The MacNeil/Lehrer NewsHour

for for for for for for for for for for for for for for for for for for further the good evening leading the news this thursday the fund that insures savings and

loans was reported in precarious financial condition of florida court convicted a colombian drug massive smuggling three tons of cocaine us on an official confirmed the twelve to fifteen thousand soviet soldiers died in the afghan war we'll have details and onion celery in a moment three word reviews in washington tonight after the news summary the potential crisis facing america's savings and loans is our lead focused after report from taxes will debate just how serious the problem is next what the government should be doing to prevent another stock crash joining us wendy gramm of the commodity futures trading commission economist milton friedman the american stock exchange is arthur levitt and discount broker muriel siebert finally essayist roger mudd on what michael dukakis means to greek americans below the news is the combining everything people like about telephones

with everything they make everything about information at mt funding is also provided by the station and other public television stations and the corporation for public broadcasting congress's one today the taxpayers may have to bail out the insurance fund for savings and loans because it is in precarious financial condition the general accounting office the auditing arm of congress reported that the federal savings and loan insurance corporation at s l i c had doubled its deficit last year and was now thirteen point seven billion dollars in the red red red wolf of the gao told the senate banking committee that the savings and loan industry could not rescue the fund we conclude that the eventual cost of restoring the prep industry to financial health are likely to exceed the fonz the physical have available in addition because of the distressed financial condition of a large segment of the industry it also appears unlikely that the industry will have the

resources to provide such comic consequently for congressional action may well be needed to obtain adequate funding the stock market was the subject of another congressional hearing today members of a house subcommittee criticize the findings of the white house panel which looked at causes of the october crash on wall street members of the telecommunications and finance subcommittee said the report did not recommend stronger steps to prevent a repeat of october nineteenth but members of the white house panel said the situation did not require drastic measures which could increase volatility one member of the panel testifying today was fed reserve chairman alan greens we cannot provide an ironclad guarantee that there will not be another october nineteenth in the future unforeseen economic forces could on their own conceivably trigger such an event if there are we succeed in fully address

its structural inadequacies of our financial markets we can at least reduce the interaction between economic and structural forces and thereby reduce the even now very small probability of a replay of last october the stock market which fell thirty five points yesterday seesawed today finally closing the game of seven points today the biggest foreign drug dealer ever brought to trial in the us was found guilty today of running a smuggling operation between colombia in the united states carlos later reversed was convicted by a jury in jacksonville florida of conspiring to bring cocaine into the us in the late nineteen seventies through an island in the bahamas called norman's key prosecutors and government witnesses portrayed later as a onetime new york street who would put together a vast cocaine smuggling empire after he was deported to his home country of columbia us attorney who

prosecuted the case told reporters he would recommend life in prison as the sentence president reagan said today he understood why george bush had split with him over efforts to remove panama's general noriega yesterday were said he would not bargain with drug dealers whether they're on us or foreign soil or he didn't mention or yeager with whom the administration is negotiating but his aides said that's what he meant in an interview with foreign tv journalists was to reagan appeared to suggest that porsche drawn an erroneous conclusion about the noriega dealings from youth leagues and rumors not from the white house was to read and went on to say that the talks with a panamanian general had nothing to do with the drug trade on another administration sore point there were more calls today for the resignation of attorney general edwin meese senate majority leader robert byrd a democrat said that if meets doesn't resign the president ought to do it for him earlier today former attorney general ramsey clark also called for mrs resignation in that same interview with foreign journalists the president said it was unlikely he and soviet leader gorbachev will reach

agreement on a long range missile treaty during their summit meeting in moscow but he said a strategic arms reduction treaty was possible before the end of his administration as to reagan was also asked about a recent book by is former press secretary larry speaks in which speak says that he made up quotations for the president at the nineteen eighty five geneva summit speech quoted mr reagan as telling gorbachev quote there is much that divides this but i believe the world breathe easier because we're talking here together actually i have to say he was not too far wrong with some of the things that were being said in earlier summit meetings i remember the general secretary and i together remarked about the uniqueness of our situation and that very possibly year between is a warren piece for the world there could be decided depending on what we did and i

remember also saying to him that i didn't think that we we distrust of each other because of our minds we were armed because we distrusted each other a group of senators proposed today that the war powers act the overhaul they said the current law which requires the president to notify congress when us troops are placed in danger is not working the new proposal would let the troops remain for an unspecified amount of time unless congress voted to remove them also re create it creates a group of eighteen congressional leaders who would meet regularly with the president on national security matters senate majority leader birds of the current war powers act doesn't work if i were president i think i would tell my nose at this legislation because it undermine the credibility of this country the dependability and sure footed that this nation no president can indicate any friend or foe with assurance that the

