4
JFILICFNTER
P.O* BOX 12188
Dallas, tx 75225-0188
Texas A&M
attalion
Vol. 88 No. 75 USPS 045360 6 Pages
College Station, Texas
Wednesday, January 11,1989
Officials advise deposit insurance reduction
WASHINGTON (AP) — Pnrsi
dent Reagan's advisers on Tuesday
recommended curtailing deposit in
surance for bank and savings and
loan accounts, triggering swift neg
ative reaction from Congress and
the Treasury Department.
In its final report to Reagan, the
president's (xmncil of Economic Ad
visers said reducing protection for
depositors would encourage them to
more closely monitor the financial
health of the institutions holding
their money.
But the Treasury Department,
through Rep. Chalmers Wylie of
Ohio, senior Republican on the
House Banking Committee,
promptly distanced itself from the
latest proposal involving the trou
bled savings industry in which a
post-Depression record of more
than 200 insolvent institutions were
closed last year.
At a hearing of the House com
mittee. Wylie said curtailing deposit
insurance is not an option and will
not be considered as part of thi S&L
plan being developed by I reasury
Secretary Nicholas F. Brady, who is.
staying on in the Bush administra
tion.
Wylie, who said he spoke after his
office conferred with the Treasury
Department, said Brady will present
the plan to President-elect Bush by
about Feb. 15.
Rep. Henry B. Gonzalez, D-
Texas. chairman of the committee,
did say a gradual reduction in de
posit insurance may be considered as
part of solving the S&L crisis. But he
also said such a proposal is a serious
matter, not a matter to be thrown
out as a “trial balloon.”
Other Democratic and Republi
can members of Congress reaf
firmed a commitment to guarantee
ing deposits up to the current
$100,000 per account limit.
"Congress will stand four-square
behind the $100,000 agreement,''
Rep. Charles Schumer. D-N.Y., said.
“I'm appalled at the timing of the
administration. I think the public
needs some reassurance.”
In its report, released by the
White House, the Council of Eco
nomic Advisers also sharply crit
icized Reagan-appointed savings
and loan regulators'for "postponing
the day of reckoning” in their res
cues of failed institutions.
“Most regulatory actions taken so
far . . . will sharply increase costs to
the general public,” the report said.
S&I. regulators' practice of guar
anteeing new owners of rescued
X
Photo by Jay Janner
Open for business
Texas A&M s new six-level parking garage opened Tuesday to accomodate faculty and staff. The mil
lion garage, located on the comer of Asbury St. and University’ Drive, holds 2,000 vehicles and is the first
of three planned. Officials say the garage was completed on time and under budget.
Former Navy technician
accused of selling secrets
NORFOLK. Va. (AP) — A former
Navy technician was arrested Tues
day on charges of trying to sell anti
submarine warfare secrets to the So
viet Union. The FBI said he was
seeking revenge because the Navy
had discharged him for indecent ex
posure.
Craig D. Kunkie, 59. of Virginia
Beach, a former chief petty officer,
was charged with attempting to de
liver classified information to a for-
eign government after he was
caught trying to sell secrets to under
cover agents.
The charge carries a sentence of
up to life imprisonment upon con
viction.
Kunkie, who had been working as
a security guard, was arrested by two
undercover FBI agents at a Wil
liamsburg motel, according to Irvin
B. Wells III, special agent in charge
of the FBI’s Norfolk office. Wells
told a news conference that Kunkie
had classified documents with him at
the lime.
An FBI affidavit filed in U.S. Dis
trict Court said Kunkie talked on six
occasions, beginning in early Decem
ber. with a person he believed to be a
represenutive of the Soviet embassy
in Washington. In fact, the person
was an FBI agent posing as a Soviet
agent, the affidavit said.
“During each of these conversa
tions, Kunkie discussed his desire to
sell classified United States Navy
military secrets to the Soviet Union
for monetary gain, and as revenge
for his discharge from the United
States Navy,” the affidavit said.
The affidavit said Kunkie was dis
charged in October 1985 under “less
than honorable conditions" as a re
sult of his non-judicial punishment
for multiple acts of indecent expo
sure committed at the Barber’s Point
Naval Air Station in Hawaii.
FBI spokesman Charles W. Stein-
metz said the undercover investiga
tion by the FBI and the Naval Inves-
S&Ls against losses for up to 10
years weakens the incentive to man
age efficiently, it said.
The top regulator, M. Danny
Wall, chairman of the Federal Home
loan Bank Board, defended his
agency's year-end spate of savings
and loan bailouts as cheaper than
shutting down the failed institutions
and paying off depositors.
Wall told the committee that his
agency rescued 75 institutions in De
cember at a cost of $ 15.5 billion to be
spread out over 10 years. Tax bene
fits arising from the deals will cost
the government an additional $4 bil
lion.
