The Des Moines Register from Des Moines, Iowa • Page 13

Dow Jones Industrials closed Monday at 847.13 D017TJ 4.53 5B 1 I 111 XteaiwX isaia LwJ ftai L.J AP PHOTO Elegan mm legislation to 'literally save1 ISILs Hawkeye earnings up 33 GWt; A 3 111 HI ''X 4 a CVs' Jm I Ji I 1 I Hi ditional powers to offer interest-bearing checking accounts and provide consumer loans for household, family and personal purposes. But industry spokesmen contend they need even broader powers to help them compete better during volatile economic conditions. Proposals before the Senate panel would enable to become more like commercial banks they could offer checking accounts to businesses, move more into the small consumer loan business and expand their real estate investments. They also would let the federal government overrule state laws that bar due-on-sale clauses in home loans. The clauses mean a lender can call in a home loan when the bouse is sold, preventing assumable mortgages, which allow sellers to pass on low-interest loans to new buyers.

The commercial banking industry also would get new powers to operate mutual funds, underwrite municipal revenue bonds and expand its real estate investments if the legislation is approved. "With fewer governmental restrictions, the financial system should respond more efficiently to changes in the economic and competitive environment to the benefit of everyone," Regan said. Garn said the legislative changes would help banks and savings and loans compete with firms that are not regulated by the government but off er the same services. The legislation would give federal regulators greater authority to allow ailing to merge across state lines and with banks. And, it would merge the insurance funds of the Federal Savings and Loan Insurance Corp.

and the National Credit Union Administration into the Federal Deposit Insurance Corp. Regan did not support that provision. WASHINGTON, D. C. (AP) -Treasury Secretary Donald Regan on Monday backed congressional proposals to remove many regulations on savings and loan associations in what he said was an effort to "literally save the industry." But Regan said President Reagan's administration would rather the Congress wait to see how well struggling thrift institutions fare with less restriction before allowing them to go into the mutual fund business.

Appearing before the Senate Banking Committee, Regan predicted that savings and loans institutions will remain primarily in the housing market because of their long experience there and the tax advantage that it offers. "I don't think they'll turn their backs on the housing industry," he told Senator William Proxmire "I think the major activity of the thrifts will be in the housing area." Committee Chairman Jake Garn Utah) expressed concern over the future role of in providing home loans, but added that unless Congress gave the thrifts broader investment powers, "I see no savings and loan industry left literally." Regan concurred, saying the ailing need new powers to be able to compete with other depository institutions "in any interest rate environment" "I think what you're trying to do is literally save the industry," he testified. "The severity of the industry's difficulties in 1981 should have convinced everyone that the governmental restrictions on its business need to be removed." Savings and loan associations, whose basic function has been to use money from savers to make long-term housing mortgages, have been hit particularly hard by inflation and high interest rates. Recently, have been given ad Logs piled high behind Jim Qulnn, a lumber mill production manager in Omak, represent lumber that isn't being told. Depressed lumber industry grovjfiig jobless lines Weidenbaum views current economy Dairy price supports cut by Senate WASHINGTON, D.

C. (AP) The Senate passed emergency legislation Monday rolling back an increase in federal dairy price supports that Agriculture Department officials said was costing the government $200,000 a day. The Senate approved the bill on voice vote after Senator William Proxmire Wis.) agreed to end a filibuster in return for assurances that Senate Agriculture Committee members would consider endorsing a support increase for next year. Last month, the Senate voted to effectively freeze supports for several years. The emergency bill, which now goes to President Reagan, will return milk price supports to $13.10 a hundred pounds, the level they were before a 3 percent increase was required on Oct.

1. The House two weeks ago overwhelming approved the rollback. Deputy Agriculture Secretary Richard Lyng estimated last week, that the higher support level was adding $200,000 a day to the federal bill for maintaining dairy prices. Earlier estimates had placed the cost at as high as $400,000 to $1 million a day. The true cost of the higher support rate will not be known until the end of this month, the Agriculture Department said.