foreign policy of this country will be and that undergird by the motor for dissent within her a federal grand jury in st louis today indicted a missouri man for threatening to kill democratic presidential candidate jesse jackson a four count indictment was handed down against thirty year old mondello williams his wife tami was also charged on three counts which did not include the threat on jackson's life both are charged with possession of a rifle it was altered to make it automatic williams yesterday denied that he planned to kill jackson but acknowledged that he was prejudiced against anything that isn't white mr williams is said to have told a government informant about the jackson plot a day after the first soviet troops return home from afghanistan the soviet official gave the first estimate on the cost of the kremlin's involvement in the eight year war we have report by ryan hanrahan of the bbc i'm the withdrawal from afghanistan and not only the direct soviet involvement in the war people

until now have never spoken about casualties even the tombstone to that they are not thinking where they would kill soviet historian reviewing with integrity estimates that they think one of the lowest as being the most likely to be correct he suggested that the number of deaths would turn out to be between twelve and fifteen thousand that needs to be taken with a western estimates a hundred and three he felt uncomfortable with any time in vietnam united states lost fifty eight thousand men thought about hoffman in the committed of the height of the wars veteran us diplomat vernon waters will fly to syria tomorrow to try to win the release of nine americans being held hostage in lebanon walters who was the us ambassador to the united nations would not give any details about his plans but he said the trip was prompted by concern for the safety of the hostages while fierce fighting continues between rival factions and shiite muslim militia men in the

southern suburbs of beirut where the hostages are believed hell machine gun battles rage began today in the area and there are more casualties bringing the total over the past two weeks the two hundred and forty four dead and seven hundred and seventy two on one side of the syrian backed a mom alicia and on the other the iranian backed hezbollah group which are believed to be holding most of the hostages that wraps up our summary of the day's news just ahead on the newshour savings and loans in trouble preventing another stock market crash and greek americans in this election year our first tonight the savings and loan crisis as we reported earlier a top government investigator today said the savings and loan insurance fund which guarantees deposits of up to one hundred thousand dollars each in thousands of bridges nationwide is in precarious financial shape in addition frederick more of the

general accounting office testified the taxpayers may have to bail out the fund which is running a thirteen and a half billion dollar deficit he added that more than two hundred as unknowns around the country are hopelessly insolvent and that another four hundred and thirty five are barely a solvent failing threats are putting tremendous pressure on the federal savings and loan insurance fund yesterday federal regulators announced a record setting two million dollar bailout of for a bankrupt hacks of savings along the southwest has been particularly hard hit by the savings along crisis despite the best efforts of government regulators like the federal home loan bank board and the f s l i c destabilize the industry we have a report from byron harrison station wfae in dallas at the annual meeting of the ninth district of the federal home loan bank last month regulators tried to be optimistic but the problems

of trips in texas are daunting one hundred one of the state's two hundred seventy savings and loans aren't solvent and regulators have been working on the so called south west plan to merge and eliminate those institutions the governor of texas has been outspoken about the problem he's visiting washington this week to let his views be no i don't think anyone is satisfied that the plan is moving as fast as we'd like in dallas yesterday the federal home loan bank board announced the biggest merger yet under the southwest atlantic for prominent threats in central and west texas were acquired by southwest savings of dallas the ford acquired snl have a total negative net worth of more than nine hundred million dollars and as with many ailing texas address their problems lie in real estate portfolios of savings and loans here are riddled with tens of billions of dollars of loans and raw land shopping centers and commercial real estate as their loans have gone back taxes as unknowns have become some of the biggest

real estate voters in the state itself was savings which was the acquiring institution in yesterday's murder now has three billion dollars of commercial real estate on its books and as the wave of mergers year gets underway many have feared that a massive sell off of property will depress the real estate market even further regulators address that question there's no one son of the don properties the senator's dispose of them in an orderly fashion order was not the byword in the high flying days of texas threats from our savings which is now defunct after yesterday's merger rapidly to become the eleventh largest thrift in the state keeping it open was cutting the federal savings and loan insurance corporation more than three hundred million dollars a year yesterday's merger was thus very expensive for the federal savings and loan insurance on grassley has talked about that the two billion dollar assist and package now that's an estimate regulators still have to close or merge more than a hundred institutions in texas the cost of it all is still unknown

