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Finance
Social Security disagree over who would manage investments
Stocks listless
ahead of data
Stocks were mixed in slow trad
I ing today as Wall Street braced for
| a heavy week of economic data,
which could determine the direc-
I tion of interest rates. In early after
noon trading, the Dow Jones in
I dustrial average was off 5.92 points
at 5,467.14, The Nasdaq index
| was up 1.05 points at 1,080.49,
Security stocks
soaring
The stock of Barringer T ech
nologies soared more than 55 per
cent today on news that the Feder
al Aviation Administration has ap
proved the com pany's IONSC'AN
explosive detectors for use at air-
| ports. Wall Street also bid up the
shares of other companies that are
in the explosives detection busi
ness.
California banking
merger
First Nation wide Hold mgs Inc.
I the parent of First Nationwide Bank
of San Francisco, says it’s signed a
definitive agreement to acquire Cal
Fed Bancorp Inc., the parent of
California Federal Bank FSB. for
about $1.2 billion in cash Based
on assets, the resulting bank, to be
| headquartered in San Francisco,
will become the fourth-largest sav-
I ings and loan institution in the
United States.
Record sales,
earnings for 3M
M innesotaM ining& M anufac
turing reported record sales anil
earnings for the second quarter
today and said it secs solid growth
for the year despite the e ffe c tso fa
stronger dollar. The company said
earnings from continuing opera
tions rose 10.1 percent to $381
million compared with earnings of
$346.0 million in last year's sec
ond quarter.
Cray lodges
dumping complaint
The U.S. supercomputer firm
Cray Research says it has lodged
an “antidumping" petition against
Japan’s NEC Corp, for allegedly
selling supercom puters on the
American market at less than fair
prices. It said in a complaint filed
I with the Commerce Department
and the International Trade Com
mission that NEC was taking an
estimated $65 million loss to sup
ply the supercomputers to the Na
tional Center for A tm ospheric
Research.
AmEx, Microsoft
travel agency
A m erican E xpress and Mi
| crosoft say they plan to create an
online travel agency so corporate
| travelers can make their own res
ervations via personal computer
The pact would join American
Express, the w orld's largest travel
I agency network, with Microsoft,
the dominant maker of personal
I computer software, in a bid to tap
the huge corporate travel reserva
tion market as more and more peo
ple look to book online.
Prodigy, Intn’l
wireless merger
Struggling online service pro
vider Prodigy Services Co., re
cently orphaned by Sears and IBM,
says it agreed to merge with Inter
national Wireless Inc., forming a
new company called Prodigy Inc.
Kmart to cut costs
Kmart, the struggling retailer,
says it is reorganizing the way its
merchandisers buy goods in an
effort to cut costs. The company
said that effective immediately, its
general merchandise managers will
be provided with a team of experts
in planning, sales, advertising, fi
nance and product development.
It’s no secret that the Social Secu
rity Trust Fund will run out in 2029 if
nothing is done.
W hile the system could continue
to pay some benefits from the taxes
collected each year, living paycheck
to paycheck is no way to run a na
tional retirement system.
Raising taxes could solve the prob
lem, but tax increases are about as
popular as strip-mining the Grand
Canyon these days.
So the fix-meisters are eyeing Wall
Street.
For all the Trust Fund's long term
problems, in the short term it is flush
with cash and raking in more every
day. All that money — $566 billion
by the end of this year — is invested
in government securities at modest
rates o f return.
Shi ft some of that money to higher-
yielding stocks and bonds, the rea
soning goes, and voila! you’ve gone
a long way toward bailing out the
system.
The idea has already been floated
in Congress, and will emerge as the
central recommendation of the Ad
visory Council on Social Security, a
blue-ribbon panel assembled by Sec
retary of Health and Human Serv ices
Donna E. Shalala to find a way out of
the potential Social Security mess
The C o u n c il’s report, already
much delayed, is scheduled for re
lease late in August.
