The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Tuesday, President Bush said economic sanctions may not be enough to drive Saddam Hussein from Kuwait. And Baghdad said it would allow 3,000 Soviet workers to leave, but for a price. We'll have details in our News Summary in a moment. Jim.

MR. LEHRER: After the News Summary tonight, the private route to freedom for hostages in Iraq, with hostage wife Donnita Cole, former attorney general Ramsey Clark, and Middle East expert Robert Hunter. Then Tom Bearden reports on what the high price of fuel is doing to the airlines, the Keating Five testimony of former federal regulator M. Danny Wall, and finally a Roger Rosenblatt essay. NEWS SUMMARY

MR. MacNeil: President Bush said today he's not convinced economic sanctions alone will force Saddam Hussein to leave Kuwait. He made the comments in Uruguay, the second stop of his five nation South American tour. The President was responding to critics who've urged him to give the embargo more time before initiating military action.

PRES. BUSH: I am convinced that Saddam Hussein up until now at least has not gotten the message and the United Nations resolution speaks for itself. For me, it was loud and clear, but I don't think Saddam Hussein yet understands that and, therefore, the best hope for peace is for him to understand that all means, all means necessary to fulfill these resolutions will be used against him. And I hope he gets the message.

MR. MacNeil: The President also repeated that the situation cannot, in his words, go on forever, because many countries are being devastated by higher oil prices. Former Defense Sec. Robert McNamara disagreed with the President's assessment of economic sanctions. He said Iraq was so integrated into the world economy that it could not withstand sanctions indefinitely. He testified before the Senate Foreign Relations Committee.

ROBERT MC NAMARA: How long will it be till the sanctions lead to Iraq's withdrawal from Kuwait? None of us can predict the day or hour. But I am certain we should not declare them a failure after a test of only four months. The costs of military action, both in terms of lives lost and in terms of political instability in the region, are likely to be very, very heavy. Surely, we should be prepared to extend the sanctions for a twelve or eighteen month period if that offers an opportunity to achieve our political objective without the loss of American lives. Who can doubt that a year of blockade will be cheaper than a week of war?

MR. LEHRER: Iraq offered today to release all 3300 Soviet hostages beginning tomorrow. Most of them are oil industry experts who were working in Iraq. Iraq said Moscow would have to pay compensation for breaking the workers' contracts. The Iraqi media said former Texas Governor and U.S. Treasury Sec. John Connolly was in Baghdad today to try to win the release of some Texas oil workers and former boxing champion Mohammad Ali returned to New York today with six other American hostages. They said they had been moved frequently but that they received okay treatment. Saddam Hussein has said he will free all hostages by the end of March if the U.S. and its allies do not use military force against Iraq. We'll have more on the hostage story right after this News Summary.

MR. MacNeil: The U.S. charged today that the world trade talks in Brussels are very close to collapse because of Europe's refusal to make big enough cuts in farm subsidies. The talks were designed to reduce trade barriers throughout the world. Some European community members spoke about sending more food aid to the Soviet Union. Mikhail Gorbachev announced new measures to combat the food shortages, including a crackdown on those who sell food on the black market. We have a report from Moscow by Tim Uert of Independent Television News.

MR. UERT: The latest Western food aid rolled into Moscow today. A convoy of lorries from Germany bringing 50 tons of supplies for the elderly. In the Supreme Soviet, Mikhail Gorbachev gave his recipe for the harsh winter months ahead. Massive food imports he hopes will fill shelves an calm tempers. Aid from the West is an embarrassment to many Soviets, but as Mr. Gorbachev struggles to keep the lid on searing resentment, it may ease some of the pressure he faces. Soviets aren't starving, but they are beginning to panic. The Russian word "goled" means hunger and starvation and famine. Its repeated use in the press has generated fears for the worst. And that's meant hoarding, the plastic bags dangling from apartment windows, the food packages piled on balconies and rooftops, evidence of the new siege mentality. Electrician Valeri Neketing showed us the supplies he's put aside. "My family won't starve," he said. "Our home's been turned into a warehouse."

MR. MacNeil: President Gorbachev today also won preliminary approval for constitutional changes that would give him more power to deal with the food shortages and the economic crisis. A Soviet space capsule carrying the first Japanese in space docked with the Soviet space station Mire today. The Japanese man is a journalist. His company paid the Soviets 12 million dollars to get him on the flight. The space station was orbiting about 32 miles above the U.S. space shuttle Columbia.

