The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Friday, the judge in the Oliver North trial refused to order President Reagan to testify. The Alaska oil spill spread to threaten another stretch of coastline. Lebanon asked President Bush to help end the savage fighting in Beirut. We'll have details in our News Summary in a moment. Judy Woodruff is in Washington tonight. Judy.

MS. WOODRUFF: After the News Summary, we go first to a News Maker interview with Venezuela President and Latin American Leader Carlos Andres Perez. Then David Gergen and Mark Shields join us to analyze the political developments of the week just past, then a different sort of savings & loan story, the battle for customers. Next, the day after the Pulitzer Prizes were announced, we interview a former Pulitzer winner, playwright Marsha Norman, on what changes it brought to her life. And finally, Essayist Roger Rosenblatt with some thoughts on the election in the Soviet Union.NEWS SUMMARY

MR. MacNeil: The judge in the Iran/Contra trial today refused to order President Reagan to appear as a defense witness. Judge Gerhard Gesell had not shown Mr. Reagan's appearance to be necessary to give Oliver North a fair trial. Gesell added, "Nothing remotely supports the defense claim that the former President authorized the illegal activities with which North is charged. North's lawyers claim that as a White House aide he acted on Reagan's authority in sending aid to the Contras and lying about it to Congress. The prosecution rested its case and the defense opened today, demanding that the charges against North be dismissed. Judge Gesell refused. Judy.

MS. WOODRUFF: Last week's giant oil spill off the coast of Alaska today spreadsouthward to the Gulf of Alaska, threatening more fishing communities and a 600 mile stretch of coastline that includes a national park. Workers hustled to protect fertile salmon streams in the area Southwest of where the Exxon Valdez supertanker hit a reef, creating the spill which now covers more than 600 square miles. In Washington, President Bush told a group of out of town editors that despite the accident, he still favors oil exploration in Alaska.

PRESIDENT BUSH: We are becoming increasingly dependent on foreign oil and that is not acceptable to any President who is responsible for the national security of this country, so what will do is not go backwards. What we will do is redouble every effort to provide the proper safeguards.

MS. WOODRUFF: Congress is currently weighing a Bush administration proposal to open 1 1/2 million additional acres in Alaska to oil and gas leasing. Meanwhile, the FBI said today that it is conducting a criminal investigation into the Valdez spill. A spokesman said agents are looking at possible felony violations of the Clean Water Act.

MR. MacNeil: The Government of Lebanon has appealed to Pres. Bush to use his moral authority to stop the renewed fighting in Beirut. The White House said that Lebanon's Ambassador, Abdullah BuHabib delivered a letter to the President appealing for help in removing Syrian troops, as Lebanon's 13 year old civil war rose to a new pitch of savagery. More than a hundred people have been killed in this month in battles between Muslims and Christians and today a hundred thousand people had to be evacuated from their homes because of a fire at a fuel depot set off by artillery. We have a report from Beirut by Brent Sadler of Independent Television News.

BRENT SADLER: The colossal spirals of smoke from East Beirut's burning fuel dumps have hung over the Lebanese capital all week. A toxic cloud is spewing from the infernos of melting oil and gas tanks which raged out of control and exploded onto the city. After the massive artillery bombardments on these Christian areas, the scale of destruction is vast with one neighborhood literally ripped apart. People are battle wise after 14 years of civil conflicts and they sheltered underground to survive the blitz.

MR. MacNeil: In South Lebanon, leftist Palestinians and guerrillas claimed responsibility for attacking an Israeli patrol. The Israeli army said the patrol killed two gunmen but suffered no Israeli casualties. One of those claiming responsibility was the Popular Front for the Liberation of Palestine led by George Habash, who objects to the more moderate line taken recently by PLO Leader Yasser Arafat.

MS. WOODRUFF: A Moslem fundamentalist group in Lebanon today claimed that it was behind the murders this week of two Moslem leaders in Brussels. The group, which calls itself The Soldiers of Justice, said in a statement that it had carried out God's verdict on two traitors. In recent broadcast interviews, the Brussels Imom had criticized Iranian Ayatollah Khomeini's death threat against British author Salman Rushdie. The Imom and his aide were murdered on Wednesday inside the Brussels mosque.

MR. MacNeil: There has been another earthquake in Soviet Armenia in the same area that was devastated by the quake in December. It hit last night near the towns of Leninakan and Spitak, which were severely damaged in the last quake. Nobody was killed this time, but many buildings were destroyed. Also in the Soviet Union, there was another attempted hijacking today, the third such attempt in the Soviet Union this years. A man who the Soviets said was a on a police wanted list got on a plane and threatened to blow it up unless he was given $855,000 and flown to Pakistan. According to the Soviets, KGB agents got on board and arrested him with no injury to passengers and crew.

