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4The Daily Tar Heel Wednesday, October 12, 1988 Business ; By DAVID BALL Staff Writer According to banking experts, about 500 of the 3,000 U.S. savings and loan associations are insolvent, and depending on federal actions taken to remedy the situation, this crisis could cripple the commercial banking industry. Savings and loan associations have losses estimated at $50 billion to $100 billion, said Mark Flannery, profes sor of finance at the UNC business school. The associations are insured by the Federal Savings and Loans Insurance Corporation (FSLIC). To close bankrupt institutions, the FSLIC must pay off all depositors. "The solution is to close the savings and loans," Flannery said, "but the FSLIC has little to no cash at its disposal. There is no way for the FSLIC to close savings and loans without more funds." The associations are in trouble for a number of reasons. Since savings and loans fund long-term mortgages, their income is relatively fixed. During 1980-81, interest rates on deposits rose quickly, and the asso ciations were faced with an ever widening gap between their income and interest paid to their customers. Many other thrift institutions in Texas and Oklahoma were heavily CGLA "We are not an intolerant group," Lamerson said. "All of our members are not liberals; they are a cross section of the University population. We have never suppressed anyone's ideas." Campus Watch also attacked CGLA's "theatrical escapades," spe cifically a march held in January. Lamerson said the march was not strictly a CGLA function, because many people in the community and students who support CGLA funding participated. Campus Watch maintains it is not anti-homosexual but pro-student, but Stiles disagreed. "Most members of Interested in campus opinion? University classes mill be suspended from 10:00 a.m. to 2:00 p.m. anno lioainis involved in real-estate lending and were hurt when oil prices plummeted. Bank failures tend to undermine public confidence in financial insti tutions, according to Jim Carter, vice president of Central Carolina Bank. "Any time there's a failure it's not a positive sign to the public as to the safety of their money," he said. Savings and loans may also offer exorbitant interest rates on deposits to attract funds, because they need money immediately to pay depositors who want to withdraw their money. "The savings and loans are desper ate to get funds and will do anything to get them," Flannery said. "This practice (of increasing rates) cuts into bank profits." . Associations with negative net worths are increasing the costs of funds to healthy institutions, said Wachovia Professor of Banking Robert Eisenbeis. These insolvent . associations are unlikely to survive and only weaken solvent banks, he said. To fix this, the banking regu latory system must be reformed and more funds must be found for the bankrupt FSLIC, he said. The Shadow Financial Regulation Committee, of which Eisenbeis is a member, has proposed a policy of closing institutions with a zero net worth. from page 1 our organization are students," she said. Campus Watch supports certain students who agree with its ideas but not the student body as a whole, she said. Stiles said she was concerned that Hans, the only student representative for Campus Watch on the Student Panel attending the press conference, could not adequately answer ques tions concerning Student Congress's decision to fund the CGLA. "The group (Campus Watch) sees this as a chance for publicity to promote their close-minded views," Stiles said. "That is their motivation." Check out every Monday's DTH The Board of Trustees and the Faculty of The University of North Carolina at Chapel Hill invite you and your family to University Day for the presentation of Distinguished Alumnus Awards to Edward G . Bilpuch of Durham, North Carolina , Gail Godwin of Woodstock , New York Richard Knitfit, Jr. of Dallas, Texas Thomas W. Lambeth of Winston-Salem , North Carolina Roger Mudd of Arlington, Virginia and the Installation of Paul Hardin as Chancellor Wednesday, October 12, 1988 at 11 o'clock Polk Place at South Building (Rain Site is Carmichael Auditorium) ee Savings and loans "can have a negative worth in the present system," Eisenbeis said. "We need to deal with the fundamental problems in the deposit insurance system." The current deficit, however, must still be paid off. One proposal is the merger of the Federal Deposit Insu rance Corporation (FDIC) and the FSLIC, using the surplus funds in the FDIC to pay bankrupt thrift insti tutions' debts, Flannery said. Such a move would have harmful repercussions for the commercial banking industry. "It would leave banks with non credible deposit insurance," Flannery said. "Healthy institutions might also be charged higher insurance premi ums to pay for the insurance fund." The merger would open up only Become a By CHERYL POND Staff Writer Carolina graduates can now charge their credit card to the limit and support their alumni association at the same time. A Carolina blue VISA card pic turing the Old Well will soon be offered to UNC graduates by the Carolina General Alumni Associa tion and a local bank chain. The association had considered adopting an affinity card program for two years before finalizing a deal with First Union National Bank this past July. The concept of affinity cards is not new. Many other universities and organizations have these special cards. "Most other universities with alumni associations of our size already have a card in place," said Bo Dunlap, assistant director of Alumni Affairs. "I think, by waiting, we have put together one of the best, if not the best, programs in the country." The Carolina Alumni VISA card offers a low interest rate of prime plus five, which translates to 15 per cent. That compares favorably with the 18 percent rate for a basic Mas may im crisis a few billion dollars to the FSLIC, a "drop in the bucket compared to