MR. LEHRER: The U.S. Federal Reserve Board today eased requirements on the amount of reserves banks must hold. It was in response to signs that banks are lending less and setting tougher conditions. In a statement, the agency said the credit tightening had been welcome from a safety standpoint, but was now contributing to the nation's economic slowdown. Also today the Commerce Department reported new home sales fell 3.5 percent in October. That was the lowest rate in eight years and the fourth straight monthly decline.

MR. MacNeil: Federal investigators continued to search today for clues into yesterday's runway collision of two Northwest jetliners in Detroit. The accident left eight dead, at least twenty injured. Initial reports yesterday had put the death toll at 19. The 727 was racing down a runway for take-off when it struck a DC-9 that had turned into its path. The DC-9 burst into flames. Today in Washington, the National Transportation & Safety Board began examining the plane's so-called "black boxes" which record cockpit transmissions, as well as technical data. The 1985 plane crash in Gander, New Foundland that killed 256 Americans was back in the news today. A congressional report said U.S. agencies were grossly negligent for failing to investigate terrorism as a possible cause. A House Judiciary Subcommittee said the National Transportation Safety Board rubber stamped the findings of the Canadian government. Canadian investigators said ice on the wings of the plane was the probable cause.

MR. LEHRER: The Justice Department said today there was no evidence to link an undercover drug operation to the bombing of Pan Am Flight 103. The FBI investigated that possibility after television news reports a month ago claimed a U.S. Drug Enforcement Administration informant may have carried the bomb onto the plane. Two hundred and seventy people died when the jet blew up over Lockerbie, Scotland, two years ago. And that's it for the News Summary tonight. Now it's on to the private route to freedom for American hostages in Iraq, what higher fuel costs are doing to the airlines, M. Danny Wall before the Keating Five hearings, and essayist Roger Rosenblatt. FOCUS - FREEDOM MISSION

MR. LEHRER: First tonight we look at a prize way some are gaining their freedom. Just today former heavy weight champion Mohammed Ali returned with six and there was a report former Texas Governor John Connelly is in Baghdad now working on the releases of some oil workers from Texas. They are only the latest of the private freedom missions to Iraq which are happening despite public discouragement and warnings from the U.S. Government which refuses to negotiate for hostages. We look at this unusual development from three perspectives. The first being that of Donita Cole of Odessa, Texas. Her husband John an oil worker was in hiding in Kuwait when Charles Krause first interviewed her in August. He has since been captured and moved to Iraq. Mrs. Cole is now on her way to Iraq to try to obtain his release. Charles talked with her again last night at Kennedy Airport in New York before she flew to the Middle East.

MR. KRAUSE: When did you first hear that you might be able to visit your husband in Baghdad?

MS. COLE: It came over the news and then I called the Iraq Embassy to see if this was a really confirmed that this was really true and they said yes. So with in 30 seconds I had made up my mind to go.

MR. KRAUSE: Did you discuss it with your husband?

MS. COLE: Yes I did and he said that he preferred that I didn't go over. The first conversations. So as I finished talking him I called the Iraq Embassy and had them send me my visa application. So several phone calls later he said that he had thought it over and I would like to you to go ahead and come on over. So I said okay I will start working on my visa and that afternoon my visa application came in the mail.

MR. KRAUSE: What do you expect? Is there a guarantee that you will see him?

MS. COLE: Guarantee is a wrong choice of words. We have been offered an invitation to go and be with our husbands or loved ones during the holidays. That is what we are going for?

MR. KRAUSE: Do you think that you will see Saddam Hussein?

MS. COLE: My group that I am traveling with has made a formal request through the Ambassador requesting that we be allowed to see Mr. President, Saddam Hussein, yes.

MR. KRAUSE: The Iraqi Ambassador in Washington?

MS. COLE: Yes.

MR. KRAUSE: Do you have a response to think that you will see him?

MS. COLE: I have no idea. I can not say yes and I can not say no. I have no idea if he will allow us to see him.

MR. KRAUSE: As you know almost every week a group goes to Iraq and brings back some hostages. Do you think that this is going to happen to you?

MS. COLE: I think that it is possible. We are not stating that it is probable but I think that it is a very strong possibility. Of course we are hoping all of them.

MR. KRAUSE: But you think it is a possibility because you have been granted the visa or because of other information that you may have?

MS. COLE: Combination of both.

MR. KRAUSE: The State Department says that you are being used by the Iraqis, manipulated?

MS. COLE: I don't care. I have not seen my husband for eight months and with no negotiations his being over there has completely been bogged down. Now we are going to have some talks but it doesn't seem that our Government is putting a great deal of emphasis on the hostages. So if I can do a little something to go over there and possibly get him out that is what I am going to do.