MS. WOODRUFF: Back in this country, more bad news on the savings & loan front. Federal regulators today seized control of the tenth largest S&L in the country, Gibraltar Savings in Beverly Hills, California. A spokesman for the Federal Home Loan Bank Board said although the institution was not insolvent, its executives were operating it in "an unsafe and unsound manner and dissipating their assets" said to total more than $13 billion. That's it for the summary of the day's news. Just ahead on the Newshour, Venezuela's President, Gergen & Shields, rate wars at some savings & loans, playwright Marsha Norman, and Roger Rosenblatt on Soviet voting. NEWS MAKER

MR. MacNeil: First tonight we have a News Maker Interview with the President of Venezuela, Carlos Andres Perez, a key player in efforts to solve the debt crisis in Latin America and the tensions in Central America. Venezuela recently felt the explosiveness of the debt problem when riots erupted in major cities. When rioting broke out in Caracas at the beginning of the month, the violence came as a surprise to many Venezuelans and to Latin American experts. The country has been among the most stable in the region, with a history of 30 years of elected government and the highest per capita income on the South American continent, but lately the country has been in an economic vise. The immediate cause of the rioting, which led to the deaths of more than 300 people, was a government imposed increase in fuel prices. The price hike was required as part of an austerity program ordered by foreign creditors. In the 1970s, Venezuela's economy was boosted by its oil wells and high OPEC crisis, but the oil boom helped create the economic problems that led to the rioting. The country started borrowing billions from foreign banks to build things like steel mills, but when the oil boom went bust, Venezuela had amassed more than $30 billion in foreign debts and it could no longer pay. That was the situation confronting Carlos Andres Perez when he became President in February in one of the more lavish inaugurals in South American history. For Perez, it was the second time to hold that office. He was President during the boom years of the 1970s and memories of those times helped return the populist socialist leader to power. The collection of foreign dignitaries was no surprise. Perez has always been active on the world scene and in Latin American diplomacy. He supported the Sandinista Revolution against the Samosa regime in Nicaragua and played a middleman role in the negotiations that led to the 1978 Panama Canal Treaty between the U.S. and Panama. Already, in his new Presidency, Perez has played an advisory, behind the scenes role in the recent Central American peace talks. He has managed to maintain good relations with both the left and right and some Central Americans said he was the key to the latest peace plan. This week, Perez is in the United States. He met yesterday with two former Presidents and Secretary of State James Baker to begin talks on how to ease Venezuela's debt load. Tomorrow he will be the first South American head of state welcomed to the White House by President Bush. I spoke with him in New York this morning and asked how his country's debt crisis threatens his democracy.

PRES. CARLOS ANDRES PEREZ, Venezuela: [Speaking Through Translator] The decade over the 1980s was the great decade of democracy in Latin America, but then there is also a contradiction in that because there was a development of political life and democracy in the continent and at the same time there was a growth of economic crisis. The countries became poorer and their people became poorer and they started to question very often democracy. Our people are becoming much more mature now and we also are willing to mend our mistakes. After all, if we were to solve our debt problem but wouldn't have any reforms put into effect, the results would be nil, and so we are willing to make all these reforms possible. But if we have to use the money we have to pay our debt and cannot use it for social programs, then we won't be able to get any results.

MR. MacNeil: Does the U.S. Government, in your view, now fully appreciate the gravity of the debt crisis?

PRES. PEREZ: My talk with Pres. Bush when he was still President- Elect and the talks I had yesterday with Secretary of State Baker leave a clear impression to me that the American Government is now clearly aware of the problem and acts in good faith and I believe that the public and the United States perhaps does not know that the great trade deficit you have is due to the weakness of the trade between your country and our country. If our nations were able to buy now what we used to buy from you in the 1970s, the deficit would be much smaller.

MR. MacNeil: The suggestions made to reduce the debt burden by Treasury Sec. Brady have talked of a debt burden reduction of about 20 percent. You, Venezuela, Mexico, have said 20 percent not enough, need 50 percent. Why does Venezuela need a 50 percent reduction of its debt burden?

PRES. PEREZ: Because we have paid already so much and because the interest rates are so high and 20 percent is not enough for us to solve our problems. We have, furthermore, no flow of capital that comes into our country. We continue to be net exporters of capital and grow ever poorer, so we believe that the banks have really recovered a large part of our debt. It is not fair for us to get a reduction under 50 percent. And I must say it is not that we do not want to pay; it is just a matter of justice and a matter of needing to grow enough so as to bring well being to our economy, so if this is not restituted, we will not be able to continue buying from the United States and we will both suffer, both Latin America and our countries.

MR. MacNeil: How close are you to negotiating Venezuela's part of the Brady plan?

PRES. PEREZ: The Brady plan is an excellent initiative and it is very much in agreement with what the Latin American countries had proposed in this respect, so we are satisfied with the Brady plan, but we believe that it really at the present time doesn't have any operational mechanism, and so this is why we are afraid that it might be delayed and that the same would happen to it as we saw happen to the Baker plan. It was the first good initiative in this respect, and yet it wasn't, it hasn't been implemented. We are sure that we will benefit from it, and when I say this, I mean not only Venezuela, but only Latin America, because we cannot just solve the problem of Venezuela by itself. We believe that we have to solve the problem of the entire region.

MR. MacNeil: So you do not believe you are close to negotiating an arrangement for Venezuela, there being no mechanism to implement the Brady plan yet. It is still some way off, is that correct?

