Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Wed, Jul 22 1992 Date: Wed, 22 Jul 92 04:31:58 EDT Message-ID: 07-22 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 22, 1992 Source: USA TODAY:Gannett National Information Network FED CHIEF SAYS ECONOMY GROWING: Federal Reserve Chairman Alan Greenspan told members of the Senate Banking Committee Tuesday that the economy is getting better, but he conceded growth is "subnormal." Greenspan also told members of the committee he expects "the economic expansion will soon, again, gain momentum." Sen. Alfonse D'Amato, R-N.Y., said Greenspan doesn't "know what's taking place on Main Street." (For more, see special Greenspan package below.) STOCK PRICES REBOUND: Stock prices rebounded Tuesday from two days of heavy losses. The Dow Jones industrial average gained 5.41 points to 3308.41. Winners beat losers 901 to 844 on the New York Stock Exchange. Investors applauded the strengthening of the dollar and gains on foreign markets. In Tokyo, the Nikkei market average rose about 0.7%, and stock prices also closed higher on the London exchange. CITICORP REPORTS PROFIT: Citicorp, the USA's largest bank, joined several other large banks in reporting sharply higher second-quarter earnings. Citicorp earned $171 million last quarter, up from $11 million a year ago. Boosting Citicorp results: Cost cutting and a $101 million gain from reducing reserves against Third World loans. But total nonperforming assets climbed $251 million to $10.4 billion. BIG BANKS' EARNINGS UP: Other big banks reported second quarter earnings Tuesday. Banc One said its net income rose 30% to $181 million, compared to $139 million. Per share earnings rose 24% to 87 cents a share, vs. 70 cents a share. Chemical Banking reported net income of $240 million, up 30% from $184 million year ago. Wells Fargo's net income soared 486% to $82 million, vs. $14 million a year earlier. AUTOMAKERS HAVE ROUGH RIDE: Auto stocks dipped after Furman Selz analyst Maryann Keller downgraded Ford and General Motors to hold from buy. Ford closed at $44, down 1 1:4; GM fell 3:8 to $39 7:8. Chrysler was unchanged at $19 1:8. Keller was unavailable for comment, but other analysts expect combined second-quarter operating profits of up to $1.1 billion, the industry's biggest windfall since second-quarter 1990. PRICES LOWER ON SADDAM RUMOR: Crude oil prices fell on the New York Mercantile Exchange Tuesday, pulled down by a rumor that Iraqi President Saddam Hussein had been assassinated in Baghdad. The rumor was denied by the Iraqi Embassy in Washington. Light sweet crude oil for delivery in August was one cent lower at $21.78 a barrel. GOLD, SILVER DOWN: Gold and silver prices tumbled Tuesday. Gold fell to $357.60 on the Commodity Exchange, down $1.50. Republic National Bank quoted a late bid of $357.50, off $1.20. Gold was mostly lower overseas. Silver bullion fell in London to $3.95 a troy ounce from $3.97. On the Comex, silver closed at $3.937, down from $3.963. SPECIAL PACKAGE ON GREENSPAN: GREENSPAN BLAMES DEFICIT, DEBT: Federal Reserve Chairman Allen Greenspan told the Senate Banking Committee Tuesday that "subnormal" economic growth "has not been adequate to bring the unemployment rate down. Indeed, it has been too slow to prevent it from rising." The forces holding down growth, Greenspan said, include the federal budget deficit and consumer and business debts left from the 1980s. DEFICIT A `CORROSIVE FORCE': Despite the economy's troubles, Greenspan urged the senators not to try boosting the economy with a package of tax cuts and spending increases. "I do not believe this notion that we can `jump-start' the economy," Greenspan said. Instead, he implored them to "bring the budget deficit down as rapidly as we can, because it is a corrosive force which is doing very great damage." RECOVERY SHOULD NOT FALTER: Greenspan's testimony came during the first of two visits to Capitol Hill for his semi-annual report to Congress on the economy. Wednesday, Greenspan appears before the House Banking Committee. He told senators that despite the jump in the unemployment rate last month to 7.8%, the sluggish recovery shouldn't falter. "Industrial production in July seems to be somewhat higher," Greenspan said. UNEMPLOYMENT RATE SEEN FALLING: Greenspan said Fed policymakers believe the recovery will go on. They expect gross domestic product growth between 2.25% and 2.75% this year. Next year: 2.75% to 3%. Policymakers also expect the unemployment rate to edge down around 7.25% to 7.5% by fourth-quarter 1992 and consumer prices to rise 3% to 3.5% this year and 2.75% to 3.25% in 1993. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Wednesday at 3308.41 after closing up 5.41 points Tuesday. The New York Stock Exchange composite opens at 227.47, down 0.04. The American Stock Exchange market value opens at 384.82, up 0.30. The NASDAQ OTC composite opens at 568.63, up 4.35. DOLLAR OPENS DOWN OVERSEAS: The dollar opens down on Wednesday. It opens at 0.5231 British pounds, down from 0.5253; 5.0190 French francs, down from 5.0520; 1.4852 German marks, down from 1.4950; and 125.20 Japanese yen, down from 125.46. (As of 3 p.m. Tuesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. 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