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Austin American-Statesman from Austin, Texas • Page 70
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Austin American-Statesman from Austin, Texas • Page 70

Austin, Texas
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SECTION INSIDE Stock listings: E3-5 Thursday, December 12, 1991 ft Austin American-Statesman 13 Bowsher: Big bank could break FDIC By Dave Skidmore Associated Press WASHINGTON A single failure of a very large bank could topple the Federal Deposit Insurance Corp. into insolvency despite the agency's new authority to borrow $70 billion, a senior congressional official said Wednesday. Charles Bowsher, head of the General Accounting Office, Congress' auditing and investigative agency, also said the Bush administration's effort to break the credit crunch by loosening bank accounting standards likely will further jeopardize the insurance fund. The administration had said it expected the $70 billion would last through 1993. However, no so-called "megabanks" the top dozen or so institutions in the country are classified by the administration as likely to fail.

Bowsher's warning that such a failure could occur raises serious questions about the adequacy of the FDIC replenishment even before the president signs it into law. It was adopted by Congress Nov. 27. "While we are not saying that any particular money center bank is on the verge of failing, the questionable quality of bank data, coupled with deficiencies in exist ing accounting standards, provides the potential for a large bank to unexpectedly require assistance," Bowsher told the House Banking Committee. "If this were to occur, the level of funding provided in the legislation would not be sufficient to resolve the institution and those other institutions the regulators have projected will require assistance between now and the end of 1993," he said.

Bowsher said an accounting directive issued jointly last month by five bank and regulatory agencies would make surprise failures more likely by making it easi er for banks to hide loan losses. "As a result, there will be more banks failing without reasonable warning and the regulatory process will be severely hampered," he said. Both Bowsher and Rep. Henry B.Gonzalez, D-San Antonio, chairman of the House Banking Committee, said the administration effort contradicts last month's banking bill, which seeks to toughen regulation of banks. "If they undo what we have done, it will be a gross disservice to the national interest," Gonzalez said.

I (I Charles Bowsher, head of the Gen eral Accounting Office, said a large DanK lanure could deplete the FDIC. 2.) End in sight for thrift crisis i Today's digest TGV names Biggs San Antonio banker Glenn Biggs, who formerly was a leading competitor for the Texas high-speed rail franchise, has been named chief executive officer of the group that won the franchise for a $5.7 billion bullet train system. Biggs was announced as chairman and CEO of the Texas TGV group by William Agee, chairman and CEO of the Idaho-based Morrison Knudson managing partner of the group. Texas TGV is a consortium of U.S., Canadian and French companies. Pennzoil overseas Pennzoil Co.

is shifting its emphasis from being primarily a domestic oil and gas producer to become more active in foreign exploration and production. The Houston-based energy company said it was restructuring its management to become more efficient in international operations and would be spending up to $100 million annually for the next three years to get its foreign operations moving. The expenditures would be in addition to money already allocated for domestic exploration. Oil companies have found exploration in the United States increasingly difficult due to high costs, a heavy tax burden, stiff environmental opposition and shrinking availability of places to drill. Dalfort may move Dalfort Aviation, a Dallas company that is one of the nation's largest aircraft maintenance firms, is negotiating to move to Carswell Air Force Base, which will close by October 1993.

Dalfort employs 1,250 people at a 26-acre plant at Love Field in Dallas. It maintains and repairs large jets for United Parcel 'Service, Federal Express and others. The Carswell site near Fort Worth would offer the company 2,700 acres and 14 hangars. Congress voted last summer to close the base. Valley Ranch sold A group led by New York investor Francesco Galesi has bought Valley Ranch, the 987-acre development in Irving that includes the home of the Dallas Cowboys, from federal banking regulators.

Unlike previous major real estate sales, the Federal Deposit Insurance Corp. and representatives of the buyer did not disclose the purchase price. The federal agency took control of the development through the failure of Sunbelt Savings, which got the property through foreclosure. Sunbelt had loaned about $115 million on the commercial and residential development. More than 8,500 people live in homes, apartments and condominiums built at Valley Ranch.