PRES. PEREZ: Time runs against us. It is indispensableto implement the plan as quickly as possible. The situation is so serious that I believe that our American friends haven't forgotten what they have seen on the TV screens about the dramatic Caracas events lately. These events were not brought about by any professional agitators or guerrillas or extremists. No, this was the result of the action of poverty, of the poor people in our country, and the results of the last five years when our country has had to devote over 50 percent of our export earnings to the repayment of our debt.

MR. MacNeil: If you got what you wanted, a 50 percent reduction of your debt burden, in effect, $15 billion was written off, and for the banks, the remainder of the money was guaranteed with International Monetary Fund funds, why wouldn't Venezuela and other South American countries say why bother repaying the rest of the debt, the banks would be guaranteed, why should we repay the rest, wouldn't this be a first step to writing it all off?

PRES. PEREZ: I believe this argument to be apparently impressive but naive. After all, our economies are not national anymore. There is no national economy as such. All of our economies are global. There is an ever growing inter-dependence, economic inter- dependence in this world. What would happen if Venezuela were to stop paying, we would just be ruined, our trade would be curtailed, our oil carriers would be embargoed, we would not get foreign investment that would enable us to continue developing our natural resources, and besides, this reduction is no gift; it's simply good business, because it will allow our economy to continue to grow again and become good markets for your products.

MR. MacNeil: Turning to Central America, what do you think of the Bush administration's change in emphasis on the Contras and the Sandinistas?

PRES. PEREZ: Well, this is really what we were asking for. When I spoke to President Bush when he was President-Elect, this is what I emphasized to him, because I said that we believed that past policy, American policy, had already been proven, and it was proven that the results were not as expected, so that now it was natural that there would be in a good faith a kind of turn, slight turn of the same Republican Party and its policies.

MR. MacNeil: Mr. Baker asked you yesterday to put some pressure on the Sandinistas to keep their promised reforms on schedule as the Contras are disarmed, demilitarized in Honduras. How did you receive that suggestion? Are you going to do that? Are you confident the Sandinistas are going to keep to the timetable?

PRES. PEREZ: I believe that now this new policy allows for the United States to work in a dramatic way without any warlike pressure, and also for Latin America to influence also more in the situation. After all, we do not want to have a Communist regime in Central America and Nicaragua, we want to have democracy develop there, and I believe frankly that the Sandinistas are responding and we Latin Americans must be with them on their side so that we can cooperate towards having them respond more fully and also criticize them if they do not do so. And I have great confidence in the U.S. working in this respect.

MR. MacNeil: Do you have confidence in the Sandinistas fulfilling their promises?

PRES. PEREZ: I believe that now they are on a good course, especially now that they do not have the pressures existing in the past that made them radicalize their position, and the first good sign of it is the freeing of the 1800 Samosa guards.

MR. MacNeil: Mr. President, thank you very much for joiningus.

PRES. PEREZ: Thank you very much for giving me this opportunity to have this dialogue with the people of the United States. FOCUS - GERGEN & SHIELDS

MS. WOODRUFF: A look at the week's political events with analysts David Gergen and Mark Shields is next, but first, Pres. Bush did some summing up of his own today at the White House when he met with a group of regional editors. Among the topics was the administration's agreement with Congress to provide non-military aid to the Contras opposed to the Nicaraguan Government. The President was asked if he felt the Reagan administration's military support for the Contras had failed.

PRESIDENT BUSH: The Reagan policy brought the Sandinistas to the table, and I think had there been no pressure, the Sandinistas would have gone about their merry revolutionary ways without keeping their commitment to the Organization of American States, a commitment for free press, you know, freedom of worship, democratization if you will. So I think now the problem we had is you go to recommend aid and if you have a different foreign policy set on Capitol Hill. Now we're saying in my own view is there was no way, not a snow ball's chance in hell of getting a dime for lethal aid, military aid from Congress, and I think anybody that's familiar with Congress would acknowledge that.

MS. WOODRUFF: The President was also asked whether the Alaska oil spill had changed his support for further oil exploration.

PRESIDENT BUSH: We are becoming increasingly dependent on foreign oil and that is not acceptable to any President who is responsible for the national security of this country, so what we will do is not go backwards. What we will do is redouble every effort to provide the proper safeguards, and I think most people are reasonable enough and fair enough to look back at the record over the years in terms of the pipeline and found that there had been very little damage, if any. Certainly there's been no lasting environmental damage. The logical suggestion would be, well, shall we shut down the Gulf of Mexico, shall we shut down the oil fields off of the Coast of Louisiana, because of this, and the answer would be no, that would be irresponsible. So what you do is do the best you can, express the genuine concern that you feel on the environment, and I do feel a concern, but not take irresponsible action to guard against an innocent of this nature.

MS. WOODRUFF: Near the end of the session, Mr. Bush was asked to list his two favorite former Presidents.

PRESIDENT BUSH: First, I'd make a point that everybody looks better over time. Herbert Hoover looks better today than he did 40 years ago, didn't he? Not to you, but a lot of people they do, they remember the compassionate side of the man. You couldn't even talk about that thirty/forty years ago.

SPOKESMAN: Is he your model?

