Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Tue, Apr 14 1992 Date: Tue, 14 Apr 92 05:42:44 EDT Message-ID: 04-14 0000 DECISIONLINE: Banking & Economy USA TODAY Update April 14, 1992 Source: USA TODAY:Gannett National Information Network NONE QUICK TO MIMIC CHEMICAL: Economists and bank analysts say most banks are in no hurry to copy Chemical Banking's prime rate cut. Monday, the USA's second-biggest bank company cut its prime lending rate to 6.25% from 6.5%. No other big bank Monday touched its prime rate - the base rate for many business loans. Chemical's cut came after the Federal Reserve Thursday nudged the federal funds rate to 3.75% from 4%. (For more, see special Rates package below.) DOW OVERCOMES DAY'S EVENTS: Another Japanese market plunge and flood-paralyzed Chicago futures markets couldn't stop the Dow Jones industrial average from adding 14.53 points to 3269.90 on Monday. The Dow has risen three straight days. The Nikkei index lost 614.01 points to 17,236.65. The Chicago Board of Trade, the Chicago Mercantile Exchange and the Chicago Board Options Exchange to closed early because of a flood. NYSE'S VOLUME SLOWED: The early closing of Chicago futures markets kept investors from trading stock options and stock futures. That cut down volume on the New York Stock Exchange. NYSE volume was just 143.14 million shares, down from 199.53 million Friday. The NYSE said it couldn't tell how much the Chicago flood slowed trading. But 5% or less of NYSE volume usually is tied to trading on Chicago futures markets. JAPAN'S TRADE SURPLUS GROWS: Japan's trade surplus jumped 29% to a record $11 billion in March, the 15th consecutive month of increases from year-earlier levels. But for the first time in eight months, Japan's surplus with the USA fell from a year earlier thanks to Japan's purchase of $337 million in U.S. aircraft in March. RATES FALL AT T-BILL AUCTION: Rates on short-term Treasury securities fell at Monday's auction to the lowest in 20 years. The Treasury sold $11.4 billion in three-month bills at an average discount rate of 3.60%, down from 3.95% last week and the lowest since May 1972. And $11.4 billion in six-month bills was sold at an average discount rate of 3.73%, down from 4.02% and lowest since February 1972. GM'S STEMPEL TOOK PAY CUT: General Motors disclosed Monday that Chairman Robert Stempel took a 31% pay cut last year, making him the U.S. auto industry's lowest-paid CEO. The news was contained in GM's proxy statement to shareholders. The proxy shows Stempel earned $1 million, down from $1.4 million in 1990. GM's $4.5 billion 1991 loss set a U.S. corporate record. GM stock closed Monday at $39, up 3:8. GOLD, SILVER DOWN: Gold and silver prices dropped on Monday. On the Commodity Exchange, gold closed at $339.20 a troy ounce, down $1.90. Republic National Bank quoted gold bullion at $338.80 an ounce, down $1.85. The metal also fell in London and Zurich. On the Comex, silver for current delivery settled $4.085 an ounce, down 1.5 cents. Silver bullion rose in London. OIL PRICES FALL: Oil prices lost ground Monday in directionless trading that was influenced largely by technical forces within the petroleum market. On the New York Mercantile Exchange, contracts for May delivery of light sweet crude settled at $20.22 a barrel, down 22 cents from Friday. Lower-grade sour crude for May delivery fell 24 cents a barrel to $17.80. SPECIAL PACKAGE ON RATES: BANKS WANT TO KEEP MARGINS: When the Fed pushes short-term rates down, it's usually a signal for banks to do the same with their loan rates. But banks don't want to cut the prime rate and squeeze the profit margins generated by the wide gap between the rates they charge borrowers and the rates they pay depositors. "Banks need the money," says David Berson of the Federal National Mortgage Association. THREE BANKS AFFECTED BY CUT Chemical, an aggressive lender to midsized firms, is cutting the rate to flex its muscle and build business following its merger Dec. 31 with cross-town rival Manufacturers Hanover, analysts say. The rate cut affects Chemical's three bank subsidiaries: New York's Chemical Bank and Manufacturers Hanover Trust and Houston's Texas Commerce Bancshares. DISCOUNT RATE CUT IS PRECURSOR: Other banks are unlikely to follow unless the Fed pushes short-term rates down further, many experts say. Banks often react to the discount rate - what the Fed charges banks for short-term loans. The last five industrywide prime-rate cuts have come within a day of a drop in the discount rate. The Fed hasn't cut the discount rate since Dec. 20. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Tuesday at 3269.90, after closing up 14.53 points Monday. The New York Stock Exchange composite opens at 224.16, up 0.89. The American Stock Exchange market value opens at 388.89, up 0.88. The NASDAQ OTC composite opens at 588.15, up 3.91. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Tuesday. It opens at 0.5688 British pounds, up from 0.5661; 5.5750 French francs, up from 5.4988; 1.6571 German marks, up from 1.6360; and 133.37 Japanese yen, up from 132.86. (As of 3 p.m. Monday. 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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