for more on the savings and loan crisis we talk to two key players congressman jim leach republican iowa as a member of the house banking committee and a strong backer of legislation to bolster the savings and loan insurance fund the opec is chairman of the us legal savings institutions which represents the nation's three thousand two hundred savings and long he's also chairman and ceo of the pioneers savings bank in rocky mount north carolina gentlemen the first question is just how serious is this prices congressman leach are we looking at something that's really bad in texas and not so bad across the rest of the country with the picture we do have a crisis that is a universal in most states the centers alone jesus is not is in decent shape however added up as a national phenomenon because of the samba in particular you that maybe as many as as a third of the institutions and massive difficulty with the liabilities not been shared by a fun thats capable of meeting him i look for the real roaches in the system in the next

year or two years and real need for congress to act in one form or another we need real ranchers in the next two years well the gao reported today that at least thirteen billion dollar why building the farm with the possibility that it's much higher i think unless something is done very significantly in the near future here and have the confidence shattering in cinder to cross this country needs to get dc this assignment will first of all what do you do you lead in story i think was directed to the problem we don't have the savings and loan crisis we have a depressed economy in the southwest and that's because of the problem and i think the recent events that we've seen happen even as they have affected the banking industry in that area points out that problem one thing that his failed been taking be taken into consideration is the fact that the revenues as operas or below panel has

said the gao has failed to take into consideration that there's revenue coming in to the fear sweat and when you take into consideration the revenue of twenty billion dollars will be coming in over the next for years there are ample funds to take year the deficit is talked about obamacare temple constantly it if that's the case what's the big worry well i don't see the exact voice here still runs a wonderful institution i don't want to comment about his but the fact of the matter is the liabilities vastly exceed the essence of the fine and vastly exceed the amount of money credibly coming into the far beyond that we have more than a regional problem we have on was number for a center run like a private piggy banks we have frog abuse more in this industry than some other industries we've had the federal regulators grossly inadequate in the way that they have regulating this industry and still to this point in time i'm willing to take five steps should be taken

that his first point of that several points in this book that the terrorists want the us several the road as he put it like kiddie tax you have you have problems in every industry in this country and houses that differ and we certainly have our share of problems but in the scope of things never managed we have about an eighty percent of our institutions inside his loan business and a healthy profitable and that percentage that twenty percent that are not profitable clearly one percent of those are responsible for almost a deeper so losses they're taking place in the industry we have the operating revenues are coming in but the problem we have is the press we mostly in the southwest which is causing us a significant progress as i get it that she had different industries sacco recently wrote here was right the press real estate is one problem but it's only one problem these in these institutions have over leveraged tapper with overleveraged other

people's money and as it got then the difficulty that begin incentives to gamble to play russian roulette with our economic system they're in terrible shape as a whole although some individual institutions are seeing record profits we have top of the industry this fabulous a bottom of that is the reverse and it happens at the bottom the anchor just vastly outweighs district that how can you have so many savings and loans as mr wolfe of the gao put it today the vic that are either hopelessly insolvent or barely sell a day well for two reasons one the farm insurance fund has never been adequate to say stop in second to regulators and never have the backbone to force out the leadership of these institutions that got hopelessly assault six percent of the savings and loans the united states have the negative net worth of excess of minus twelve percent of the total us we would all have a scandal we certainly we've met we've had our problems of that they're miniscule

as far as the problem management and i think we have to go by it is as the congressman has addressed and let's look at the responsibility must remember the congress created the deposit insurance system this country in the thirties and is this country is growing as is the financial sector this kind of this country has become a very much a deregulated like these kinds of this was going to address the supervision then go back and look at the constraints that were placed in a federal homebuyer system just less than six or seven years ago where the officer medicine but it had constraints on hard we had less than probably a thousand examiners at a time when deregulation was taking place in a rapid manner and institutions were being allowed in in certain states politically that has been one of them to take advantage of opportunities that we're providing through the regulations and then the supervisory authorities did not have the people deserve the plastic just a point of clarification least