PRESIDENT BUSH: t I was trying to make the point that time is generous to people. I have great respect for Eisenhower and he brought to the Presidency a certain stability. Others may have had more flare, but he, and he presided, I will concede to you, I take it you're astute at history, in fairly tranquil times. You know, you can't live in this house and do as I do, have my office upstairs next door to the Lincoln bedroom in which resides one of the signed, handwritten copies of the freedom doctrine that will live forever, the Emancipation Proclamation, right there in our house, so I think all of us, I think almost all Americans put Lincoln on that list some place.

MS. WOODRUFF: Now to political analysts Gergen and Shields.David Gergen is an Editor of U.S. News & World Report Magazine. He joins us tonight from public station WXEL in West Palm Beach, Florida. Mark Shields is a columnist for the Washington Post. First of all, gentlemen, any surprises in the President's kind words there about Herbert Hoover and other Presidents? David.

DAVID GERGEN, U.S. News & World Report: No surprises from this end.

MS. WOODRUFF: Mark.

MARK SHIELDS, Washington Post: Well, I thought he mentioned Harry Truman. Didn't he mention Harry Truman at one point?

MS. WOODRUFF: He did.

MR. SHIELDS: Harry Truman is every Republican's favorite Democrat and he's every underdog candidate's favorite President, so Harry Truman occupies, even though he left office with a lower job rating than Richard Nixon did before Watergate.

MS. WOODRUFF: Let's talk about the oil spill. Is the Bush administration right, Mark, in deciding not to take over the cleanup, and is the President right in saying he's going to continue to support oil exploration?

MR. SHIELDS: Well, I think the President is going to have a little tussle on his hands on continued exploration. I think there'll be a move in the Senate, and I'd be willing to predict that Sen. Tim Wirth, Democrat of Colorado, if nobody else does, will offer an amendment to the further study of the wisdom feasibility of that exploration. But as far as the President is concerned, I am waiting for the action statement, coming down the Coast Guard who had been sent up to Alaska to inspect it by the President, came back, said it was absolutely deplorable what the tanker, had happened to it, it was 10 miles wide, any of our children could have driven the tanker through there and yet the company is in charge of the cleanup. And I was waiting for the action statement to take charge of this and say that we will assume responsibility and be in control.

MS. WOODRUFF: David, should the President have been more aggressive, assertive on that one?

MR. GERGEN: Well, Judy, I think the federal government as well as Exxon and the state all bear a heavy responsibility on blame, frankly, for the activities leading up to this event, because clearly they weren't prepared and clearly, as the environmentalists and fishermen and others have said, an accident like this was bound to happen at some point. We were assured there were going to be plans, the federal government was supposed to be monitoring it and yet it was clear plans were not in place. There was no emergency action plan ready. Now as to the cleanup, I've been asking that question here recently of various people, and as far as I can tell, the environmental movement does not expect the federal government to step in and clean this up. It's not clear what the Feds or anyone else can do at this point. It may be unfortunately that Mother Nature has to do most of the cleanup itself. I do think that Mark is right on this one point. There are conflicts now that are come between the environmental movement and the Bush administration, particularly on the arctic national wildlife refuge, which the President wants to go full scale on exploration. He had momentum on his side in the Congress. That momentum is now clearly going to reverse and he's going to be blocked on that for a while and I think he will be at odds with the environmentalists over that issue in the months ahead.

MS. WOODRUFF: But is he smart to stick to his guns at this point?

MR. GERGEN: Well, I think it's important to realize that that is potentially the largest new reserve of oil in America. And even the New York Times this week which has been, had a very strong pro environmental record in its editorial pages, said Alaska was too important not to explore. So I think that reasonable people can disagree on this. I think we should look at it very very hard and I think we ought to explore it.

MS. WOODRUFF: Let's talk about some politics that happened this week. We had a House special Congressional election held in Indiana there, the Democrats won, they weren't expected to win. What's the significance of this, Mark? Is there any significance in this one race?

MR. SHIELDS: Is there? Judy, when the Democrats won a seat in Indiana, Indiana, there isn't a more reliably Republican state in the union. Indiana has voted once Democratic in the past fifty- two years at the Presidential level. This is the most solidly Republican Congressional district. There were representatives like Dan Quayle, Vice President, in the Congress where no Democrat in the decade had gotten over 39 percent and the Democrats won. Is there a national pattern? No, there's no national pattern but it certainly throws a hell of a monkey wrench into the plans. Good friend Ed Rollins who ran Ronald Reagan's successful campaign in 1984 to take take over control of the House in 1990, to put Jim Wright and the Democrats on the defensive. What it left was it left the Republicans embarrassed, as Lee Atwater, the Republican National Chairman, Ed Rollins frankly admitted the next day after the shock had worn off, and it left the Democrats relieved, not that any national pattern had set in, but, in fact, that they had dodged a bullet, that the Jim Wright scandal or ethics investigation was not haunting or hurting Jill Long, the Democratic nominee there.

MS. WOODRUFF: David, were the Republicans embarrassed in that race?

MR. GERGEN: They were embarrassed. I might disagree with Mark on one point. Indiana has been moving more toward the Democratic column. The state legislature, as you know the House there is now tied among Democrats and Republicans. It was for a long time a Republican state but it has changed its coloration. Nonetheless, this was an embarrassment. As Lee Atwater said, it was a shame. I do think, Mark, there may be some national significance on some point. Jill Long, the Democratic woman who won that race who lost by 50,000 votes this last fall in the same race against a different candidate, you know, she ran an anti-tax campaign. I think that's going to give ammunition to people around Bush when this comes up on the budget to say, Mr. President, Jill Long proves that you ought to stick to your guns on taxes. I think it's going to make it harder to get a long-term budget agreement.