Officials had feared that the increase could trigger boosts in consumer milk prices. Proxmire, who represents one of the nation's leading dairy states, had been using procedural tactics and threats of a filibuster to block Senate action on the proposal for nearly a' month. Holding out hope that a higher support level might be approved in a new farm bill, Proxmire launched his filibuster against the rollback legislation last Friday and was ready to resume it Monday. But he agreed to drop it after Senator Jesse Helms N.C.), chairman of the agriculture committee, said the panel will consider accepting the House dairy support plan that would require an increase of at least several percent next Oct. 1.

The Senate version of the farm bill would effectively freeze supports at $13.10 for at least the next three years, according to congressional estimates. The rollback legislation was needed because Congress failed to approve a new package of commodity price support programs to replace the one that expired on Sept. 30. With no new package in effect Oct 1, the Agriculture Department was required to raise the dairy support price to $13.49 a hundred pounds. Proxmire, citing earlier cuts in dairy price supports, contends that dairy farmers are bearing too much of the burden in President Reagan's budget cuts.

He said dairymen face soaring costs and other financial problems and deserved the higher price support level, even if it was only temporary. But Agriculture Department officials say it is mainly middlemen who are benefitting from the higher support level. The drive to cut milk price supports comes as milk consumption in the United States is gradually declining at the same time dairy farmers are increasing production. September milk production was a record and marked the 29th consecutive month that milk production has been above year-earlier levels. Farm Bureau chief tells House to scrap bill WASHINGTON, D.

C. (AP) The American Farm Bureau Federation said Monday the House should scrap its farm bill unless the measure is amended before a final vote Is taken this week. Robert Delano, president of the federation, also urged the House "to resist efforts to kill the tobacco program because of the adverse economic impact" such an action would have on tobacco producers. Delano said Farm Bureau's reasons for opposing the current bill include decisions by the House to continue target prices for wheat and feed-grains, and votes to repeal the peanut and sugar programs. The farm leader, in a statement also criticized the bill's dairy provisions.

"Farm Bureau is dismayed at the apparent lack of understanding of the bill's sugar and peanut titles," Delano said. "Repeal of these titles will surely result in severe gyrations in supplies and prices for those commodities and will seriously impact net farm income of sugar and peanut growers." Hawkeye Bancorporation of Des Moines had a 33 percent increase in third quarter earnings compared with the same quarter a year ago, the bank holding company reported Monday. Results were helped by a 24 percent increase in taxable equivalent net interest Income, the report said. Earnings for the three months ended Sept 30 were 3.56 million, or 66 cents a share, compared with 2.68 million, or 64 cents a share on fewer shares outstanding in the year-ago period. The company's 27 Iowa banks had deposits of more than $1.07 billion on Sept.

30, up 25 percent from a year earlier, when it owned 24 banks. Paul D. Dunlap, president, com- THE BUSINESS TIDED Compiled by JAMES LAWLESS meriting on the farm economy, noted that a year ago "we were in dire straits due to what the press called widespread drought and weak crop 1 The Iowa farmer is just now har vesting one of the greatest corn and soybean crops ever produced in the state of Iowa, and prices have weakened again, he said, predicting that a temporary imbalance between supplies and demand will be alleviated either by increased grain exports or more feeding of grain to livestock. "We have successfully managed such periods before and have every reason to expect we will do so successfully again," Dunlap said. Banco has an edge up on third quarter profit Northwest Bancorporation of Minneapolis, which owns banks in Iowa, including Iowa-Des Moines National Bank of Des Moines, said net income was $28.16 million, or $1.08 a share, in the third quarter of 1981, up slightly from $27.7 million, or $1.07 a share, in the 1980 third quarter.

The bank holding company said latest results included $790,000 in losses from securities transactions. The 1980 final net included securities losses of $402,000, the report said. John W. Morrison, chairman and chief executive, said earnings growth resulted principally from a higher volume of earning assets and improvement in net interest margin. Morrison said generally weak economic conditions should persist for some time to come.