we talk about this insurance fund why does it matter whether that insurance fund isn't good financial shape or not but he's saving script when it matters because everyone the places of the posse unlike in the thirties is expected to have insurance in the banking incident won't sustain this country it happens the bank can find more adequate and thrift industry find something is going to have to give on that particular relativity is what we're saying but the insurance fund is not is not able to cover what is in the savings allowance that is currently the case now i personally believe that the united states congress would move to back up the insurance fund in in the event of an emergency is as well as the federal reserve board is there to help but i would like a common one thing fewer said i'm totally agree youth congress is responsible for part of this problem we gave too much authority to institutions and fight against issues of them troubled that a too close relationship with congress a lot of money flowed between institutions individual members

powerful ones that state legislatures and congress and congress gave every incentive to federal regulators to be weak let me ask you both a very basic question how worried should you be if you're sitting out there in any any estate not just the southwest but any part of the country and you got a sizable amount of money in a savings account should you point out and put it somewhere else something absolutely not the deposits of the pastors and savings and loans in this country as well as in the banking system are safe that phone both plans were created by congress twice the congress in the eye states has said that the bull fighting credit of the united states government stands behind those insurance fund not one cheney has ever been lost in an insured deposit in this country so there is no concern on the part of that analysis possible to the bakken deposits as a congressman leach what is all the fuzz about what the fuss is even a fear was right you can depend upon characters there is a

problem on from the taxpayer's perspective as a taxpayer won't have a lot of footloose and fancy free institutions that are going to be a continued brain on their potential liabilities the fact is that the texture comes into twenty or thirty or forty or fifty billion dollars to assist this fun that means raising taxes or increasing the deficit i mean one question or more taxes current that's where the industry has to be reined in and you have to bring in tougher stronger for a more regular routes with guinness and specifically talking about getting few detail but we talking about just make one analogy in the banking industry and banks can't make direct investments five percent of the capital cities along the street they go to three hundred percent of her kept that means i can leverage other people's money to make preschool direct investments that is a skinless regulation it's gotta be changed you at and there isn't there is not that type of leverage of mobile there may

be in some states the opportunity to take advantage a direct investment regulations but for the vast majority of the savings alone in this country there's no such opportunity for them to leverage direct investment we operate well i think the safety and sound institution but we don't have that opportunity we have the authority to invest the fact the center via set it in other than normal types of loans and then direct investments and that certainly is not the ability to live the street and get any well i think first of all that we need to refocus on the fact that this industry is not an industry in crisis this industry is healthy we have a portion of honesty in it and it does have a problem we have a problem with a regional economy that is depressed and that he would eventually and i think the bad economy has got to be addressed and we've got to look for ways to solve the problems in a calm nadal is not only trying to build for the banking industry's well is that sufficient that's a pollyanna perspective that the

fires of the report that was issued today that says in this industry as of twenty five to thirty five billion dollars liability insurance fund and more importantly many industry experts think it's doubled and the fact of the matter is until we have restraint in this industry and the reigning in of those would you responsibly leverage other people's money without putting up an adequate about themselves were to have a scandal it's going to get bigger not smaller but it but in the meantime until those kind of that kind of bringing an asian carp can take place and what is the taxpayer going to be asked to do the taxpayer will be asked to do nothing until we have a crisis that none of the crisis of breaks out the task for the taxpayers could be very much and when exactly that will happen and of the john q public makes a decision that the institutions to which is putting his money or she is putting

her money or not a strong incentives as previously been stated maryland we've had two runs one in maryland and one in ohio none of the soap we use iran to deny that possibility would be a probably own property one last word on that there is no confidence crisis in an essential minister in the financial structure because of insurance for congress congress is a hazardous situation i think under consideration and ivory that supervision is a problem and that we have a dress that need to get and then to a very different character we thank you for that first the late robert still to come on the newshour how to prevent another stock market crash and an essay on michael dukakis next tonight

is the government doing enough to prevent another stock market crash earlier this week a top level white house working group recommended only modest changes in the nation's financial markets a major recommendation was that the stock options and futures exchanges halt trading for one hour if anyone market rose and fell the equivalent of two hundred and fifty points in the dow jones industrial average trading would be halted for two hours if the market rose or fell four hundred points the white house group recommendations stopped well short of more comprehensive reforms recommended recently by prominent wall streeters and members of congress it did not for example propose any increase in the current level of margin or down payment requirements on stock index futures london to recommend restrictions on computerized trading finally the group rejected the proposal of an earlier white house panel chaired by investment banker nicholas brady to assign a single government agency as a super regulator of the financial markets today in a congressional hearing the chairman of the white house group under secretary george gold