The Dallas Cowboys NFL football team has its offices, work out facility and practice fields there. i I 1 Staff photo by Tom Lankes The oil business is looking up for, from left, John Sobehrad, Andy found and drilled the Austin area's largest producing well in more Alff, geologists, and drillers Noel Scully and Michael Smith. They than 60 years. Oilmen gush over Austin area well By Earl Golz American-Statesman Staff The end is in sight for the Texas savings and loan crisis. Only six small thrifts are in trouble and candidates for closure in 1992, compared with an estimated 15 banks, including one large institution, that have comparable financial problems.

The $56 billion in assets from 137 Texas that have been taken over by federal government also are diminishing. The Resolution Trust Corp. disposed of $31.5 billion in its first two years of operation. The agency has now taken care of more than half the assets it inherited in Texas as a result of the thrift industry collapse here. It has about $25 billion in assets that it still must deal with.

"We have reached a turning point of sorts," said Teresa McUsic, RTC spokesperson in Texas. "Texas led the nation in going into this, so it only makes sense we would be leading the nation in coming out of it." Ditto for the Office of Thrift Supervision, the federal agency that closes and hands them over to the RTC. "Texas has had its day," said OTS spokeswoman Janis Smith. "The large and deeply troubled Texas institutions already have been dealt with. And, of the six thrifts that we would consider to be troubled and likely to require some form of federal assistance to survive, it's not a given that they will be taken over and sold." The six thrifts in trouble are part of 69 privately operated institutions in a state that had more than 280 in the boom times of the 1980s.

Another seven savings and loans in Texas remain in operation under RTC conservatorship. Of those, Sunbelt Savings of Dallas is the only giant with $8.4 billion in assets. The 15 troubled Texas banks, on the other hand, aren't under federal or state supervision and include the formidable First City, Texas with $11 billion in assets. The $31.1 billion in book value assets sold J' Austin 10 miles Austin 4 jSf San Marcos Dalee if Lockharte Scully and Smith Oil Corp. A well two miles from Dale is thought to be the largest producing vertical well in the area since 1927.

Threadgill No. 1 to GEOCO, an Austin-based consulting firm founded in 1987 by geologists John Sobehrad and Andrew Alff. By poring over records kept by the Texas Railroad Commission, which regulates oil and gas production in the state, Sobehrad and Alff have been able to determine what kind of finds other producers have made or not made in the area, they said. Using that research and looking at the formations from a geological standpoint, they can find the best spots to drill, they said. "When we got out there, it was phenomenal to just hear the oil rushing into the tank," Sobehrad said.

"You could feel it rumbling. We were running around like a bunch of kids." Sobehrad and Alff said the recent discovery is significant because GEOCO is using a somewhat different philosophy about the area, which contains three types of geo- See Oil, E2 By Sarah Barnes American-Statesman Staff At a time when many economic experts are talking about another recession and the oil industry is in limbo, at least one independent producer has discovered a bright spot. In this case, that spot happens to be an oil well drilled recently about 25 miles south of Austin by Scully and Smith Oil Corp. of Salado. Thought to be the largest producing vertical well in the area since 1927, the "Threadgill No.

1" initially produced 475 barrels of oil in 11 hours. "I couldn't wait to get to the phone to call and tell people," said Michael Smith, president and chief executive officer of Scully and Smith. "I've never had any children, but that must be what it's like." The well is now producing 180 barrels of oil a day and Noel Scully, chairman and chief financial officer of Scully and Smith, Staff graphics estimates the life of the well could be between three and five years, with a total estimated production of 125,000 barrels. Scully and Smith have drilled another well in the area and will drill two more this year. They attribute much of the success of OW lMp GM ready to close assembly plants in broad shakeup The market day Dow industrials 2,865.38 Up 1.56 3.200 3.100 3,000 2.900 GM currently has 33 North American assembly plants making cars and light trucks for the U.S.

market, far more than Ford Motor 20 factories and Chrysler 14. GM has shut more than a dozen assembly plants in the past 10 years. "I think they will announce a charge closing two or three (assembly) plants in the first quarter of 1992," said auto analyst John Ca-sesa of Wertheim Schroder Co. in New York. "If you close assembly capacity, you probably trim down component plants." Robert Stempel said.