MS. WOODRUFF: Mark.

MR. SHIELDS: Just one quick rejoinder. I wouldn't argue with that point that David made, but this kind of puts a little bit of -- pricks the bubble of the redistricting magic that supposed to restore the Republicans to the domination of the legislative chamber in 1990. In 1980 after the last census, the Republicans controlled Indiana totally, lock, stock and barrel, and they sat down and they drew districts that they thought were going to be 7 to 3. They controlled the legislature, the governorship, 7 to 3 Republican. They miscalculated one seat, and that was Phil Sharp, a Democrat, held on, so it was reliably 6 to 4 heading into the '80s. Since then, three Democrats have won the seats that were held by Republicans. The Congressional district that hasn't been changed since 1981 is now 7 to 3.

MS. WOODRUFF: So what's the significance?

MR. SHIELDS: Well, I think the significance is that consistently the Democrats get better candidates. I mean, they've won those races not on any national tide or ideas or issues that I can see, but they've had better candidates than Republicans.

MS. WOODRUFF: But they still win the White House. Let's talk for a moment about Boyden Gray, David, the President's counsel, who surprised a lot of people last weekend when he raised some questions, some criticism, about the deal the administration had struck with Congress over non-lethal aid for the Nicaraguan Contras. What's behind all that?

MR. GERGEN: I'm sure Boyden doesn't like us talking about that. I think he feels that the issue has been blown out of context. But I have to tell you. I was shocked. This was a man who got in trouble only a few months ago, when he was serving as counsel to Jim Baker, who was his client, then apparently went to the press to talk about his questions of conflict. One never hears of a lawyer -- that's unethical by the normal standards of the law and I think everybody understood that that was inappropriate, so to step out again against Jim Baker to me was extraordinary. He is going to keep his job. He's very close to the President, but I think the man who has wound up being hurt by this unfortunately is Boyden.

MS. WOODRUFF: Is this a sign of squabbling, of bigger problems within the administration, or is this just an isolated --

MR. SHIELDS: I will leave it to David. I think that one of the problems that the administration continues to have is that we're dealing with a problem a week. The agenda is not being set by George Bush. We're talking about an oil, an environmental tragedy in Alaska this week, it's savings & loans last week, and next week it's atomic energy, there really isn't an agenda, so in the absence of that, what you have is you do have squabbling because there isn't an agreed upon set of marching orders, and I think that remains a problem for this administration.

MS. WOODRUFF: All right, David, you get a chance to respond next Friday.

MR. GERGEN: All right, but he's right.

MS. WOODRUFF: Have fun in West Palm Beach, David.

MR. GERGEN: Thank you.

MS. WOODRUFF: David and Mark, thanks for being with us.

MR. MacNeil: Still ahead on the Newshour interest rate wars in Texas, the perils of the Pulitzer Prize and a Rosenblatt essay. FOCUS - SAVINGS & LOAN RATE WARS

MS. WOODRUFF: Next tonight an update on the savings & loan crisis. Today government regulators took control of the nation's tenth largest thrift, Gibraltar Savings in Beverly Hills, California. A government spokesman said Gibraltar was run in an unsafe, unsound manner that included offering high rate funds to attract depositors. California is not the only state where S&Ls go to great lengths to bring in customers as a recent rate war in Texas shows. Dan Gifford of public station KUHT in Houston has more.

DAN GIFFORD: Money brokers like these at Union Planter's Houston Office have become the life blood of banks and savings & loans. They're the little men and women who bring big investors wanting high interest rates together with lenders paying the highest rates. Interest rates are already moving up because of Federal Reserve policy to fight inflation. In addition, newspapers are full of ads run by failed or troubled banks and thrifts touting high interest rates that reflect a bidding war to attract cash deposits. Some banks and savings & loans need new deposits to replace record numbers of withdrawals. Others need money to make new loans, but most need money to pay their bills.

KEN WARD, Money Broker: They have to have the money. It's not a question of choice or whether they're going to be able to go another six months without having to pay the highest rates possible. They have to have this money to make up the short fall between operating income and operating expenses.

MR. GIFFORD: In Houston, early in February, Banc Plus Savings opened the latest round with a 10.1 percent offer for six month certificates of deposit, more than 1/2 percentage point above the national average. Across town, University Savings matched that with 10.1 percent of its own. Down the road, Commonwealth was only offering 9.6 but raised the stakes to 10 1/2. University Savings balked at going higher and dropped out of the race. Finally, Banc Plus and Commonwealth were neck and neck at 10 3/4, about 2 percent higher than any other six month CD in the country. Those particular rates weren't for the average saver. They were only available to big depositors through money brokers. Ken Ward says investors like that shop around for the best rates.

KEN WARD: Well, they don't have much in the way of loyalty. I hate to use the term, but there are those people out there that are somewhat yield whores and they basically are people that they go wherever the rates are the highest.

