Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks,americast.usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Tue, Sep 15 1992 Date: Tue, 15 Sep 92 04:23:48 EDT Message-ID: 09-15 0000 DECISIONLINE: Banking & Economy USA TODAY Update Sept. 15, 1992 Source: USA TODAY:Gannett National Information Network GERMAN CUTS COULD HELP USA: Cuts in two key German interest rates Monday touched off tremors felt in every industrialized nation. They kicked off what could be a stunning chain of events that produces stronger economic growth in the USA, Europe and Japan. "And this could go on for the next two or three years," says James Smith, economist and finance professor at the University of North Carolina. (For more, see special Bundesbank package below.) SALOMON ANTITRUST DEAL OK'D: A New York District Court Judge Monday approved the antitrust part of a settlement Salomon Bros. Inc. has accepted. The settlement was over charges it rigged a treasury-note market, the Justice Department said. The judge approved payment of $27.8 million, part of a $290 million settlement. The $27.8 million is the largest civil penalty the antitrust division has received. FED TO TARGET WEAK BANKS: The Federal Reserve Board Monday approved rules that say banking regulators have to take action against undercapitalized banks. Under the rules, to go into effect Dec. 19, 50 to 100 banks face closure. The Fed was the first of four bank and thrift regulatory agencies to act on the so-called corrective action rules. The Federal Deposit Insurance Corp. is expected to vote Tuesday. DONALDSON KEEPS DEALER STATUS: The Federal Reserve Board Monday said Donaldson, Lufkin & Jenrette can retain its status as a primary government securities dealer. A primary dealer can buy and sell directly from the Federal Reserve Bank of New York, the Treasury's fiscal agent. DLJ's status was in question because a French insurance company, Axa SA, acquired a controlling interest in parent The Equitable Companies. SHEARSON SELLS BOSTON CO.: American Express took another back-to-basics step Monday, announcing the sale of Boston Co. by AmEx subsidiary Shearson Lehman Bros. Mellon Bank of Pittsburgh will pay $1.5 billion in cash and securities for Boston, an investment-management company that counts among its major customers mutual funds and pension funds. LAST YEAR SLOW FOR BANK CARDS: The bank card industry in 1991 saw its slowest growth level since 1988. But consumers who did use credit cards had plenty of choice despite what some consumer groups say about lack of competition. That is according to a survey out Monday from the American Bankers Association. The only two areas where growth didn't slow: Delinquencies and chargeoffs of uncollectible loans. THIS YEAR WILL BE IMPROVEMENT: While 1991 was a slow year for bank cards, 1992 results are likely to be dramatically different, say bank card executives. In the nine months since the end of last year, credit quality has improved. And most of the biggest issuers have cut rates and fees because of competition from non-banks like General Motors and AT&T and because their cost of borrowing money has fallen sharply. T-BILL RATES FALL: Interest rates on short-term Treasury securities fell in Monday's auction to the lowest levels in nearly 30 years. The Treasury Department sold $10.6 billion in three-month bills at an average discount rate of 2.89%, down from 2.91% last week, the lowest rate since April 22, 1963. Another $10.6 billion was sold in six-month bills at an average discount rate of 2.90%. SPECIAL PACKAGE ON BUNDESBANK: LOMBARD, DISCOUNT RATES CUT: The Bundesbank Monday changed the financial world by cutting two rates it charges German banks for loans. It trimmed the Lombard rate on emergency, overnight loans to 9.5% from 9.75%. The discount rate charged on most short-term loans to banks was cut to 8.25% from 8.75%. Other European central banks followed Germany's lead, and financial markets reacted gleefully. TWO YEARS OF GOOD NEWS COMING: Some economists say that cuts in two key German interest rates Monday could mean two or three years of falling rates abroad and slowly improving economic growth nearly everywhere. Others agree rates will fall further, led by Germany. "More noticeable, lasting interest-rate reductions could follow around the turn of the year," predicts Juergen Moellemann, Germany's economics minister. GERMANY BOWS TO PRESSURE: The rate cuts also signal that after months of pressure from U.S., European and Japanese leaders, German central bankers apparently have joined a global effort to boost economic growth around the world. "The Germans have recognized the weakness in their own economy and the risks their high-rates policies have presented" to worldwide growth, says economist Allen Sinai. (End of package.) TREASURY RATES, YIELDS FALL: The Dow Jones industrial average shot up 70.52 points Monday to 3376.22, spurred by news of key cuts in German interest rates. The NASDAQ composite index jumped 11.20 points to 594.21. The yield on 30-year Treasury bonds fell to 7.25% from 7.29%. The discount rate on three-month Treasury bills fell to 2.89% from 2.92%. The dollar climbed to 1.4820 marks from 1.4505 marks. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens at 3376.22 Tuesday after closing up 70.52 Monday. The New York Stock Exchange composite opens at 233.73, up 2.93. The American Stock Exchange market value opens at 390.05, up 3.60. The NASDAQ OTC composite opens at 594.21, up 11.20. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Tuesday. It opens at 0.529 British pounds, up from 0.508; 5.038 French francs, up from 4.893; 1.487 German marks, up from 1.4893; and 124.4 Japanese yen, up from 123.9. (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: Beth Mann. (1-919-855-3491) Making copies of USA TODAY downdate (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM