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Santa Cruz Sentinel from Santa Cruz, California • Page 10

Location:
Santa Cruz, California
Issue Date:
Page:
10
Extracted Article Text (OCR)

LBtLQsnirnoss A-10-Santa Cruz Sentinel Tuesday, Dec. 8, 1987 Summer's record bank earnings conceal more gloom DesDite the continued bleak outlook tot the third quarter followed a record loss of In response to questions, Seidman said it 173, and may reach 200 by year's end, WASHINGTON (AP) The nation's banks earned a record $5.8 billion last summer but still may end the year with the lowest overall earnings since 1934, the government's Federal Deposit Insurance Corp. said Monday. FDIC Chairman L. William Seidman blamed the prognosis on continued economic problems in Texas and other oil-industry states, combined with large write-offs taken in the April-June quarter to cover Latin American loan losses.

Also, the October stock market plunge "has resulted in an increase in bank deposits," the FDIC said. It did not specify to what extent. the Southwest, the overall profitability of small banks, particularly in the Midwest, has been improving this year in a reflection of a better farm economy. In a separate report Monday, the Federal Home Loan Bank Board said the 3,178 savings and loan institutions it insures suffered net losses in the third quarter of $1.6 billion up from losses of $1.8 billion in the second quarter. The board said 934 lost as total of $3.1 billion in the third quarter.

Of this group, 318 were insolvent and posted net losses of $2.3 billion. $10.6 billion in the second quarter. "Banking profits are on a roller coaster this year," Seidman said. He said the upswing was due in part to higher interest rates, which boosted yields to banks on loans and investment securities; and in part because major banks put fewer dollars into reserves during the period. The large sums put in reserve in the second quarter as a hedge against anticipated later losses on Latin American loans "substantially reduced the the need for these banks to add to reserves during the third quarter," the FDIC said.

is still too early to tell what overall impact the stock market collapse will have on the banking system. Separately, the Federal Home Loan Bank Board said 10 percent of the nation's approximately 3,000 savings and loan institutions are now insolvent, with about one-third of these insolvencies occurring in Texas alone. The nation's savings and loans lost $1.6 billion in the July-September quarter, a slight improvement from the previous quarter, the regulatory agency said. Meanwhile, commercial bank failures this year have already climbed to a record Seidman said. He said nine banks failed last week alone, the record for a one-week period.

There were 144 bank failures last year. Seidman said the number of bank failures would narrow next year, but not by as much as originally expected largely because of continued bank failures in the Southwest. "Clearly, the economy In the Southwest is not improving," he said. "Right now, we do not see any recovery In the figures. Oil prices have gone down and there's great uncertainty on where they will go in the future." The FDIC said the rebound In profits in Sizing up a gift Third Wall St.

giant cuts staff 40 percent turn this business to profitability," Andrew L. Berger, president of Rothschild's broker-dealer subsidiary, L.F. Rothschild said at a news conference. He said the firm would achieve some of the layoffs by phasing out the clearing activities of its retail accounts, meaning that Rothschild would no longer handle the financial settlements of clients' securities transactions. Rothschild is negotiating an agreement with Broadcort Capital a subsidiary of Merrill Lynch Co.

to conduct all of Rothschild's clearing activities, Berger said. The effect of this step would be to lower Rothschild's fixed costs and exempt it from certain minimum net capital requirements. NEW YORK (AP) L.F. Rothschild Holdings hurt by internal strife, heavy losses and growing competitive pressure in the aftermath of the stock market crash, announced a severe restructuring plan Monday to narrow its business and cut staff by 40 percent. Rothschild became the third big Wall Street firm in the five days to announce impending deep cutbacks in operations and staff, partly because of internal problems and October's market collapse.

E.F. Hutton Group Inc. and Kidder, Peabody Co. announced restructuring steps last week that could result in losses of up to 7,000 jobs. "We mean to get our house in order and as quickly as possible re Consumers slow rate of borrowing WASHINGTON (AP) Consumers took out $3.7 billion more In credit than they paid off in October, down substantially from the credit increases recorded in the previous two months, the government said Monday.