MR. GIFFORD: The place offering the highest rates can change from day to day, even hour to hour. Last month's highest rates were at Banc Plus and Commonwealth. Both have huge mortgage subsidiary operations and need to raise cash each month to make up for late homeowner payments. Even more money was needed than usual last month since cash also had to be set aside for property tax payments that thrifts make on behalf of their mortgagees. That combination together with an already tight credit market sent rates much higher than usual. Once the monthly funds were raised, both places dropped their rates. Insolvent banks and thrifts are trapped in a vicious spiral of interest rate hikes. Most of them don't have enough cash to pay off large depositors that might want their money, so they continually have to raise their rates to keep people from pulling out their money and going to the competition, but that creates another problem. Most of them don't have enough money to pay the promised higher interest rates, so they have to attract more deposits, but attracting more deposits means raising their rates still further. All that interest rate hike activity raises the rates for everybody, because banks and savings & loans compete for funds from all over the country. Many say that spiral even continues when government regulators like these move into a failed institution and take over day to day operations. Sam Pierce is a Houston-based bank and savings & loan consultant.

SAM PIERCE, Savings and Loan Consultant: They're really not there to see to it that they make a profit. They're in a custodial capacity, which oftentimes means an informal liquidation. But they're still in the market place competing in terms of rates and loan products.

MR. GIFFORD: That competition forces healthy institutions like Lee Stein's Texas Capital Bank to raise their rates or forgo big deposits.

LEE STEIN, President, Texas Capital Bank: We have large customers that come to us and if we are not able to pay a higher interest rate, then we lost that customer. The situation is very critical in the, you know, particularly in the S&L industry. It's confusing to the customer, it's confusing to the bankers as to what should be done, but the sooner they can close the institutions that are insolvent, the better.

MR. GIFFORD: Congress hasn't come up with the money needed to pay off insured deposits at failed institutions. Until it does, Stein and others are forced to play interest rate leap frog. Also, some failed institutions never will be closed simply because they're too big. Last summer, NCNB Texas National Bank right over here behind us, which is mostly owned by the Federal Deposit Insurance Corporation, started a lost leader program to lure new customers. It paid high interest rates on some deposits, but didn't charge enough on loans to make a profit. What's more, because of the feared chain reaction this bank's failure might have on the entire country's financial community, the FDIC considered this bank too big to be allowed to fail, so for all practical purposes, all deposits no matter how large were 100 percent federally insured.

LEE STEIN: It is creating somewhat of an unfair competitive situation where you have somewhat of a direct intervention by the government in free enterprise whereby the government owns 80 percent of an institution and yet still permits higher interest rates to be paid on time deposits than what's really necessary in the market place.

MR. GIFFORD: Holding back unfair competition at federally controlled lending institutions is the priority of the new Acting President of University Savings. He is Nick Ketcha, New York Regional Director for the Federal Deposit Insurance Corporation. Ketcha and the FDIC's auditors and management team are now calling the shots at University Savings as part of the Bush administration's rescue plan. Ketcha says avoiding unfair competition is high on his list.

NICK KETCHA, Acting President, University Savings: Well, from the agency's standpoint, we're hopeful that as we get more institutions into the conservatorship program, we'll be able to exercise that influence upon the decision making process within there to hold the rates down.

MR. GIFFORD: Ketcha says when University Savings started raising its interest rates recently during the Banc Plus/Commonwealth competition, he ordered bank officials to pull them back.

NICK KETCHA: Back up. It's a little misinterpreted in terms of some people that were at the desk, that when the other rates went up, there was a feeling that maybe they could go up but stay below that. As soon as that was brought to my attention and to senior management's attention, we sat down and we said, wait, we're not going up after those rates and we pulled our rates back.

MR. GIFFORD: Manuel Mehos, Chairman of Houston's Coastal Bank Savings, likes what he's hearing from the FDIC, but believes actually reining in rates will actually take longer than most expect.

MANUEL MEHOS, Chairman, Coastal Bank Savings: Even if all thrifts, all insolvent thrifts, were solved or resolved in one year, which they won't be, if they were, it still will have some kind of echo effect and it will take a couple of years.

MR. GIFFORD: Failed thrifts like this will continue to keep the pressure on interest rates headed up until Congress votes the money for a bailout. The longer that takes, the more it's going to take the taxpayers who will ultimately have to foot the bill. CONVERSATION

MR. MacNeil: Next tonight a conversation with a prize winning playwright. The 1989 Pulitzers were announced yesterday, bringing joy, fame and new career opportunities to the winners, but it doesn't always work quite that way. Arts Correspondent Joanna Simon talked to playwright Marsha Norman who won a Pulitzer in 1983 for her play "Night Mother".

JOANNA SIMON: For most playwrights, winning the Pulitzer Prize would be a dream come true, but for Marsha Norman, it nearly turned into a nightmare. Norman was only 35 when she was awarded the highest honor of her profession. The year was 1983, the play "Night Mother", a searing drama about her mother's futile attempts to prevent her daughter's suicide. Despite its controversial subject matter, "Night Mother" became an instant classic. The critics acclaimed Norman one of the most promising playwrights of her generation and she assumed that the Pulitzer guaranteed future success, but she was bitterly disappointed. Although the four plays she had written before "Night Mother" all had been warmly received, the drama that followed the Pulitzer, "Traveler in the Dark", was savaged by the critics. Norman says the reviews were so brutal she contemplated leaving the theater altogether.