came under sharp attack with all due respect to the enormous talents each of you brought to this endeavor i regret we believe that history will judge your work broader are more harshly and has your boss president reagan when you have missed an historic opportunity to erect a dynamic coherent and unified regulatory structure or the brave new financial world of the nineteen eighties and beyond a ball going to start challenging a presidential mandate was to help restore investor confidence and this critical area i hear your report is an historic value do you really believe that a two hundred and fifty and four hundred point make a circuit breaker or were back to watch equity markets the millions of individual investors we're now on the sidelines will stare and that's it is ten out of parking in an ambulance at the bottom of a cliff seventy eight it is to wade page when y'all report we hear most ringing endorsement of the status quo that i

ever thought that you could possibly have given it of individual investor they feel shut out of the market walked away bag and is begging us for wave i can you offer us no prescription is likely to reassure the individual investor i'm impatient with that with are constantly trying to point out that we recommended what we thought was right for the market and that refrain we're back is all that's not enough you should do more or is often unspecified more is often amorphous what you've got a do more with the assumption that sir is that there is something more to do that would be affected and the disagreement comes on that substantive base you feel that the statue of taking that report every story are bolstered small investor confidence in the market well the trouble with financing that is true although is that i have to make an assumption as to what's bothering always small investors and i am a small investor i'm not

ideologically comes to a process without realizing or without being personally at risk i am a member of the public i could give you a long list of things that bother me some of which this address and some of which will have to be addressed in a broader context we live in a volatile world if you could give me a world without a trade deficit without a domestic deficit with non inflationary growth with low interest rates and throw him for good measure of peace in the middle east i would suggest to you that there would be less volatility of the markets i cannot you had of those things with a small investor but not we can act on witches safety and sourness measures for the market and have acted on it that reassures the small investor as it reassures me that i hope that we have accomplished something i'm extremely dissatisfied with the pill or where i've observed that volatility is not acceptable or desirable simply because it makes the market work well and it didn't satisfy that makes them are well there are many things within the individual capacity

begun the practitioner chamber do so so i believe i go to congress all must confront the issue without the advice of you and your age with us now is one of the working groups leading members wendy gramm chairman of the commodity futures trading commission she's joined by three financial and economic experts who differ widely on the white house report and the need to reform the market milton friedman is a nobel prize winning economist now a senior fellow at the hoover institute at stanford university he joins us from san francisco arthur levitt is chairman of the american stock exchange muriel siebert as president chairman of euro siebert incorporated a discount brokerage firm ms graham from the beating we've just heard your report taking on capitol hill this morning do you really think it's going to do anything to restore investor confidence in the markets well first of all i think that we have to understand that investor confidence doesn't necessarily equate with low volume and us because you have low volume doesn't mean all investors don't have

the competence indeed there are some investors that are in mutual funds and in these institutional funds and so on also i would the quotas chairman greenspan said whenever there has been a market shoppers there was that market participants tend to go to the sidelines because of the uncertainty and they will be back there was uncertainty during that apple their period and what we've done in the working group i think goes a long way to addressing some of the causes of that uncertainty you don't think there's a crisis and investor confidence i believe that there are some things that we cannot be a weird about investor confidence for example the fact that the market decline in october was through the fundamental factors how we can deal with some structural problem problems that were evident that stock market decline but ultimately investor confidence has to do with wanting to see the markets stronger again but that has to do with fundamentals

merle siebert you deal with investors at the retail level what how do you describe the state of investor confidence and market their allocation they are afraid in many cases what happened to them that one day he was simply horrible they're mcmahon margin calls politely and they never had an opportunity to set an act that was too fast they feel it could happen again there's fear they just do not trust them freedom and you see a crisis in confidence in the market and not at all it would be a shame of people have too much confidence in the stock market we want them to be realistic we don't want people think of me they're putting money in the stock market is a sure way to make riches i didn't hear anybody talking about a collapse of confidence when the market was going up very rapidly everybody loved that but of course nobody likes to take a decline in dayton

area of talk from congress seemed to me a typical example of their writing the messenger congress itself is in reducing volatility into the economy which has been reflected in the market the market is simply a message that tells us what's going on and what it's reflected is the fact that in recent years there's been increased uncertainty about the course of certain kinds of events financially tracing back in considerable measure to what the government is doing the stock exchange how do you see the state of investor confidence and how worried are you about well i think that investor confidence has been sorely eroded and i think in the most serious way investors are not in my judgment going to come back into this market until they believe they can trust the system and they don't trust the system right now because they don't understand they're dealing with new products and new regulatory mechanism which they surely don't understand and even corporate america