MR. KRAUSE: Do you have any second thoughts about this in view of the larger implication?

MS. COLE: NO I really don't. I really think that I am a patriot American. I have no worries or fears about feeling it. In fact sometimes I think that I am more patriotic than a lot of people are. That has nothing to do with me going over and trying to bring my husband home.

MR. KRAUSE: You are planning to return to the United States on the 19th. Do you think that you husband will be home for Christmas?

MS. COLE: I hope so. I really honest hope so.

MR. KRAUSE: You hope so. Do you think so?

MS. COLE: I don't know. Mr. President Saddam Hussein has been very generous in letting other people leave the country when they have had some one go over there and petition for them. So we are hoping that we will be allowed an audience with him, we can plead our cause with him, and he will release our men and let them come home.

MR. KRAUSE: How would you feel if Saddam says okay take him home?

MS. COLE: I will feel like the weight of the world has been lifted off my shoulders. That is exactly how I would feel. I haven't slept a whole night in four months. If we return with their lives a bad experience will be over and done with. My world is not compete now. Their is a part of me over there. So if Mr. President Saddam Hussein says I can have my husband back I can take him back with me. What it means is that my world is complete again. And I am not saying that it is going to be perfect or anything. No good marriage is perfect there is problem. It is time for him to come home.

MR. KRAUSE: Thank you.

MR. LEHRER: Now two more views of this. Ramsey Clark was Attorney General of the United States in the Johnson Administration, has been active since in Liberal causes. He recently returned from Iraq where he met with Saddam Hussein and helped obtain the release of some American hostages. Robert Hunter was Director of Middle East Affairs at the National Security Council in the last two years of the Carter Administration. He is now a Vice President at the Center for Strategic and International Studies in Washington. Mr. Hunter do the individual private missions on behalf of the American hostages help or hurt the overall situation?

MR. HUNTER: Here in this Country I don't think that it makes much difference provided that the American people do hold firm as I think that we are holding firm and I think that we will hold firm on the need to get Saddam Hussein out of Kuwait. Now he is not letting these people out out of the goodness of his heart. The lady who is on whose heart is breaking obviously was talking about the generosity of Saddam Hussein in letting others go. He is not a generous man. He is doing it out of cynical efforts to manipulate world opinion, American opinion by letting people out in drips and drabs. This is the most cynical manipulation of hostages there has been. No I don't think that it is going to make a big difference in terms of nation will but it could in terms of suffering of Americans and others.

MR. LEHRER: How could it effect that?

MR. HUNTER: I mean in terms of Americans left behind their suffering is bound to increase. I don't blame any one for going over and doing this. If I had some one over there who was a loved one I would probably do the same thing but I would also want to understand there is a price to pay in the cynicism and manipulation this man is attempting to do.

MR. LEHRER: And his manipulation is aimed at accomplishing what>

MR. HUNTER: He is trying to get a deal which will allow him to keep all or part of Kuwait and be a victor in this crisis. It is aimed less at the American people. This has been sort of a minor thing in releasing hostages. It is really aimed at people in other countries where he has been releasing wholesale entire nations hostages to try to get them to depart from the coalition that the United States has put together.

MR. LEHRER: Like today 3300, he announced, well they are going to have to pay up to do it the Soviet Government but the possibility that all 3300 Soviets will be let go?

MR. HUNTER: That is right. The Soviets are the latest on the list. We have seen the British, the Japanese, the Danes and a lot of others. When we get into the negotiation later this month the pressure, in my judgement, is going to increase from a number of these countries to say well you know let's get it behind us. Saddam Hussein just gets a little bit of Kuwait who really cares it is a long way away. Well people here are going to say I saw people going over to Iraq and getting their loved ones out. That is great I can get my loved ones out to if the United States will only give this man, this generous man something of what he wants. That is the problem.

MR. LEHRER: Meanwhile the only hostages that remain are the Americans if he continues to follow this pattern. Is that what you are suggesting?

MR. HUNTER: At the end it looks like it will be just the Americans and may be a few from some other countries that choose to stand strongly with us.

MR. LEHRER: So then if there is in fact a conflict, combat, a war,. then it is Americans whose lives are primarily at risk?

MR. HUNTER: I think that this is something that the American people would react to later on. After all we get far less oil from the Persian Gulf than the Europeans. Japanese and others but if it comes to a war and god forbid that it does and it is Americans that are being killed out there while Europeans and others have gotten their people out I wonder what the reaction is going to be in this country.