But while the 13-member Council
is united in supporting the stock-
market option, it’s bitterly split over
whether Social Security should do
the investing itself, or whether a share
ol the funds should be “spun o f f ’ to
individual workers to invest as they
see fit.
A six-member faction headed by
former Social Security Commissioner
Robert M. Ball favors having Social
Security do the investing. They ar
gue that individual investment ac
counts would make too much of a
w orker's retirement income vulner
able to the swings of financial mar
kets — and would leave disabled
workers with much less protection
than they get now.
Besides, they assert, creating in
dividual accounts would be the first
step toward dismantling a successful
program (hat could easily be rescued
with less-drastic changes.
Five members who favor a partial
spinoff reply that the public is so
soured on Social Security that an
attempt to shore up the existing sys
tem would be met with disbelief.
More to the point, this group —
headed by Carolyn W eaver of the
American Enterprise Institute and
Sylvester J. Schieber of benefits
consultancy Watson Wyatt W orld
wide — argues that most retirees
would have bigger incomes under
their plan than if Social Security did
the investing.
Somewhere in the middle are two
members, including Council chair
and University ot Michigan econom
ics professor Edward Gramlich, who
advocate a more modest program of
individual investment accounts.
As a consequence, the group will
issue three separate prescriptions for
healing Social Security’s long-run
ills:
The Ball plan calls for 40 percent
of the Trust Fund to be shifted f rom
government securities into a stock-
market index fund over 15 to 20
years. The market returns are pro-
Business development
fund leverages millions
Rural communities in ( Jregon have
benefitted from millions o f private
dollars leveraged in their areas to
create jo b s and grow businesses,
thanks to an Oregon Economic De
velopment Department fund.
A recent analysis o f the perfor
mance o f the Oregon Business De
velopment Fund has found an in
vestment o f $20 million in state lot
tery dollars has leveraged more than
$80 million in matching funds from
banks and private resources, since
the fund’s inception in the mid-
1980’s.
More than 3,800 jobs have been
created or saved by companies fi
nanced through the program.
“This fund has been successful in
leveraging a great deal of bank and
private resources to assist rural and
other businesses expand and create
jobs." said Mark Houston, business
finance manager for the Oregon Eco
nomic Development Department.
The fund s primary focus is to
help rural areas diversify their econ
omies. About two-thirds o f the loans
have partially financed businesses in
rural areas o f Oregon.
I he hind is targeted at manufac
turing, processing and tourism-relat
ed businesses. Houston said the in
tent ol the fund "is to help communi
ties diversify their economic bases
and create jobs locally."
In addition to the economic benefits
o f jobs and investment in Oregon, the
Oregon Business Development Fund
receives interest and fees to cover all
administrative costs and loan losses.
I he Fund is currently earning a four
percent return on investment.
Examples o f rural projects fi
nanced through the fund include: a
recreational vehicles manufacturing
company in LaGrande, creating 70
jobs, a belted chain manufacturer for
the agricultural industry in Hermi
ston. a pizza crust-making company
Equipment leasing
company opens
With the recent founding o f Cap
ital Equipment Leasing, Inc., O re
gon gained a new entry to its ranks o f
employee-owned businesses. Based
in the Portland metropolitan area.
Capital Equipment Leasing provides
all types o f equipment leasing and
financing services to small and medi
um-sized companies throughout the
United States and Canada.
CEL President Beverly Becket has
brought together a team o f profes
sionals with over 15 years o f com
bined leasing experience. Together
jected to cover promised benefits
and keep the Trust Fund plump. A
tax ol up to 1.6 percent on wages,
evenly split between worker and
employer, might be needed by 2045
to keep the Trust Fund at the desired
level: big enough tocover four years’
benefits.
The W eaver/Schieber plan
would immediately divert two-fifths
ol current Social Security tax rev
enues into individual accounts to be
invested by workers. Social Security
payments would be reduced to $410
a month (they would grow with infla
tion). Workers over 55 would be
exempt from the change; to pay their
benefits under existing formulas,
workers and employers would each
pay an extra 0.75 percent tax on
wages for 70 years.