which traditional uses this market is a long term vehicle his name to do that we had nearly sixty companies prepare to do public offerings and west on the american stock exchange which canceled those offerings that's jobs that's capital formation there is in my judgment a lack of trust in the system which is yet to be addressed ms graham how to respond to us why do you think that there were a lot of uncertainties during an october break people couldn't get their orders executed the systems were overloaded there were concerns about potential counterparty the solvency an alarm what this working group has done is to try and address it exactly those uncertainties and there's a lot of exchanges that done to improve border execution to expand the capabilities and i think that's very important was this siebert why won't the measures that ms graham's group the white house working group has proposed that principally stopping trading if the markets

fall equivalent of two hundred and fifty points for one hour stopped for two hours if it falls for why won't that work in your view to restore calm network christina what that is going to do is a will take all non professional investors and put them at a disadvantage most investors do something else for a lie if the market is closed for one hour they would have to be available during a one hour and make investment decisions it's not practical if the markets start rehearsals are character professionals about their we can see if there's an imbalance we can see what caused that we can act it will separate the non professional investors whether they have five thousand dollars or five million dollars in the market they will be added and disadvantage school has not address the basic things we have stocks today the prices of many stocks are being determine the price of the averages are being

determined by the futures market she's ever had that they do not understand we just let that moment and if that was going to respond to what you said about it's going to put the nonprofessional of a disadvantage well first of all i think we ought to be clear about the fact that we're talking about investors see i think about investors being someone who enters the market and maybe biden holds for several years perhaps what we're talking about in stand when when you're starving that investor confidence is the trade or the person who's going to be in an out during the day and i agreed that is as again i would echo chairman greenspan that when the market shop those traders do tend to go to the sidelines and waited out but they will be back as happened many times it's happened many times in the past traders traders know these are investors who buy a hundred years of ibm will expect that doctors in their child's children to

college and they feel they want the opportunity to participate in the market of the market is going to go down in the stock was going to go down by twenty percent they should be able to be told about a dish at the sink to see the papers to say to look at the reasons to make a decision do they wish to buy more and that wish to sell what they have by stopping the market for one hour all of these people really does put them at a great disadvantage so what your view of stopping the market for an hour the circuit breakers like well i think originally when it was first proposed it was a crisis measure to reassure the public but with all the emphasis placed on circuit breakers what they've done is to frighten the public in fear of fearing this is a black hole the real emphasis in this report should have been what the brady report suggested the real threat to the system was the breakdown a potential breakdown of the clearing system while its report made a few constructive steps in that direction and my judgment they did not emphasize the

primacy of that did discussing in simple terms the break for those of us or exports the breakdown of the clearances to just define that entails watching the clearing system is the system by which firms and banks complete transactions pay for securities receive securities deliver securities in the nineteenth and twentieth the cistern nearly overloaded and the brady commission correctly recommended in my judgment the establishment of a centralized clearing mechanism the fall commissioned the gold commission has taken some constructive steps in that direction but they have not in my judgment emphasize the urgency which i think should be part of this i did differ on that because the working group felt that it was the priority of the working group to address the safety and the soundness of the system and we identified just as the brady commission did then indeed the east clearing and payment system sentiment system was the most important system to address in terms of financial risk and if you look at that

section there are indeed substantial recommendations that we're making to address those concerns would you agree with me but not to create a new center was clearing system the way we approached it is to bet the centralized system would really entail son fundamental changes in structures are the particular does not margins stock market because it collects top margins in a different way than the future's do and because of that legal and other problems we propose an interactive approach where you could try some pilot studies and then retire man after further information about whether the benefits of going to the last step exceed the cost after all all of us including chairman greenspan and german writer and i believe also the securities and exchange commission right and annie the night senator brady now had said not necessarily one clearing system but certainly

coordinated clearing system and that is what we are working toward would you think their mr friedman on that score more on this whole thing i think where there's a lack of a sense of perspective on what's going up the markets are important but they don't own the economy the economy runs a market economy have been going extremely well investment broadly speaking they've been going very well and investment funds are made available and many so many routes of which the stock market is only one young that the talk is as if the solution has to be more government regulation i rather suspect it's the opposite way when i read the report of the working group i thought it was an excellent report in particular i was enormously impressed with how extensive where the present arrangements for handling problems on the market simply a miracle and so complex structures has developed worked that well isn't that but the more important point is that is in

