J 20 - MANCHESTER HERALD. Tues.. June 8, 1982 ECHS principal Board reprimands 'Ants up tree' BUSIWESS / C la ssifie d / « felt like freshman top state educatoi for supper? page 13 . page 4 . page 5 There's no business like bank business with the same explanation — it’s the lender of last GOVERNMENT DEALERS and banks work very it also wanted to assure them that, if they found By Philip Greer and Myron Kandel themselves short of money, the lending window at the resort. closely together. Since Treasury paper is as good as Manchester, Conn. cash, the margin, or down payment, required to buy the Fed would be open. You have to wonder, though, if the Fed, by giving the Sunny, warm The Fed justifies its action by pointing out that it is There's no business like bank business. Nobody other paper is very small. You can buy $1 million worth of banks such a steady backup, isn’t simply making the 6n Thursday Wednesday, June 9, 1982^ than a bank wades through billions of dollars on a daily Treasuries by putting up just $50,000— that’s 5 percent. the tender of last resort — that it’s supposed to help situation worse. If the banker knows the Fed’s zillions basis, creates its own money almost any time it likes The rest of the money comes from the banks, banks get over the tough times. That’s true, to a point. will be there in time of need, what’s to stop him (or her) — See page 2 Single copy 25c and bas a wet nurse always on hand in case things turn sometimes directly, sometimes through broker in­ When a bank is hit by something outside its control, from taking on risky loans? What is there to make a when economic conditions threaten the banking system, banker tend to his accounts when the risk of failure is so IrralJi sour. termediaries. That comfortable situation became clear again in the If there had been a default, then, it would have the Fed is supposed to be there to cushion the shock. diluted? Trading in government securities, although it involves wake of the default by Drysdale Government Securities reached into the banks themselves, whether they o^^ed In the Drysdale case, the Chase bank can afford the Inc., which left Chase Manhattan Bank holding the bag. the securities that were defaulted or financed the firms tons of money, is another question. Before Chase agreed to act as a middleman for Drysdale, it’s safe to assume loss. It will wipe out any chance of a profit in the second And, once again, it raised the very serious question of that did own them. quarter and take a big chunk from the year’s earnings. whether it should have happened. Chase soon agreed to make good on the interest pay­ it checked into the firm. Never mind that other banks checked, too, and decided not to handle the firm’s ac­ But the bank is so big that, from the point of view of When Drysdale defaulted by not paying $160 million in ment. It will cost the bank at least $270 million in all safety for depositors, the $270 million — or whatever it interest due on Treasury securities 'it had borrowed. tion. Chase has a right to make its own decisions. Halfway before taxes, and the price could go higher. finally comes too — poses no threat at all. Chase’s deci­ Chase, which had arranged the loan, said at first it was It also has a right to be wrong. So do the other banks, sion to pay off also means there won’t be any domino Israeli jets not responsible for the payment. That created a very BEFORE THAT HAPPENED, though, the Federal just as the brokers do. And you have to wonder if the Reserve showed how things work in the banking Fed should be standing there with its pockets open, for effect. ’The Fed’s decision could be encouraging to a lot real threat of securities firms falling like dominoes more less-than-careful banking practices. because they would not be getting the payments they business. The New York Fed called a meeting of the the single reason that a bank might be in trouble. house expected from Drysdale and might not be able to make members of the New York Clearing Hose — the 12 It must be nice to be in a business where you know biggest banks in the city. It wanted to know if any of This, of course, isn’t the first time. The Fed has payments they were obligated for and had earmarked historically been ready to help the banks, and always that failure, at the least, will be neat. that money for. them anticipated problems because of the default. And advised hit Syrians -in B rief-------------------- By United Press International pressed north along the coastal By Nancy Thompson road, inland from the Chouf moun­ Credit crunch Herald Reporter Israeli jets and invasion forces tains and across east-central Ferguson cited pounded Syrian positions today on Lebanon, apparently converging on 9 Area residents cite marital dis­ the main DamascusBeirut road Beirut Thomas F. Ferguson of 78 Forest St. was cord and drug and alcohol abuse as today, downing a MiG fighter and a However, Mdeirej and Dahr el awarded a certificate in financial planning at a the major mental health problems, helicopter as Syrian reinforcements ceremony held last Thursday on the campus of according to a study by the North Baydar,16 miles east of Beirut, are hurts business were reported moving into Lebanon. on the only remaining route to the Adelphi University, Garden City, L.I., N.Y. Central Regional Mental Health Gunboats, steaming close to the Beka Valley — a route that could be The certificate is the culmination of a year-long Board. coast, bombarded the highway adja­ course of study in business and estate planning. The By Mary Tobin “In view of these alarming financial used to invade Svria. Although Manchester appears to cent to Beirut’s only airport, only 8 university is the first academic institution to offer a trends, the deterioration of corporate UPl Business Writer have a low need for mental health miles south of the besieged capital, At the United Nations Security formal course of college study in the field. credit quality as reflected in credit services, based on the number of ad­ witnesses said. Council, the United Slates Tuesday We are all deluged today with solicitations for NEW YORK — The extremely ratings is disturbing, but not sur­ _ missions to state mental hospitals, On the fourth day of the Israeli vetoed a resolution condemning investments, insurance plans and financial dangerous state of corporate balance prising,” Kaufman said. downtown Manchester is a sweep into Lebanon to destroy PLO Israel for ignoring a cease-fire call schemes which offer a multitude of suggestions to sheets could lead to sharply increased Top-rated companies still can borrow “distressed area” with a need for strongholds, the military command The vote was 14-1, with only solve our future direction. Most of us are thoughly failures on the magnitude of Braniff at prime or below, Yardeni said, but more services, the study says. in Tel Aviv said Israeli forces shot Washington opposed. confused. r International and AM International. others are being forced to pay above down another Syrian MiG fighter David M. Jones, economist for Aubrey ‘It is the role of the financial planner to suggest prime, if indeed they can borrow at all. Marcia Richardson, who compiled plane and an attack helicopter. The G. Lanston & Co., said “prolonged tight the best method of planning for each individual ac­ “Banks are throwing good money after the study for the mental health Israelis reported downing six MiGs cording to his wants, desires and interests. The money clashing with huge federal bad in some cases,” in the hopes that in­ board, said the downtown area on Tuesday. financial planner has no axe to grind in advancing deficits has all but crowded corporations terest rates will come down and spen­ would be a good location for new or In another development, Israeli Falklands any one course of action, so that the client may be out of the bond market. If firms can’t ding will pick up, “but new customers expanded mental health services reserve units were mobilized to assured that his advice is not self-interested,” said borrow long-term there’s a strong are being turned away.” because that is where the need lies. strengthen lines on the Golan Ferguson, possibility that even larger businesses Heights in case the fighting with IN THE BROADEST sense cor­ Ms. Richardson also said there is Ferguson, former publisher of the Manchester will go belly up.” Syria escalates into a fifth Middle porations have been hit by problems need for a halfway house to provide Herald, is a member of Financial Associates, 825 Short'term business borrowing — from East war. Syrian troops have been fighting beyond their control — inflation and a transition from institutional care. Herald photo by Tarquinlo Wethersfield Ave., Hartford, a group which offers banks and in the commercial paper deficit-induced high interest rates have based in Lebanon since the 1976 Civil comprehensive financial planning for both in­ market — has exploded and much of it been prolonged by the Federal Reserve’s Ms. Richardson said that in sur­ War as a peacekeeping force. dividual and business interests. has been so-called “distress” borrowing tight monetary policy. At the same time veys of local residents, people We’re No.