MR. LEHRER: So what you are saying that while you understand why individuals would understandably would want their loved ones out of there and leave no stone un turned to do it is not working in the interests of getting this thing resolved?

MR. HUNTER: I think that it helps for individuals but it helps really not at all in resolving the over all crisis and if Saddam Hussein manipulates it effectively with other countries it might actually cause a problem.

MR. LEHRER: Ramsey Clark how do you feel about it?

MR. CLARK: Well I feel quite differently. I think that you have to hate going to war and I think holding hostages creates hatred and creates a great risk of war. I think that war is the ultimate thing that society has to work to prevent. So every time a hostages is released you have not only struck a blow for individual liberty which is important but you have released some tensions. I hope that all of these 18 men and women who have gone over today will bring back their loved ones. I met with a room full of hostages, spent three or four hours with them, they fixed me some dinner, I hadn't eaten and we talked specifically about that how does it feel not to be selected when some of the people with you are going home. They say that it feels pretty bad but I'll tell we would rather some go than none go. I think from every stand point why we would want hostages to remain there I can't imagine. We want every hostage of every nationality out. When I met with Saddam Hussein I told him that I thought that holding hostages was a terrible mistake. I didn't come to bargain for a few, try to take back a few, I really thought that didn't look good. It looked like you were dealing with people. But to hold hostages creates hatred. I told him there had been more publicity, more press attention on the hostage issue in the United States than all of the other aspects of the crisis combined probably. It created hatred it was threatening to the children of his country. If he wanted peace he had better look at that issue. And he in fact said he was looking at it and he said that he thought that was probably right and he was going to try and find, it had been 90 days and we haven't been attacked and he said he would try to find a way and with in a week he had made an announcement and I think that it is true he is going to start releasing systematically all of the hostages, and our hostages and they will be out by the end of March if there hasn't been a war. That is something to look forward to an in the mean time we are getting them out every day. 15 released earlier this week to Mohammed Ali. They have been coming out every week a bunch of them coming out.

MR. LEHRER: So you do not believe that he is callously manipulating you and others for his own purposes. You heard what Mr. Hunter said?

MR. CLARK: I think that is nonesence. I think that he started out way behind by holding hostages in the first place. He is cutting his loses is what he is doing. When a hostage is released they realize that the person was a hostage and was held for a while and they don't forget that. You don't have so much gratitude at the release of a hostage that you forget the person was held against his or her will whatever the conditions are. However nice they might have been you have a right to leave the country. It is a fundamental human right and it is a violation not to permit it.So I think that he is really cutting his loses. I think that he realizes that he needs to release these hostages and he is trying to do it as quickly as he can. That is why he is turning them over to any body that comes and he will systematically release them according to what he says beginning Christmas and going through January, February and March.

MR. LEHRER: Hunter do you believe that?

MR. HUNTER: I agree entirely if you can get a hostage out them out. If any one can leave by any way by all means come home but I think that it is absolutely naive to believe that this guy is doing it because he has a time table. Saddam Hussein is a man who obtained power by personally butchering his enemies. He is a person who has used poison gas more than any body else did since the first world war. He has set a time table for letting these people out with all of this anguish which just happens to be past the point where it looks like war can be made o n his country. If he is serious he can release the hostages today. He can accept the United Nations resolutions which 12 votes out of the 15 practically the United World saying get out of the country which you have invaded. It is naive to believe that this guy is doing it out of the kindness of his heart.

MR. LEHRER: You are naive Mr. Clark?

MR. CLARK: I did not say that he was doing it out of the kindness of his heart. He is doing it because he understands that holding hostages is harmful to his interest and he needs to release them because holding hostages creates hatred. It is as simple as that. But we don't need to talk about butchers or Hitler things like that to face reality. Every time you get some one out from one of these circumstance you releases a little tension and the State Department ought to work on that and try to help people get them out. We want them out as quickly as possible. If we get them out by March that is a lot quicker than we succeeded with the U.S. Embassy hostages in Teheran.

MR. LEHRER: Mr. Clark before you went to Iraq did you have any contact with the U.S. Government. Did you ask them or get any advice or did they contact you or what?

MR. CLARK: I have been doing this sort of business for some time. In fact President Carter sent me over the day that the U.S. Embassy Hostages were seized in Iran.

MR. LEHRER: And we talked to you about it when you got back.