the self interest of the participants in the market to avoid having the kind of break down the people are afraid the only need to bring the government and when it's necessary to do something that is not in the self interest of the people who are involved in the process in this case it's in the self interest of the stock market firms it's in the self interest of the futures market sits in the self interest of the stock exchange to say to that they operate effectively in the idea that we had one more point in this rich let's keep in mind that the united states is not an isolated island by itself we are the world's leader in financial transactions of those financial transactions are a major export mark what we threatened to do when people talk about this extensive governmental regulation additional regulation is to kill the goose slowing the golden eggs if we greatly enhance the cost of operating an oil market we're just going to drive everybody abroad <unk>

oh i have a lot to say the purpose of the stock market is to raise capital for companies so that they can do research they can invent products they can expand they can employ people they can sell abroad and they can make money for investors that is a purpose and that's what we must keep in mind the stock market are capital system as a national treasure it's the envy of the world we raise more money or more efficiently cheaper than anyplace else in the world is to free <unk> understand not over simplify that it's self correcting it is not self correcting because we have a new process in the last five years called a financial futures a financial futures do not have an equal regulation the sec was mandated by congress to create fear is for investors the phenomenal rise of detroit just what are those letters and if the financial futures while they may be beneficial have a totally different regulations totally different margin

requirements wholly different trading practices you only have to put up fifteen percent in the futures markets were as you have to put up with if you wish to sell the stock to do not only on any list of market because you think the prospect for that that is poor you must have salad and higher price in the last sale is called an uptick so if you wish to short a stock you need an uptick if you wish to sell financial futures which actually is selling the market as a whole the s and p five hundred represents five hundred stocks which comprise about eighty eighty five percent total volume of stockton the next act exchange you can just sell those contracts you can sell them and keep selling them which in turn actually realistically do prices to prod the prices but we do not have the name you're saying more regulation is needed in the most commonly mentioned one is raising the margin or down payment requirements and futures trading let's go back to oh

ms graham why did you decide not to do that actually there was quite a bit of work done by the working group on this including substantial extra work as well as the empirical evidence already on the record and we found that indeed for purposes of safety and soundness the financial integrity of the market that the margin levels are adequate and furthermore because of the difference in the systems we collect features margins for example every day they're settled at the end of the day and because you don't have at a transfer because of that there's a generic for directing this in fact is the market that you regularly featured the rest of us right that that for that all levels of risk that is financial ways to the market place and times of volatility that the margins for the stock market have to be substantially higher than the margins for futures contract that's because you don't pay those margins until three to five days at

half a roof arthur levitt hear some people at arguing that those who want to increase margin requirements were in the futures market that that that the low margin requirement makes more of a gambling casino out of that kind of investment you agree with the idea which you have to keep in mind is that the customers for the futures market are essentially professional customers were as the customers an equities markets are individuals as i said before the individuals have lost trust in the system and one of the things that can bring them back in my judgment they view margins individuals the margins as a speculative device they know the sec for years they regard the sec as their protector now they're saying new regulatory agencies created layers like his grants they're seeing new products to roll they see the spectacle of government arguing about who should regulate who i think this is a very unfortunate trend and i think we've got to address the issue

of the individuals trust in the system do you agree the futures market does not require higher margins i think i had that i agree with the brady findings at the margins must be harmonized in my judgment that means not the same margins but it clearly means higher margins mr metzger well the evidence that we looked at is that first of all that they're two kinds of martin's margin for tech and safety of the system and that adequate and for protecting the safety of the system that the margins are not only more than adequate but they need to be in order to be harmonious harmonious means that they have to be high on the stock side and on the future site then the next question is can margins effect volatility and the weight of the evidence on this so that chairman greenspan and commanders at treasury and myself looking at the evidence we see that you cannot use margins to

control volatility and does not have an impact are on speculation of volatility and there's no it wouldn't it would give a false sense of security does suggest that you could use margins to control speculation and there's a lot of evidence and clerical evidence over the years to support that view you believe that the lower margins in the chicago futures market does that increase the likelihood of speculation and does therefore make the market more volatile ways your body futures craig like a commodity grain soy beans with the oil port police stop stop groups don't work and in that indexes the indices which represent these baskets of stock trades in the commodities markets right alongside with those commodities we have to monetize the trading of stocks or you know that the stamp or five hundred which is the most widely traded futures contract fighting is much in nineteen