Stempel said Wednesday GM's board of directors, which endorsed the shakeup at a meeting Monday, still must decide the size of the charge and when it will be taken. GM also has a large number of component plants that produce about 70 percent of the parts used in GM's North American-made cars. Analysts have said that has has created substantial redundancy in nearly all operations, including product development, engineering and administration. kinds will be shuttered, perhaps within a few months. There also was speculation the coming announcement will include cuts in white-collar employment beyond the 9,000 salaried jobs the automaker has said will disappear during the next two years.

GM has about 94,000 white-collar employees in North America now. The coming moves are designed to speed the return of GM's battered North American operations to profitability. GM won't say, but analysts estimate the automaker is losing $5 billion to $6 billion a year on its core North American automotive operations. In the first nine months of this year, GM lost $2.2 billion as profits in finance, computer services and electronics subsidiaries softened the staggering automotive losses. GM said its planned changes would result in a charge against its earnings, but it would be less than the $2.1 billion after-tax charge taken in the third quarter of 1990 to close plants, GM Chairman By Frederick Standish Associated Press DETROIT General Motors Corp.

is preparing to announce North American plant closings to match sagging demand in a recession that has clobbered automakers, the nation's leading industrial company indicated Wednesday. GM said it will detail the plans to employees and the media next Wednesday. But industry analysts said it seemed apparent that some plants assembly, parts or both 2.800 2,700 WFMTWThFMTW NYSE 208.53 down 0.33 Up: 626 Down: 1,026 Unchanged: 536 206.02 million Volume: 50 0 377.70 down 0.20 Dollar exchange Dollar In foreign currency RTC prepares for record auction 3 former officials named in indictment Tue. .5518 1.5720 128.42 3,060 Wed. .5542 1.5825 129.45 3,060 Britain Germany Japan Mexico McClain was convicted on two tax-related charges and was sentenced in October 1990 to five years in prison, five years probation and was fined $250,000, court records show.

ty left from the failed Wall Street brokerage Drexel Burnham Lambert Inc. That sale drew 10,000 people but raised just a few million dollars. The record property auction was two weeks ago in Beverly Hills, when the Resolution Trust Corp. sold 14 commercial properties. By contrast, the records of the nation's leading art sellers, Sotheby's and Christie's in New York, are both about $269 million, set in separate sales of impressionist Sea Bidders, E7 for the Federal Deposit Insurance which obtained them from failed banks and thrifts.

The properties are valued at more than $500 million. The sale will become the nation's largest property auction if it raises more than $106 million, expected before the halfway point. "This is first one ever with more than $200 million in dollar expectations," Dove said. His Foster City, company, Ross-Dove conducted the June 1990 auction of desks, coat racks and other proper By Evan Ramstad Associated Press DALLAS Auctioneer Ross Dove won't see as many people when he walks into the Fairmont Hotel ballroom today as he did when he sold off the remains of Drexel Burnham Lambert in New York last year. But the people he sees will have more money.

Dove and his brother Kirk, principals in one of the nation's largest auction nouses, will auction 175 commercial real estate properties Associated Press DALLAS Three former thrift officials have been indicted in connection with loans made to corporations owned and controlled by former Dallas real estate developer James McClain, federal officials said Wednesday, Gold New York Comex $366.60 $2.30 Rep. Nat'l Bank $365.95 $1.95 Oil Light sweet crude $19.51 per barrel, up $0.10 (January delivery) Natural gas Price per 1,000 cubic feet $1,851, down 7.0 cents (January delivery) A 12-count indictment turned by a U.S. grand 8aJ.

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