
record trading.
In the midst of the worst crisis on
Wall Street since the Crash of 1929,
Reagan said Thursday night after
the U.S. markets closed that there
may be volatile days ahead but
“there are no indicators out there of
recession or hard times at all.”
Reagan said he was prepared to
meet personally with congressional
leaders to seek a plan to reduce the
budget deficit, which some analysts
have said has contributed to the
market’s problems, and said he was
willing to discuss a tax increase.
The Japanese market appeared to
react badly to Reagan’s remarks, a
possible indication of how the Euro
pean and U.S. markets would be
have later.
Peter J. DaPuzzo, manager of the
retail equity group at Shearson Leh
man Brothers Inc. in New York,
said, “The market’s extremely frag
ile. . . . There’s so much tension and
nervousness, the confidence level is
very close to zero.”
Robert Brusca, chief economist at
Nikko Securities International Inc.
in New York, said the stock market
doesn’t know what to do.
“The message coming through
clear, loud and strong is that the
market is looking for greater coordi
nation of economic policies that we
haven’t seen in a number of years,”
he said.
Sell orders swamped the New
York Stock Exchange when it
opened after two days of partial re
covery from the Monday crash.
about the economic future can be
made.
“I think the correct posture is to
wait and see,” he said.“We haven’t
seen the end of this stock market vol
atility. It will probably continue for a
couple of weeks until the investors’
confidence in the market is restor
ed.”
Parman is watching for signposts
from monetary and fiscal policy that
will point the way to a new invest
ment strategy.
“We’re basically pretty confident
in the economy right now,” he said.
“That’s not to say that we aren’t con
sidering some changes, like selling
some of the investments. There are a
number of things that need to be
considered.”
Parman said the next three to five
weeks will point the direction the
economy will take in 1988. President
Reagan holds one of the keys to reas
suring investors, he said. The presi
dent needs to take steps to stabilize
the economy; one of the first ways to
do so would be a reduction in the
budget deficit, which Parman par
tially blames for Monday’s panic in
the stock market.
He also said the Federal Reserve
Board needs to use monetary policy
to stabilize the value of the dollar.
If these “positive steps” are not
taken, Parman said, the System will
need to modify its investment strat
egy. Several options have been out
lined in case changes are necessary.
“We have program options in
place from consulting with our advi
sory group,” he said. “For example,
we could continue to wait and see
until the market dies down or we
could reduce our holdings in equity
and take what’s called a ‘flight-to-
quality’ approach.”
If the fatter strategy is chosen, the
System would transfer its invest
ments in stock to U.S. Treasury Bills
or U.S. government obligations, he
said. Another option would be short
ening the term of bonds it currently
holds. For example, instead of buy
ing six-month Treasury Bills, the ad
ministration could purchase three-
month Treasury Bills. This would
increase the liquidity of the invest
ments.
Parman said the System takes a
conservative investment stance.
"I think the No. I principle you
have to observe when investing for
state universities is protection of the
principal amount,” he said. “You
have to remember your responsibil
ity to the students and preserve your
capital investment.”
Investments are made on a per
petual basis; funds for these invest
ments ate earmarked by the fiscal
officers of each part of the System.
These funds are non-endowment
funds and come from bond funds
and proceeds, past earnings on in
vestments and the Available Univer
sity Fund, Parman said. Operating
expenses are paid by liquidating the
necessary amount of the investment
and renewing the remaining
amount.
Investment of non-endowment
funds is regulated by the Texas Leg
islature. The majority of this money
must be invested in U.S. Treasury
Bills, state and municipal institutions
and federal agencies.
pace-grant college program
aits to get Reagan’s approval
By Janet Goode
Staff Writer
I The concept of “space-grant” uni-
veiskies, initiated by Texas A&M
president Frank Vandiver in 1985
|nd proposed as a bill to Congress by
US. Sen. Lloyd Bentsen, D-Texas,
hsi year, has passed both the House
ol Representatives and the Senate
and now is pending President Rea
gan s approval.
(The bill, if passed, will create a
(ace-grant college program and an
atcompanying fellowship program
for graduate students.
■ If passed, the National Aeronau
tics and Space Administration would
have the authority to fund the pro
gram at $10 million for 1988 and
1989, and $15 million annually.
Vandiver said he came up with
the idea two years ago and gained
support from other faculty members
and congressmen. He said he then
proposed the concept to Sen. Bent-
sen who, he said, “sort of took it over
and ran with the idea.”
“He (Bentsen) never lost faith in
the concept from that moment on,”
Vandiver said. “And now we are
waiting for the president to sign it. I
can hardly believe it.”
Once passed, Vandiver said A&M
will be among the first institutions to
apply for the new designation.
According to the bill, an admins-
trator from NASA will be assigned
to draw up an application for uni
versities that want to become a
space-grant university, he said. This
process could take a year to .com
plete, he said, but A&M will be ready
and waiting to take advantage of the
program when it comes through.