MR. CLARK: That is right you sure did. It was a private effort in a way and if it had been a little more private and it might have been successful and it would have a made a tremendous difference. There wouldn't have been an Iran, Iraq war and there wouldn't be this situation now but that is all behind us. Any way I had been working energizing people in opposition to the war because I think that it would be an absolutely catastrophe and my views on that were very well known but I made no specific contacts with the State Department. When I got back I wrote Secretary Baker a fairly long letter describing who I had seen and what had been said and what my impressions were and if he wanted any further information all he need do was have some one call me.

MR. LEHRER: What I am getting at and I should have asked the question directly. Did you have a feeling that you were going over there against the wishes of the U.S. Government in violation of U.S. policy in any way or did you feel that had kind of winked. They could not do it officially but they didn't mind your going over there. They didn't mind your getting hostages out if in fact you could?

MR. CLARK: It is sad to say I thought they really would oppose my getting hostages out. Although they had names that they wanted out and hoped that they would get them out. But I think that they prefer the tension to their freedom sadly and I think just the opposite that we want to reduce those tensions and find a way to peace and get every hostage out as quickly as possible.

MR. LEHRER: Mr. Hunter do you believe that as a matter of U.S. Government policy that the Government should not encourage the Ramsey Clarks of this World, the Mohammed Alis down the line doing what they are doing?

MR. HUNTER: I don't think the Government should oppose any one doing what he is doing but you know there is a price to be paid. When ever some one like the Attorney General shows up in Baghdad he is put on Iraqi television. Saddam Hussein says he is coming to us. What Saddam has been trying to say is that the World is wrong and he is right and that this is a contest between himself and George Bush and when ever anyone shows up under these circumstances he has something to show his people and frankly lengthen the time that it will take for sanctions to work. Now that may not be a big price but that is something to be considered here.

MR. LEHRER: Do you agree with that Ramsey Clark that by doing this you are actually lengthening the crisis rather than moving it toward resolution?

MR. CLARK: No I think just the opposite. It is irrational to think that this lengthens the period of time in which it will require the sanctions to work. There is absolutely no relationship. In fact if there is some price for a former Attorney General going to some country to get a prisoner or hostage out it is a very small price. I am tired of traveling but I will go any place any time to get freedom for some one who deserves it and if the only price is that of my getting there so be it. I will pay it over and over again.

MR. LEHRER: Mr. Hunter?

MR. HUNTER: You also have to realize that 300,000 plus American young men and women in uniform over there and some one has to make a judgement about the best way to prevent a war to resolve this crisis to meet the interests of the United States. Let's by all means get those hostages out but let's be careful that we don't at the same time play in the hands of this man and may be put more American and other lives in jeopardy.

MR. LEHRER: Mr. Hunter, Mr. Clark thank you both very much.

MR. MacNeil: Still to come on the NewsHour tonight airlines feeling the cost of the Gulf crisis, today's Keating Five hearings and Essayist Roger Rosenblatt. FOCUS - SKY-HIGH FUEL

MR. MacNeil: Next, another casualty of the Gulf crisis. Yesterday, the nation's fifth largest airline, Continental, filed for bankruptcy. Continental is not the only carrier in serious financial trouble. As Correspondent Tom Bearden reports, the reason is the price of jet fuel.

MR. BEARDEN: Continental had been skating on the brink for some time. The airline has had a high debt load for years as a result of rapid expansion in the 1980s. That burden became crushing when the price of jet fuel, the biggest cost for any airline, more than doubled after Saddam Hussein invaded Kuwait.

HOLLIS HARRIS, CEO, Continental Airlines: Continental Airlines enters Chapter 11 only after considering every other prudent option. We cannot control our fuel costs by ourselves. But by filing for reorganization we can get some help in controlling our debt.

MR. BEARDEN: The high price of jet fuel is hurting other airlines too. Robert Aaronson is the President of the Air Transport Association.

ROBERT AARONSON, Air Transport Association: We're looking in excess of a $1 billion loss for the fourth quarter of 1990.

MR. BEARDEN: Aaronson says a lot of people have already lost their job.

MR. AARONSON: There are already 10,000 employees in the airline industry that have been laid off, and we certainly have the prospect of more of that.

MR. BEARDEN: Aaronson says half of all the airlines now have severe financial problems, although some predate the Gulf crisis. Most observers believe that if fuel prices stay high for six months, several carriers may also seek bankruptcy. Lee Howard, CEO of Airline Economics, says it may lead to the long anticipated final shake out of the industry after deregulation.

LEE HOWARD, Airline Consultant: We would expect to see five or six very large and powerful carriers, of course, that would dominate the industry and garner some 95 percent of all the traffic that travels by air.