The Federal Reserve said thai consumer credit rose at an annual rate of 7.4 percent in October, compared to a 12.9 percent annual rate of increase in September and a 10.2 percent rise in August, two months when heavy auto sales boosted consumer borrowing, Auto loans rose by $1.6 billion in October, a 7.6 percent annual rate, after climbing by $3.5 billion in September and $3 billion in August, Increases that translated into annual rates of 16.3 percent and 14.5 percent respectively. Consumer spending is being closely watched after the Oct. 19 collapse of stock prices for any indications that Americans are cutting back on purchases be-' cause of concerns about the future. Analysts said the October decline was not particularly worrisome because so much of it could be explained by the fall in auto sales that occurred after auto-' makers stopped offering cut-rate financing incentives. AP Laserphoto CORTE MADERA Jim MacLean of San Fran- Retailers say sweaters, a perennial favorite, are Cisco digs for a Christmas sweater gift recently.

high on many wish lists, with prices from $6 to $600. U.S., Canada settle free-trade treaty dispute "It was a bad deal to begin with and now I think Canada has given away even more," said congress President Shirley Carr. Even when approved by both governments, the treaty will face hurdles before the 10-year agreement on eliminating tariffs and dismantling other trade barriers can go into Both Canadian opposition parties, the Liberals and New Democrats, strongly oppose it, as do three of the 10 Canadian provinces that would have to implement it. They accuse Conservative Prime Minister Mulroney of giving away Canada's sovereignty in a shortsighted bid to evade U.S. details.

"We see this as being a good agreement for Canada and for the United States," said Peter McPherson, deputy U.S. treasury secretary. The Canadian Labor Congress, which says the pact would cost uncompetitive industries 800,000 jobs, said the revised text may make matters worse. chief of staff, Derek Burney, and U.S. deputy trade and treasury secretaries.

The officials spent more than 30 hours in an Ottawa office block over the weekend and finally emerged early Monday to announce agreement. "What remains to be done is to do the usual routine proofreading and checking and we plan to initial the agreement within the next 48 hours," said chief Canadian negotiator Simon Reisman. The Canadian Broadcasting Corp. said a section on maritime shipping was dropped because of opposition from the U.S. industry, and slight changes were made to the dispute-settlement mechanism.

Neither side would disclose the TORONTO (AP) Canada and the United States early Monday finally resolved their differences over a comprehensive free-trade treaty due to take effect Jan. It 1989. The Canadians also announced a partial breakthrough with Washington in a dispute over control of the Northwest Passage through the Arctic. The historic free-trade pact was initialed Oct. 4 in Washington after 16 months of negotiations, but both sides sought modifications in the legal text before the docu-! merit is signed by President Reagan and Prime Minister Brian Mulroney.

Weeks of haggling resulted in deadlock until the talks were elevated to a higher level last week with the participation of Mulroney's Snowed under by the holiday? HIGH YIELD CD's 3 months 6 months 1 year Annual Rate Annual Rate If your production cant keep up with the demand or you will need a crew of "elves" to handle all the shoppers-- call MANPOWER. We will supply the good workers (even Santa to handle the rush and keep things moving merrily through the Christmas season. 7.65 7.25 Annual Rate 7.80 Annual Yield 8.22oo Telex welcomes new offer by Memorex International Annual Yield Annual Yield 7.62 8.06 MANPOWER TEMPORARY SERVICES 9 Commercial Pacific We'll give you all the help you need. SAVINGS LOAN ASSOCIATION 1000 41st Avenue Santa Cruz, CA 95062 475-6800 476-6666 All deposits federallu insured to $100,000 by the FSUC. CAPITOLA 809 Bay Ave.

WATSONVILLE before joining Telex in 1981. Memorex officials at company offices in Milpitas had no comment on the offer, said spokesman Tom Lustenader. Under the proposal, Memorex would acquire all 14.7 million outstanding shares of Telex for $56 in cash and $6 liquidation preference of a series of junior preferred stocks for each share of Telex common stock, said Telex spokeswoman Julie Gentz. The proposal, received by Telex on Sunday, states the terms of the preferred stock will be designed to provide a value of at least $5 per Telex share on the date of execution. Memorex, based in London, is a Dutch concern that manufactures computer components in Belgium, Ireland and at a plant in Milpitas.

Memorex no longer makes audio and video tapes, although that name is used by Tandy Corp. Telex produces computers, electronics communications equipment and audio devices. TULSA, Okla. (AP) Memorex International NV is challenging in- vestor Asher Edelman's attempted takeover of Telex Corp. with an offer worth about $911.4 million, Telex of- ficials said Monday.

Telex also announced the company is recommending the rejection of Edelman's most recent offer in the takeover battle that began Oct. 8. Telex President George Bragg and Chairman Stephen Jatras indicated they welcomed the Memorex offer, saying in a joint statement that a Memorex acquisition of Telex "would be advantageous to both Companies and their customers." "We are familiar with the oper-ations and management of Memorex; we believe the synergies resulting from a combination with Memorex would be advantageous to both companies and their customers; and the board of directors will consider Memorex's proposal very carefully," Bragg and Jatras said. Bragg was a vice president of corporate development for Memorex 724-7775 Based on a deposit of $50,000. Interest compounded daily.

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About Santa Cruz Sentinel Archive

Pages Available:
909,325
Years Available:
1884-2005