the problem," Eisenbeis said. Another option is to' generate interest through raising taxes. "A tax increase is a way to fund the FSLIC," Eisenbeis said. The problem has not yet affected the state, however. "In North Carolina we enjoy a very healthy banking and savings and loan industry," Carter said. "You don't hear of any real problems." But according to Eisenbeis, the next president will be faced with the problem immediately, because the FSLIC deficit doubles each year. "It's time that the taxpayer realizes the bill that's there is coming due, and that the longer we wait, the bigger itH be," he said. card - carrying Carolina alumnus tercard or VISA from First Union. The card will be free for the first year with a $20 annual fee afterwards. . For each card issued to a Caro lina alumnus, the alumni association will receive a small royalty. A per centage of each purchase made with the card will also go to the associa tion. First Union is not disclosing the exact amount of these royalties. The alumni association's cut of the profits will be put into its general fund, Dunlap said. "We don't expect a great windfall," he said. "We don't have any special project earmarked for the funds." The credit card is not officially associated with the University, said Susan Ehringhaus, assistant to the Chancellor. "It was something the alumni association was free to do," Ehringhaus said. "It's not something they had to ask permission of the University for. We have not endorsed their card, but things that benefit the alumni association obviously benefit the University." First Union will begin marketing the card to graduates in a few weeks. "We will be doing a direct mail Light lunch will foUow the ceremony. Usual campus parking regulations will be in effect; permit holders will not be displaced. Carolina Students' Credit Union Rates SHARE CERTIFICATE RATES 30-89 Days . . 6.500 simple 90-179 Days 7.252 7.521 180-269 Days 7.760 8.068 270-364 Days 7.770 8.079 365 Days 8.170 8.512 Compounding is daily. Rates subject to change daily. Longer terms are negotiable, as are amounts of $10,000 or more. LOAN RATES Share Secured 10.00 Co-Signer 13.00 Travel 16.00 Rates subject to change daily. CSCU is not affiliated with UNC-CH. ing, followed by telemarketing," said Agnes Stevens, communication officer for First Union Corporation. First Union has placed advertise ments in alumni magazines and planned radio and television spots. The bank also started a routine credit screening to determine which alumni should be contacted by direct mailing. "We receive as part of our agree ment a list of the alumni associa tion," Stevens said. "Then we set forth a criteria of what would make a person likely to use our card." The list of names and the bank's criteria are then sent to a credit bureau that does the screening, Stev ens said. The bank does not get a credit history on an individual until a card application is received. Undergraduates will have the opportunity to apply for a card, but the details have not been finalized, Dunlap said. Because it is designed for alumni, the card will not be made available to the general public, Dunlap said. But if the association is contacted by a UNC fan or supporter who is not an alumnus, it would consider their application. Choosing a bank to provide the H with purchase Q D 0 D WMMi Orcen tees with this ad through October 31, 1988 Limit 18 holes per person per day 18-hole Public Course D Complete Line jj Driving Range D 0 Q D Q 0 D 0 Q Q D 03 4 fct 1 Clrf If W wivni Call For 942- : V" n fi F"i ft"i pi E3 Reservation Sales Representatives American Airlines is hiring for its Southeastern Reservation Office in Cary, NC. We are seeking highly motivated individuals for full-time positions as Reser vations Sales Representatives. Successful candidates must have a high school diploma or equivalent, type 35 WPM and have good oral communication skills. Two years' college or public service contact work ex perience preferred. We offer: $5.77 per hour upon successful completion of training $6.15 pey hour after six months probation Travel benefits Competitive healthmedical benefits Opportunities for career advancement Shift and weekend work required Interested and aualified candidates should send a re sume andor self-addressed, stamped envelope to: American Airlines, Dept. UNC1012, 500 Cregson Drive, Cary, NC 27511. No phone calls please. American Airlines An Equal Opportunity Employer affinity card was a long process, according to Dunlap. "We made the decision after talking with other alumni associations across the nation that have gone thrc ?h a similar process," he said. ' Vo took advantage of their experiences in hopes of advantaging our program. Almost all recommended going with a bank that has a presence in North Carolina." The alumni association wrote the 10 largest banks in North Carolina, soliciting proposals. Nine banks responded, six with proposals. The association then sent a synopsis of each proposal to all the competing banks. . Three banks were selected to make oral presentations. After eva luating the proposals, the selection committee chose the one they thought most beneficial to the alumni and the association. Duke University and N.C. State ; University's alumni associations have also announced a similar card affinity. Duke's alumni association will offer a credit card through BB&T, and NCSU's card will be offered by People's Bank and Trust Co. Wake Forest University recently rejected the idea of an affinity card. rj mmt of 9 or 18 hole D Q D Q of Golf Equipment o Lessons Available jj Directions: From NC 54 ByPass take Jones Ferry Rd. to Old Greensboro Rd. Follow Old Greensboro Rd. 12.5 miles to NC 87. Turn right on NC 87 (north) for 9 miles to blinking light. Turn right for 1.2 miles on Boywood Rd. to sign D D Tee Times 0783 it 1
Daily Tar Heel (Chapel Hill, N.C.)
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Oct. 12, 1988, edition 1
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