MR. BEARDEN: What is most frustrating for the airlines is that there isn't much they can do to manage their way around higher fuel prices. Sky Harbor Airport, Phoenix, a well practiced ground crew is standing by for the arrival of one of America West Airline's Boeing 737's. Airplanes don't make any money sitting at the gate. It's vitally important that the crews get the flight in and out quickly. America West is proud of the fact that nobody turns an airplane around faster than it does. It gave them an edge on their competition and was one of the reasons they were looking forward to a profitable year. But jet fuel is such a huge cost that all the hard work that has gone into this carefully choreographed system has been rendered almost irrelevant, and planning has become an exercise in futility. Bud Balzer has the unenviable job of buying fuel in a marketplace that goes crazy every time Saddam makes a speech.

BUD BALZER, Fuel Director, America West: And then Saddam will come on and say I'm going to put another 50,000 troops in whatcha- do-er -- pewww -- the price goes up -- and you say, man, I should have bought that. And just about the time you say maybe I should come in and buy something, he says, yeah, I think we're going to negotiate -- pewww -- down goes the price. And you're saying, you know, give me a break. How can I do anything in that arena and guess right?

ED BEAUVAIS, Chairman, America West: The most serious problem I have ever seen in the history of the airline industry.

MR. BEARDEN: Ed Beauvais is chairman of the board.

MR. BEAUVAIS: We consume 30 million gallons of fuel monthly. As a result of the increase averaging about 70 cents a gallon, our costs are up well above $20 million a month, which is much more than the profit we were planning.

MR. BEARDEN: Are you contemplating layoffs?

SPOKESMAN: We may have to. At this time we're not. We never had to in the past, however, as long as this particular crisis continues, the uncertainty with how you cope with that will be out there and the prospect of compelling you to furlough employees is on you.

MR. BEARDEN: How big was the jump? On the 1st of August, America West paid 63 1/2 cents a gallon for jet fuel. By the second week in October, the price hit a high of nearly $1.40 before falling back to just over a dollar. Airlines have raised ticket prices by about 15 percent since the invasion of Kuwait. But it hasn't helped the airlines much because higher prices caused traffic volume to drop.

SPOKESMAN: So when we put through a 5 percent fare increase, we're going to be lucky if we get a 1 percent revenue.

MR. BEARDEN: Have you seen a fall off in passenger traffic

SPOKESMAN: Yes, we have. Advanced reservations have dropped and as a result, the passenger level increases that we were experiencing up to the energy crisis have disappeared.

MR. BEARDEN: Aaronson says frequency of service may also be affected.

SPOKESMAN: There would be service reductions to communities that are used to having choice of flights and may have no choice and no flights at all, plus substantial numbers of employees who are out of work.

MR. BEARDEN: Industry leaders want government help. They note that early in the crisis, President Bush cautioned the oil industry about price gouging on gasoline and home heating oil.

PRES. BUSH: They should show with strength and not abuse today's uncertainties to raise prices.

SPOKESMAN: He didn't even mention the airlines and he was the biggest demand on the market so he didn't say anything to the oil companies about jet. No one cared, it seemed like, and it further had no pressure from any what I call jawboning.

MR. BEARDEN: Privately, some airline officials go further, accusing the oil industry of gouging, a charge the American Petroleum Institute's Dr. Edward Murphy vigorously denies.

DR. MURPHY: The oil industry is not gouging the airlines. The oil industry has responded with increased production. We've never produced as much jet fuel as we are now producing, and that is in direct response to the forces in the marketplace that we have seen. That certainly is not evidence of price gouging. That has served and the effect of that has been to bring prices down in the last several last weeks.

MR. BEARDEN: Even so, airline representatives continued to lobby the Secretary of Transportation, saying the government must step in to stop what they charge is rampant jet fuel price speculation. UPDATE - MONEY & INFLUENCE?

MR. LEHRER: Now the Senate Ethics Committee's investigation of the Keating Five. Keating is Charles Keating, owner of the now failed Lincoln Savings & Loan. The five are Senate Democrats Alan Cranston, Dennis DeConcini, Don Riegle and John Glenn, and Republican John McCain. They received funds from Keating and met with federal regulators on his behalf. Former Federal Savings & Loan Regulator M. Danny Wall testified today. Judy Woodruff reports.

MS. WOODRUFF: It was on April 9, 1987, in the office of Sen. Dennis DeConcini that the five Senators in question learned not only that Lincoln Savings & Loan was heading towards insolvency, but also that bank examiners were going to refer Lincoln's case to the Justice Department. Michael Patriarca, who testified last week, was one of the four San Francisco examiners to break that news to the Senators.