eighty seven as all of the trading on the new york stock exchange the american stock exchange and the over the counter market what do you say to this charge of mr friedman the devices like the futures market are the packages of stocks are just turning it into a gambling casino when you get a good deal or gambling the whole purpose of the futures market is to enable people to hedge against future uncertain because you cannot have a situation which people can ahead unless you have somebody who was willing to take a chance so you need speculation the whole role of a margin for example is altogether different in the stock market than it is in the futures market for example you could have required you could forbid margins and that the stock market and the stock market could still functioning people could buy and sell fully forget if you made a marginal hundred percent in the futures market you would destroy that completely destroyed the futures market and they could actually sell it to

talk about getting rid of speculators out of the futures markets in say are essential <unk> truly effective operation of that market we have to work we have to interrupt you there are times a week and there were methods for some german embassy work and a lot of the law the disagreement that led to secure readers' suited for airpower finally tonight the fact that the first presidential candidate of greek ancestry is doing very well in the campaign this year is not escape the notice of thousands of greek americans essayist roger mudd has some thoughts it is no understatement to report that the country's big americans are working themselves into a lot of them thought of ad hoc this inauguration you can almost hear what they're thinking is a first generation breakout president of united

states the first president of foreign born around since the scotch irish andrew jackson outside the mainstream president dukakis president michael stanley the caucus son of fellow samuel turvey dukakis grandson of study on osama would be at the caucus of wes vose in the aegean sea and grandson of michael and parcel of the focus of the race and several grades one young pretender said american preacher and a state of delirious anticipation it's no wonder even if he is defeated in november or somehow denied the nomination in july michael dukakis says now other states never reach like any friendly apps american politicians of all the immigrants who came to america during the past one hundred fifty years only the irish have produced presidential candidates in nineteen twenty eight

our second generation irish in nineteen sixty john kennedy third generation irish but none from the germans or the italians or the osprey or the hungary is none from the russians the swedes are the french only the greats and yet according to the census bureau the total greek american population in the us is less than in the nine hundred sixty thousand at the center of reagan era there is the greek orthodox church there are now more than five hundred in the united states from palm desert california the bangor maine this is saint sofia cathedral in washington dc where every spring there's a request to not only to raise money for the church but also to keep the church at the center of the greek american family and to reinforce the pride of this week's episode what is it about the greats

why has such a small immigrant group which did not begin arriving here in any numbers until after nineteen hundred become so successful so fat cow the grades themselves why that is because of the family education hard work self reliance the census bureau within the bailout of on the twenty four major ethnic groups the rates were first in the level of education and second to the jews in the greek americans have one of the highest self employed rates one of the lowest labor agreements many of the more restaurant owners of the forests of infection there's a filmmaker's what's also educators dr john roberts president of new york university director elliott has all actor john cousin eddie's singer maria callas designer james garner votes football player alex karras

and politicians like senator paul sarbanes of maryland but occasionally politicians like spiro agnew greek americans now like to joke about it is only half greek they say my goodness it was the bottom of what the outcomes someone read americans hope and repair the damage agnew did and then replied michael dukakis's know ellis island when in fact he and his family are much more upper class than they were ever for us but my nose is to caucus and resets and human he looks great speech great in more ships as a great he believes is a great big dances as a great and every chance he gets advice to do as a group and all he has narrated you and is occasionally taken for jewish or italian it is not likely

never disappear or be totally a similar horror that he would want it to be not only has it given an instant access to campaign money for instance there are estimated to be abused americans each with a net worth of three billion dollars what his greatness also sends a strong and unwavering message that america was and still is a land of opportunity and every time to practice uses to speak greek or spanish french or even as limited korea is and the same a signal to mark of brotherhood and sisterhood of immigrants that they were right to come again the main points in the news congress was told that they have to bail out the fund that insures savings and loans because it's in precarious financial condition but the colombian drug dealer was convicted in a florida court of smuggling more than three tons of cocaine into the united states president reagan says he

understands and is not bothered by vice president bush distancing himself from negotiations with panama's minimal yet so that official confirmed the twelve to fifteen thousand soviet soldiers have been killed in afghanistan and i rather not signed is our for tonight we'll be back tomorrow night and judy woodruff thank you and good night combining everything people like about the what's wrong with everything they make everything about information at him funding has also provided by the station and other public television stations and the corporation for public broadcasting their earlier errors