MARSHA NORMAN, Playwright: There are times when I felt that the criticism of a particular play was so brutal that it was criticizing me, not the play, and in fact, there have been critics who have said, she is a terrible person who has written this awful play. The joke is among us that what you should do when we sort of advise Pulitzer winners to hire someone else to write that next play after the Pulitzer, get it on the stage, get it shot down fast, and go up, so you can go on with your life, because there does seem to be in some cities some anger on the part of critics about the fact that you have won the Pulitzer Prize. They wish it had been them and they don't see why it was you because you certainly can't be as smart as they are.

JOANNA SIMON: Norman came to regard the Pulitzer Prize as the biggest curse of her life. She retreated from the spotlight and made a number of personal changes. She married for a third time and age 40 had her first child, a son named Angus. Her husband, artist Tim Dykeman, then encouraged her return to the theater, so she went ahead with an idea that had long intrigued her, a play about how a marriage endures. She based it on the longest running marriage of all, the 104 year old biblical union of Sara and Abraham. [SCENE FROM PLAY]

MS. SIMON: Having been devastated once by criticism, Norman is now taking precautions. When Sara and Abraham was performed recently in Louisville, the critics were banned. She is now involved in a private workshop production which has allowed her to experiment with new ideas for the play. She's rewriting at a beach house on the Eastern end of Long Island, New York, where she's obsessed by the sight of the ocean and finds it a constant source of inspiration.

MARSHA NORMAN: It's all out there, wild and formless, and a lot, I think that's the thing you can't help but know about the ocean, that, you know, this is not a static creature here, this is a living thing.

MS. SIMON: Let's back track a little in terms of your life. What was it like growing up in Louisville?

MARSHA NORMAN: It was very isolated. Mother had the idea that there weren't any kids around that she wanted me to play with, so I read, I studied the bible, and played imaginary games, had imaginary friends. It was the kind of perfect upbringing for a writer, although at the time when I was an adolescent, I thought it was a terrible way to grow up.

MS. SIMON: Did you think you wanted to rebel against this upbringing, or was this just the way things were?

MARSHA NORMAN: I was terribly rebellious. I was a silent rebel. I perfected the smile behind which was this incredible anger, frustration and confusion, so I didn't go storming around the house, telling everybody what fools they were. I just went aroundthe house smiling and thinking to myself what I would be saying if I weren't smiling. And, of course, there again this is what writers do. I mean, writers imagine what they might say in a situation. I think I really lived my whole childhood in a kind of training for dialogue.

MS. SIMON: How did you get from sitting at home and silently rebelling against your upbringing to actually putting it into writing?

MARSHA NORMAN: I came out of college with a philosophy degree and couldn't do anything so I spent some time teaching at a state mental hospital because they were the only people who would hire me, and what I learned there was that people are trying to survive. Whatever they are doing, however odd it may seem to you or how destructive it may seem to you, they are trying to find a solution to the problems of their life, so I think whatever writers can do in terms of saying, well, single individuals one at a time are understandable, this is comforting to people. I think you go to the theater to have that experience of understanding why somebody did what they did. It seems like a small thing but it's very rare in life that you have that experience, freely understanding why someone has taken the course that she has.

MS. SIMON: What do you consider your individual voice as a writer? What do you want to say?

MARSHA NORMAN: I don't know that I'm saying anything in any kind of instructive way or a moralizing way. I don't think the audience comes to the theater to hear what I had to say. I think they come to hear who I've found that I think they should know about. It think that it's part of our job as writers to nominate for permanent memory some characters we have known, some of those characters the world will take up and remember. "Jessee and Mama", for example, will be known for all time I think. It's clear that they've been accepted into the Hall of Fame. [SCENE FROM PLAY]

MARSHA NORMAN: Jesse pronounced herself guilty, of being inept at life, as if nothing ever worked. Everything she touched seemed to turn out badly, so that killing herself was the solution to the problem of being alive that she sought, that there wasn't anything that she could do short of that that would actually work. [SCENE FROM PLAY]

MARSHA NORMAN: There were a number of people in my life who have killed themselves, people I had gone to school with, you know, people, just too many people. I wanted to know why they did that, so, you know, I realized finally that I think I had to write it, and I remember just crying, you know, a terrible sort of sobbing, yes, okay, as if someone were standing over me saying, you're going to write this and you're going to write it right now and you're going to write it straight and you're not going to dodge any of the issues. That's why "Night Mother" has had the great life that it's had is that we've all had this tragedy, we all know about this, and it was given to me to write about it, but, in fact, it's the world over.

MS. SIMON: When you say it was given to you to write, who gave it to you?

MARSHA NORMAN: I don't know, and yet it is one of the things that writers are most driven by is this, somehow the sense of assignment, this is mine to do. I didn't imagine it; I didn't think it up; I didn't discover it but it came to me. I mean, you'll hear writers say that all the time, it came to me. I don't know where it comes from.

MS. SIMON: When you sit down to write a play, do you know exactly how things are going to work out, what form it is going to take?

