The Battalion. (College Station, Tex.) 1893-current, October 23, 1987, Image 1

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■ 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