Under the Gramlich plan, each
worker would have 1.6 percent de
ducted from his pay to fund a retire
ment account he would invest. Social
Security taxes would remain the same,
but benefits would be reduced as the
Trust Fund was drawn down. By the
time benefits from the existing sys
tem were cut back, workers would
have enough money in these accounts
to make up the difference.
But of the 43 million current So
cial Security beneficiaries, only 26
million are retirees. Four million are
disabled; 7 million are surviving
spouses and children, and 6 million
are dependents of Social Security
recipients.
Benefits for the disabled would be
left pretty much intact under the Ball
plan, but would be reduced as much as
20 percent over time under the other
schemes. Benefits for survivors of de
ceased workers wouldn' I change much
in any of the plans.
A spot check ol workers lunching in
Center City last week found many
intrigued by the idea of individual
accounts, but skeptical about having
Social Security itself invest in the stock
market.
"If someone else is going to manage
my money, I want it to be in low-risk
investments, like Social Security is
now, said Laura Walsh, 28, a project
manager with the Philadelphia Rede
velopment Authority. “In a riskier en
vironment, like the stock market, I’d
prefertohavemy hands on my money.”
Preston leads in
female attorneys
Survey Ranks Preston Northwest's Highest
in Baker City, and a company in
Brookings creating floral arrange
ments out o f forest floor plants.
The fund works to satisfy a busi
nesses' expansion needs after the
company has obtained private financ
ing for at least half o f the project. The
department can then provide financ
ing to fill out the balance o f the
financing need, Houston said The
department works in cooperation with
Oregon banks.
In its most recent survey on how
women are doing in the legal pro-
tession at the 250 biggest law firms
in the U.S., the National Law Jour
nal (NI J ) ranked Preston Gates &
Ellis number one in the Northwest
and 39th nationally.
Female attorneys represent 30.7
percent o f Preston's professional
staff. When you look at the number
of those women who are partners in
the firm, the ultimate measure of
advancement, Preston fares equally
well with 29 female partners.
I he national average for all law
firms is only 9.1 percent female
while the average for the top 250 is
26.4 percent women. The percent
age o f female attorneys is based on
the total number of partners, associ
ates and special status attorneys,
not including support personnel.
L ast W e e k , W e
W a l k e d I n t o U .S. B a n k
A n d L e f t W it h
2 B e d r o o m s A n d A B a t h .
they are creating a Total Service
Leasing Company that specializes in
"instant approvals” and same-day
documents.
They also focus on leases with
deferred payments, annual and quar
terly installments, and a wide variety
o f terms and purchase options tai
lored to meet client needs. Addition
al leasing services include Lease
Credit Lines, National Vendor Pro
grams and opportunities for busi
nesses that are newly established or
with weak credit.
Albina community bank
public offering announced
Six months after opening for busi
ness, Albina Community Bank is
going public, with an initial public
offering o f 100,000 shares o f com
mon stock priced at $ 10 per
share, with a 25-share min
imum, or $250.
Pacific Crest Securi
ties is managing the of
fering. Proceeds from the
sale o f the shares will be
used to support the general
growth plans for the compa
ny, which has as its focus the accel
eration o f redevelopment in N/NE
Portland.
“This public offering is an oppor
tunity for the people o f this commu
nity to take ownership o f Albina Com-
munity Bank and to actively partici
pate in its economic redevelopment,”
says Leon C. Smith, the bank’s chief
executive officer.
Albina Community Bank
opened for business in Jan
uary, modeled after the
South Shore Bank of
Chicago, which has suc
cessfully revived sever
al depressed areas.
A lb in a C o m m u n ity
Bank was cultivated from $2
million seed money from the North
east Portland Community Develop
ment Trust and from proceeds o f a
private stock offering.
The Trust is the bank's largest
shareholder.
ex
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H ome
L o a n s F k o m
U.S. B a n k
^[ lxs J b a im k .
Without yen, there’s no ns.
e>|'l<«, u S Hank H om e toan. are m .nk by a inortgage kiuluin attillale o f U S Hank
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