“We will certainly be there — I
hope first in line — asking to become
such a university,” he said.
Becoming a space-grant univer
sity could mean more than just
money for graduate fellowships, he
said.
The main function of the pro
gram is patterned after the sea- and
land-grant concepts — to do re
search, gather knowledge and disse
minate it to benefit everyone, he
said.
“It will give us opportunity to in
teract with state and private industry
interested in the area of space re
search,” he said. “Our faculty and
students could work with them on
general research that could benefit
See Space-grant, page 10
Pro-Iranian group threatens to bomb U.S. ships
■ BEIRUT (AP) — A pro-Iranian group that
Iholds American and French hostages said Thurs
day that “thousands” of suicide bombers are
poised for attacks against U.S. and European na
val forces in the Persian Gulf.
I The group, Islamic Jihad, claims to have car
ped out a series of suicide bombings against
Pmerican and French targets in Lebanon in 1983
and 1984. The attacks killed more than 370 peo
ple, mostly American and French servicemen.
■ The threat was made in a typewritten Arabic
statement, copies of which were delivered to the
Offices of Western news agencies in Beirut. It was
accompanied by black-and-white photographs of
American hostage Terry Anderson and French
captiveJean-Paul Kauffmann.
I Anderson, wearing a T-shirt, had a bushy
moustache and beard and was looking straight
into the camera without his eyeglasses. The pic
ture was different from the eight previous photo
graphs of Anderson released by his captors.
Kauffmann, also with a bushy beard and
moustache, wore a striped shirt under a dark ny
lon jacket. It was the first still picture of Kauf
fmann released by Islamic Jihad. His previous
photographs in captivity were all taken from vi
deotapes.
Neither captive looked fatigued. Anderson
wore an expression of confidence while Kauf
fmann, a 42-year-old journalist, had a look of dis
may. Both appeared to have lost weight.
Anderson, the 39-year-old chief Middle East
correspondent for the Associated Press, was ab
ducted in March 1985 and is the longest-held
hostage. Kauffmann was kidnapped two months
later.
Islamic Jihad, or Holy War, holds another
American and two other Frenchmen. The
statement made no mention of hostages, not
even the ones whose photographs accompanied
it.
The Islamic Jihad statement said the Persian
Gulf attacks would be patterned after the Oct.
23, 1983, bombings that demolished the head
quarters of the U.S. Marines and French par
atroopers in Lebanon, for which it claimed re
sponsibility. The bombings, carried out by
suicide truck drivers, killed 24 1 American serv
icemen at the Marines base and 58 Frenchmen at
the other post. Both nations later withdrew their
forces from Lebanon.
Bryan bank closes;
business to continue
with new ownership
By Mary-Lynne Rice
Staff Writer
About 50 Federal Deposit In
surance Corp. employees began
closing procedures at Bryan’s
Western National Bank at 1001
Villa Maria after the bank was de
clared insolvent at 3 p.m. Thurs
day.
Robert J. Herrmann, senior
deputy comptroller of the cur
rency, appointed the FDIC as re
ceiver of the bank.
The bank will reopen at 9 a.m.
today under new ownership. First
State Bank in Caldwell purchased
the bank’s deposit base of
$15.38 1 million.
Because the FDIC injures de
posits to $100,000, most deposi
tors’ money is safe, FDIC Closing
Supervisor Alan Rouse said.
However, “it won’t be exactly
business as usual,” he said.
Excess deposits could be in
jeopardy, he said. Depositors with
more than $100,000 may have to
file claims for their money, he
said.
“Obviously, customers of a
failed bank want to be reunited
with their money as soon as possi
ble,” he said. “That will be our
first priority.”
The Office of the Comptroller
of the Currency cited a poor local
economy, poor lending practices
of prior management, ineffective
supervision by the board of direc
tors and increasing liquidity de
mands resulting from a runoff of
deposits as causes of the bank’s
decline.
Rouse said the runoff indicates
it was “very likely” that depositors
suspected that Western National
faced trouble.
“A runoff of deposits is an ero
sion of the deposit base where
people come into the bank and
suspect or believe perhaps that
the bank may fail or think that
the funds are at risk, and they re
move those funds from the bank
and take those deposits some
place else,” he said.
Rouse said First State paid a
$5,000 purchase premium for the
deposit base.
“Banks advertise on radio, tele
vision, newspapers and they say,
‘Bring your money down to this
bank’ because with these deposits,
that gives us the foundation for
being able to make loans,” Rouse
said.
“If you can buy a portion of
that market share of deposits,
that has got some value to it,” he
said. “In this case, the value was
agreed upon as $5,000 for the
purchase.
“Well transfer those deposits
to the agent bank and the agent
See Bank, page 10