MR. PATRIARCA: The Senators became less aggressive, it seemed to me. The full court press challenging all our -- the basis for all our conclusions about the examination was reduced significantly.

MS. WOODRUFF: But this morning, M. Danny Wall, who took over as chairman of the Federal Home Loan Bank Board in June of 1987, testified it was another year before he learned of the criminal referral, and as for the case against Lincoln compiled by his San Francisco examiner, Wall threw it out.

MR. BENNETT: But what did the San Francisco people say was wrong about what you say that you didn't feel that it was sufficient evidence? Let's get the allegation first.

MR. WALL: As I indicated, there were fairly broad and general allegations dealing with real estate transactions, dealing with questions about the qualities of the file.

MR. BENNETT: What action did you take regarding these findings? I take it you found that you -- you personally didn't think there was sufficient evidence?

MR. WALL: No, I didn't make that observation. Three offices of the Washington staff, the office of regulatory policy oversight and supervision, that staff that was responsible for the examination and supervision aspects of the 12 banks.

MR. BENNETT: But did you ever --

MR. WALL: There wasn't a sufficient case. The Office of Enforcement said that there wasn't a sufficient case, and the litigation division of the General Counsel's Office said there wasn't a sufficient case. So three offices of the Washington mechanism concurred that there wasn't a sufficient case that had been made by the field examiner.

MS. WOODRUFF: Under questioning from special counsel Robert Bennett, Wall detailed his September 1987 meeting with Charles Keating.

MR. WALL: My recollection is that we discussed the fact that there was this still unconcluded examination which had been underway for in excess of a year. There were problems -- there had been problems, allegations, and, in fact, a lawsuit that had been brought by Lincoln or American Continental, alleging leaks of confidential information.

MR. BENNETT: Did you tell Mr. Keating at that meeting that the board would take a fresh look at the Lincoln exam?

MR. WALL: I did.

MR. BENNETT: And what reasons did you give for that?

MR. WALL: Well, I had just a few weeks earlier brought into Washington in the process of creating a new management structure for the Federal Home Loan Bank Board, I brought into Washington a very senior former bank examiner who had been in the Seattle office as the head of agency functions there.

MR. BENNETT: What was his name?

MR. WALL: Darryl Doco. And the rest of the senior staff at the Federal Home Loan Bank Board likewise were new to their positions. I felt that it was appropriate and desirable for us to determine for ourselves what our view was of the recommendations that have been made by San Francisco, on the one hand, and the response that had been made by the career staff in Washington, on the other hand, and try to reconcile the other.

MR. BENNETT: At any time prior to this meeting of September 24th, I gather, when you said you would give a fresh exam, had you received any calls from any of the Senators involved in this proceeding?

MR. WALL: It was my and my staff's recollection that Sen. Cranston had called sometime in late July or in August, making the observation that there was this ongoing open exam that had been unconcluded, and urging that the board make a decision.

MS. WOODRUFF: Of the five Senators who initially intervened with bank regulators on behalf of Charles Keating and Lincoln Savings & Loan, only Alan Cranston of California and Dennis DeConcini of Arizona continued to intervene on Keating's behalf. This morning, former bank board chairman Wall said the two Senators urged that he strongly consider Keating's offer to sell his savings & loan.

MR. WALL: he had decided to try to sell the institution, that it was not wise for him to have gotten into a regulated business, his attitude, his philosophy was too entrepreneurial, he wanted to get out of the business. Senators Cranston and DeConcini both urged that the board give prompt and serious consideration to the offers to sell the institution. As I see the documentation that has been provided, at the time I wondered, you know, why does somebody urge that we give serious consideration to something? We're not playing games down there. We're doing serious business at a serious time. But as I see these documents --

SEN. TRENT LOTT, (R) Mississippi: But weren't they, in fact, urging you to do it?

MR. WALL: I'm sorry?

SEN. LOTT: Weren't they, in fact, urging you to approve the sale?

MR. WALL: They were urging us to give prompt consideration and if a valid sale to proceed with the sale.

SEN. LOTT: But you didn't feel it was out of order?

MR. WALL: I didn't feel it was out of order. Making the point, Senator, as I might, as I see some of these other documents, they are obviously, their ears were being whispered in, telling them that we weren't serious, that we weren't looking at it, we the board now, the three of us. Well, indeed, we looked at each of them. It was not a lightly considered process.