Liquidating the S&Ls and shutting
them down would have required $47
billion in “up-front cash," far more
than is available immediately to the
Federal Savings and l>oan Insurance
Corp.. Wall said. However, by selling
off the property of the (ailed S&Ls.
regulators eventually would have re
couped all but $22.8 billion on the
December transactions, he said.
Wall and fellow bank board mem
bers Roger Martin and Lawrence
White cited two benefits of rescuing
institutions now and spreading out
the cost rather than waiting to accu
mulate the money for liquidations.
First, Wall said, the bank board
stopped the operating losses at the
rescued institutions. Second, it eased
the need for the institutions to pay
above-market interest rates to attract
depositors. That in turn eases the
pressure on still-healthy S&Us to
compete by raising their rates.
For all of 1988, including Decem
ber, the bank board committed more
than $38 billion to resolve the cases
of 205 institutions. Wall said.
Several members of the commit
tee expressed outrage that in some
deals, buyers of failed institutions
are to receive tax benefits worth
more than the private monev they
are to put into rescued institutions.
“The dealmakers who are walking
away with more cash than they’re
putting in from day one are laugh
ing all the wav to the piggybanx,”
Rep. Jim Leach. R-lowa, told Wall.
“Ttie acquirers have robbed you
blind."
Reagan's council, noting estimates
up to $100 billion for solving the
SAL problem, said “a large portion
of the pavment of this bill will need
to come directly from the public.”
The report did not say lax money
would nave to be spent, but many
private analysts believe that is inevi
table.
In the final Reagan budget, re
leased Monday, the administration
called for spending $64 billion on
S&1.S through 1994.
Investigators blame crash
on engine trouble, fire
LONDON (AP) — One engine of
a Boeing 737 had fire damage and
the other inexplicably shut down be
fore the plane plunged into a high
way embankment, killing 44 people,
investigators said Tuesdav. «
Asked whether the shutdown pre
ceding Sunday's crash could have
been due to human error, chief in
vestigator Eddie Trimble said: “At
this stage in the investigation all pos
sibilities are open in that regard."
Transport Secretary Paul Chan-
non told Parliament that investiga
tors found “evidence consistent with
a shutdown in (light of the right en-’
gine before impact, and evidence of
a fire in the left engine.”
The British Broadcasting Corp.
said investigators believe they know
what causea the disaster, buz are not
yet disclosing their conclusions.
Capt. John Tritton of the Guild of
Airline Pilots Associations said the
chances of the pilot accidentally
shutting down the wrong engine
were negligible.
“1 find 'it unbelievable. When a
fire occuri in an engine, the master
ajulion light comes on. there is au
dio warning and there is a light in
the handle, the fire handle for that
particular engine, indicating which
engine it is," he told BBC-TV.
The British Midland Airways jet,
(lying from London to Beliast.
crashed beside Britain’s main north-
south highway Sunday night after
reporting engine trouble. It had un
dershot the runway while attempt
ing an emergency landing at East
Midlands Airport in central En
gland.
Eighty-two pwengers and the
crew survived withTnjuries.
Trimble, the Transport Depart
ment’s chief engineering insoector
at the crash site, said the rightutand
engine was found “in a zero-thrust
or shut-down condition," and so far
showed no sign of mechanical fail
ure.
He told reporters it was shut
down not in the moments before the
crash but "at a previous point in the
flight.” But he added it would be
premature to speculate about the
reason before the engines were
stripped down for laboratory scru
tiny.
Ham radio operator Merwn Sol-
loway, who picked up cockpit trans
missions shortly before the crash,
has said he heard the pilot report en
gine trouble, then say it was under
control.
But later, he says, he heard a fran
tic voice say "We’ve got problems
with the other engine."
Aviation experts say the chances
for both engines to fail on the Boe
ing are almost impossible, and have
theorized that the blame for the
crash could lie with impure fuel,
faulty maintenance, an explosion in
the engine’s combustion chamber or
a mechanical fault.
Channon told Parliament: “We do
not yet know the precise cause of the
engine failure and, as in all such ac
cidents, speculation can be not only
unproductive but positively mislead
ing."
He said pilot Kevin Hunt re-
C rted the fire 15 piinutes into the
ur-long flight. And clearance for
an emergency landing was re
quested.
But witnesses reported that in its
final approach to East Midlands Air
port. the aircraft descended lie low
the normal path. Channon said.
tigative Service prevented disclosure
of any damaging information to the
Soviets.
“We did stop him from providing
the information." he said.
Kunkie was first identified by
counterintelligence surveillance of
telephone calls to the Soviet embassy
in Washington, said a source who
spoke on condition of anonymity.
U.S. counterintelligence agencies
routinely monitor telephone calls to
'the embassy as pan of efforts to pre
vent spying.
The affidavit said that on Dec. 9.
Kunkie mailed a packet of docu
ments, photographs and diagrams to
the undercover agent at a post office
box in Alexandria. Kunkle’s inten
tion was to show the type of classi
fied information he could provide,
the affidavit said.