MARSHA NORMAN: Form is very important to me. It's only thatcombination of form and content that allows for truly theatrical experience. "Night Mother", for example, is not the story of someone who killed herself. It's a story of a woman and her daughter on a night in real time, fighting this heavyweight battle for the daughter's life, so it's that structure. "The New Place", Sara and Abraham has a very serious structural component. It's a theater company improvising its way toward the final production that you see on the stage, and it's about the deterioration of a relationship, so yes, we'll follow the bible story, but we won't really be thinking about that. Who we'll be watching is Kitty and Cliff, these actors. There's this kind of click in the audience when suddenly people know what's going on and they love it. They think, look, we're seeing the true life story of this couple. [SCENE FROM PLAY]

MARSHA NORMAN: I'm working now in the second act because I really underestimated the audience in the blow by blow destruction of this marriage. I really thought that the audience would not want to see that and yet, as I watched the play play down in Louisville, I realized that people only wanted more and more and more. They wanted to know exactly what awful thing was going to be said next and where was the really terrible end. The audience is just, they're just desperate for it, they just love it, they just really love watching this happen. Can you imagine?

MS. SIMON: Isn't it interesting that you're writing about a separation when your own life is reaching such personal fulfillment?

MARSHA NORMAN: I've had a number of lives. In fact, I had a life in Louisville with some talent but not of defined quality. Nobody knew quite how I might be talented but it seemed that I was sort of funny and smart and those were good signs, so I had that kind of invisible life. And then I wrote "Night Mother" and then suddenly it was on every magazine, so now I'm back invisible again, have moved to the beach, which has been a life long dream to live at the sea. I don't know whether what comes after this is, what I do here is make myself visible again. That certainly seems to be the conclusion you'd draw based on this little tale, but I know that this life feels the best of any that I've lived. ESSAY - MINDS OF THEIR OWN?

MS. WOODRUFF: Finally tonight, our regular essayist Roger Rosenblatt, Editor of U.S. News & World, has some thoughts about the new thinking in the Soviet Union.

ROGER ROSENBLATT: Can an entire nation change its mind? That's what's happening in the Soviet Union these days, a wholesale reconstruction of thought due to the open expression of ideas under glasnost. The country just experienced the first relatively free election for Parliament. The election is but the latest of expressions of freedom of expression in the last four years. Dissidents have been released, the most prominent Andrei Sakarhov, becoming one of glasnost's leading advocates. Once banned authors such as Pasternak, Nabakov and most recently Soltsinetsen are eagerly read in books and magazines. Painters and playwrights forbidden under Stalin and Brezhnev, now have their work shown to great public enthusiasm. History is revised, the murder and brutality of the Stalinist period revealed, the law much freer, the schools much freer, the church once an anathema to the state now actually sends representatives to the Supreme Soviet. So the Soviet mind opens but also with extreme caution. The same glasnost that breeds free theater also urges nationalistic uprisings in the outlying republics. On February 28, 1988, an estimated300 people died in Azerbaijan. In March 1988, a nationalistic demonstration in Yerevan, Soviet Armenian's capital, was contained only by the presence of soldiers and the KGB. Last September, the Estonian Supreme Soviet, the republic's legislature, asserted its right to veto Soviet laws. Eruptions give birth to counter eruptions. Xenophobic Russian nationalists clash with ethnic nationalists. Pro Stalinists clash with the revisionists. Teachers, clergymen, politicians are afraid of freedoms run amuck. A school principal asks what should you make on the altar of a broken idea? Glasnost has made its promises, but perestroika shows realities and the realities are grim. So far, the reconstruction of the Soviet economy has done next to nothing to affect vast poverty in the rural regions. Disastrous health care, air pollution and water contamination in practically every city, a potentially rich agriculture hopelessly clogged by bureaucracy. In 1988, the Kremlin reported the worst grain harvest in years. Housing is a mess. Families share bathrooms, kitchens. Crime is up. One looks with amazement at this country with the military power to crush the world and then focuses on the lines outside of stores, on line for nothing. Among the points of hope and fear and disappointment, the Soviet mine reconstitutes itself. After a thousand years of emperors and czars and dictators telling it exactly what to do, the mind of the country is learning to think for itself. The strain may be in the mind, but the faces look suddenly free, free of the old fears, free of the past, free even of the Communist Party and Gorbachev, himself. What would it look like, this new Russian mind? Not American, that's for sure. Something entirely its own, balanced between an historic stoicism and the occasional instinct for upheaval. Soviet citizens who for so long have led two faced lives, one face shown the state, the other to the inner life, are now perhaps for the first time learning to form a single integrated personality. The adjustment is hard. Before they could either hide from the government or from themselves. Now they cannot hide at all. Can an entire nation change its mind? RECAP

MR. MacNeil: Again, the main stories this Friday, the Iran/Contra trial judge refused to order President Reagan to appear as a witness, saying Oliver North's lawyers had produced no evidence that Mr. Reagan approved illegal activities. The oil spill in Prince William Sound spread to the Gulf of Alaska, threatening an additional 600 miles of coastline. Good night, Judy.

MS. WOODRUFF: Good night, Robin. That's our Newshour for tonight. We'll be back Monday night. I'm Judy Woodruff. Thank you and have a good weekend.