MS. WOODRUFF: Charles Keating managed to keep the doors open at Lincoln Savings until April 14, 1989. On that day, the government finally did move in and shut Lincoln down at a cost to taxpayers of $2 billion. Wall blames Keating for the long delay.

MR. WALL: I think if I've learned one thing in hindsight of this whole process, it is that we were dealing with a master at delay.

MR. BENNETT: And who was that?

MR. WALL: Mr. Keating and all of his lieutenants.

MR. BENNETT: And why do you say he was a master at delay? What are the things that he asked you to do that could result in delay for the benefit of Lincoln?

MR. WALL: Well, it wasn't a matter of what they asked us to do. It's a matter of actions they took. As I indicated --

MR. BENNETT: Tell us what they were.

MR. WALL: As I indicated to you, the matter of insisting that or resisting the provision of documents and data that was being asked for, the fact that offices were maintained inconveniently in two different states, albeit both states within the jurisdiction of San Francisco, fortunately. The matter that they had taken court actions against the San Francisco staff, against the staff in Washington, against me personally over the months and weeks, and were very litigious, it clearly was, as I say, in hindsight, you put all these things together and you look back at them, you get a much clearer picture than you had as you're living it.

MR. LEHRER: The Keating Five Senators, themselves, are scheduled to begin their testimony before the Ethics Committee later this week. ESSAY - FALLEN IDOLS

MR. MacNeil: Finally tonight, essayist Roger Rosenblatt with some words about heroes and real people.

MR. ROSENBLATT: Can we learn to take it when our heroes are shown to have clay feet? The people handling the papers of Martin Luther King, Jr. announced that Dr. King plagiarized portions of his doctoral dissertation. They hated to say so, but Dr. King, the idol of millions of schoolchildren, was at one time in his life an intellectual cheat. It has been alleged for a long time that Dr. King was a womanizer. We squirmed when we learned that. We'll have even a harder time dealing with the idea of the civil rights saint as plagiarist. The same discomfort fell on us when John F. Kennedy's life was shown to be an unpleasant mixture of noble public words and ignoble private actions. A parade of mistresses, including the girlfriend of a notorious mobster, sneaking up the back stairs of the White House. Kennedy, unlike King, was more a hero of style and vision than of accomplishment. Yet especially after his martyred death, it was painful and confusing to discover the weak spots in that handsome mind. Maybe we've had a hard time dealing with such disclosures because we've forgotten what a hero is supposed to be. A hero is supposedto be flawed. The great heroes in the past, fact and fiction, were flawed up to their eyeballs. Odysseus, for all his adventurous island hopping, was an almost pathological adulterer. Brutus was a traitor. Et Tu Brute? Even you Brutus, the best of the empire, the most loyal of the lot? General George Patton was brave and swashbuckling and also a harsh egomaniac. No one but the hero, Patton, slapped that weeping soldier in the face. Heroes became heroes by incorporating their weaknesses. The impurities, like alloys to steel, were considered indispensable to their strength. We might also consider that heroes are legends made by us, not by themselves. If the designation hero depended solely on good deeds, every unsung social worker would have his or name in bronze. But heroes are public inventions. We bear their names abroad on our soldiers, bigger, brighter, higher. If we suffer vast disappointment every time the Thanksgiving Day balloons of John F. Kennedy or Martin Luther King are shot with an arrow, it's at least partly because we've been playing a child's game all along. Nothing can be wrong. Nothing can be wrong. But in our rational hearts, we always knew these people were human; something could be wrong. Great deeds do not excuse peccadillos, crimes or misdemeanors. They're probably not supposed to. Dr. King wasn't left of a plagiarist because he steered the country right. But heroes are our responsibility. The burden of heroic reputation is in our hands. And in the world of investigative journalism, we'd better be prepared for all sorts of disappointments in the future, the unvarnished truth about Ghandi, the unrevealed secrets of Joan of Arc. Greatness may have nothing to do with goodness. Virtue is complex. The best of people make mistakes. Valor at 2 in the afternoon may become sinfulness at midnight. If we want to keep our heroes, these are the discriminations we may need to make for ourselves and for our children. I'm Roger Rosenblatt. RECAP

MR. MacNeil: Once again Tuesday's top stories, President Bush said economic sanctions may not be enough to drive Saddam Hussein from Kuwait. Iraq said it would allow 3,000 Soviet workers to leave but that Moscow must pay compensation for breaking their labor contracts. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with Sec. of State Baker's testimony before the Senate Foreign Relations Committee, among other things. I'm Jim Lehrer. Thank you and good night.