On Dec. 14, a Navy official in
Norfolk determined that the
material consisted of sensitive de
fense information the affidavit said.
Lewis elected to 4th term
as speaker of Texas House
AUSTIN (AP) — Speaker Gib
Lewis on Tuesday became only
the second stale representative
elected to four terms as leader of
the Texas House, and he af
terward predicted there would be
no new taxes this year.
“Tm not worried about a tax
increase,” Lewis, D-Fort Worth,
told reporters after being re
elected speaker by a 149-0 vote
on the 71st Legislature's opening
day. “I rule out a tax bill in 1989 "
I>ewis, addressing a packed
House chamber and gallery,
called on lawmakers to address
such issues as education, prisons,
worker's compensation, the tax
system. AIDS, drugs and provid
ing health care.
He said he believes the mood
of lawmakers is to “do what we
have to do with what we have,"
but he said he expects the money
to be found to address priority
areas.
“I think the economy's on the
rebound. If you look at all the re
cent indicators, Texas is slowly re
bounding back," he said. “The
economy's stabilizing. I look to
the comptroller to give us a better
and more favorable finance fore
cast in the next 30 to 60 days."
The Legislative Budget Board,
which includes Lewis, has said
there is a $1 billion gap between
projected revenue and the cost to
maintain state services for the
neA two-year budget.
Budget problems are nothing
new for Lewis, who was first
elected speaker in 1983, follow
ing Billy Clayton, a Springlake
Democrat who was elected four
times to that position beginning
in 1975. Founder of a label man
ufacturing company and a hunt
ing enthusiast. Lewis first was
elected a state representative in
1971.
In his management of the
House, Lewis described himself
as a “member’s speaker." He has
appointed Repuolicans — who
nqjnber 57 in the 150-membei
House — as well as Democrats to
head committees.
"Members, let us unite as one
to forge ahead in confronting the
challenges of a new Texas,” Lewis
said in his acceptance speech.
“For many years, Texas meant
opportunity. Today, many no
longer believe in the promise and
.potential of Texas. It is a time,
therefore, for us to show that we
believe in ourselves.” he said.
Lewis was nominated by Rep.,
Stan Schlueter, D-Killeen, and
seconding speeches were given
Reps. Larry Evanp, D-Houston;
Patricia Hill, R-Dallas; Ashley
Smith, R-Houston; Juan Hino
josa, D-Mt Allen; and Mark Stiles,
D-Beaumont.
Schlueter, chairman of the tax
writing House Ways and Means
Committee, no^ed tffe state fiscal
troubles in recent years including
the drop in oil and gas prices, the
ensuing need for new taxes and
federal court orders to improve
the prison system and facilities
for mental health and mental re
tardation.
“Through it all, Gib has been
an island of calm in a sea of con
flict," Schlueter said.
Among those attending the
opening day ceremony in the
House were Gov. Bill Clements,
state Comptroller Boh Bullock,
Attorney General Jim Mattox.
Treasurer Ann Richards and sev
eral Texas congressmen, includ
ing U.S. House Speaker Jim
Wright.
the comptroller to give us a better longer believe in the promise and Wnght.
Senate greets five new membe
elects assistant presiding offi<
Austin tAPl — I exas senators >;rw.l^ » the Senate’s nres- hm tu-kets on the samt
Austin (AP) — Texas senators
Tuesday greeted five new mem
bers, heard words of encourage
ment from a former governor,
and elected a man often de
scribed as a fiscal conservative —
John Leedom of Dallas — as their
assisunt presiding officer.
It was an historic first day in
the 71st Legislature as it marked
the beginning of Lt. Gov. Bill
Hobby’s final regular legislative
sttrion.
“lust another opening day,”
said Hobby, who first presided
over the Senate in January 1973
and has said he will not seek te-
ekretion in 1990.
Leedom, R-Dallas, was rou
tinely elected as the Senate's pres
ident pro tempore, a job tradi
tionally based on seniority.
Leedom, 67. is among five sen
ators who came to the Senate in
1981 but is listed as senior as a re
sult of a drawing at that time,
according to Senate Secretary
Betty King.
His election places him third in
the gubernatorial succession, and
several senators said in a joking
manner that they would pray for
the health of Hobby and Gov. Bill
Clements.
Leedom responded in kind,
saying he woula use whatever in
fluence he has to see to see to it
that Clements and Hobby “don’t
buy tickets on the same airplane
at the same time.**
Leeflom is president and chief
executive officer of Wholesale
Electronics, Inc. He served five
years on the Dallas City Council.
Sen. Eddie Bernice Johnson, »
D-Dallas, said Leedom “makes
money for the state so I can
spend it — who could have a bet
ter friend?”
Fellow Senate Republican Don .
Henderson of Houston described
Leedom as “a man who is some
times wrong but never in doubt."
Leedom. paraphrasing Presi
dent-elect George Bush, said he
hoped he could provide a “kinder
and gentler Senate.”