He added that although Banco's earnings growth has slowed this year, be is encouraged by the company's ability to register higher earnings despite an unfavorable economic environment. He said average demand deposits declined slightly in comparison with a year ago. Also, deposits were down from the second quarter of this year, he said. The composition of demand deposits has been changing with growth in business accounts while consumer demand deposits declined reflecting the shift to interest plus checking accounts, Morrison said. Occidental Petroleum has lower earnings Occidental Petroleum the nation's 13th largest oil company, said its third-quarter profits fell 13.3 percent to $115.8 million, or $1.15 a share, from $133.7 million, or $1.62 a share, a year earlier.

Sales for the period ended Sept 30 were $3.7 billion, up 23 percent from $3 billion a year ago. Earnings from oil and gas operations were down, the company said, because of slimmer profit margins and losses on sales of Libyan oil. Earnings from the company's coal and beef operations were up, Occidental said, but overall results were hurt by higher interest expenses and a worldwide surplus of crude oil Occidental owns Iowa Beef Processors of Dakota City, Neb. Peavey turns milling by-products into ethanol Peavey Co. of Minneapolis said it developed what it called a unique process for converting cereal grain milling by-products to ethanol.

The company said patent protection has been filed for and is based on fundamental research of the nature of milling by-products conducted over a three-year period at Peavey's technical center in Chaska, Minn. Peavey said preliminary studies have demonstrated the high-yield, lower cost benefits of the process over currently available corn utilization techniques. Peavey said it is examining production and marketing alternatives. 7 northern Maine, where dozens of small, family-run mills are threatened and the problem is compounded by cut-rate competition from Canada. Recovery will depend largely on when soaring interest rates, now in the 18-19 percent range, drop so people can again afford to build homes, the major market for timber.

As of the week ending Oct. 10, 51 percent of the 102,000 western sawmill workers either were laid off or working shorter shifts, reported the Western Wood Products Association in Portland, which represents lumber manufacturers in 11 Western states and the Black Hills region of South Dakota. Of 756 Western sawmills, 187 were closed and 252 were running at curtailed levels, association spokesman William Kirtland said, adding that he felt the figures would be similar in other U.S. logging regions. But the figures don't include others affected loggers, papermill workers and workers in the particle board and plywood business.

Kirtland said that for every sawmill job lost, 2.5 to 3 other workers are hurt, "from loggers in the woods to waitresses in the communities." Industry experts say timber has a good year when about 1.75 million housing starts are reported nationally. But only 1.2 million housing starts are expected this year and 1.4 million in 1982, Kirtland said. "Recovery will be slow," he said. "We've been depressed for about 18 months now. We're not in a recession but a depression.

There are mills that have closed, never to reopen, and more will suffer the same fate." The Weyerhauser one of the nation's biggest timber companies, cut shifts at many mills, operates some mills only three or four days a week and closed a mill in Bly, putting about 150 people out of work, said Tom Ambrose, a company spokesman. Crown Zellerbach has closed several sawmills, including one in Omak, that employed 355 people. The big wood industry companies in Maine's north woods, such as International Paper Co. and Great Northern Paper are not suffering major layoffs because of their size and diversity, company spokesmen said. But the smaller, family-owned mills that employ up to 300 workers are laying off hundreds because they cannot sell their spruce, fir and cedar products.

1 Most frustrating to the owners is that the trouble comes from factors they cannot control. The biggest problem is the lack of housing construction, but another factor hurting Maine's mills lies just north of the border in Quebec and New Brunswick. J. Paul Levesque, a life-long lumberman who owns a mill about 50 miles south of the New Brunswick border and who has bad to lay off more than 100 workers two-thirds of his work force says the traditional Canadian competition is now a near-monopoly due to government subsidies. D.

Ross Hodgins, an officer of a Big New Jersey lumber brokerage, said five years ago he bought half his lumber from Aroostook County mills and half from Canada. Now the Canadians get 90 percent of his business. He said Maine mills can't match Canadian prices. Deland Lebel, a mill operator in Van Buren, Maine, said Hodgins recently canceled an order for 50 truckloads of fencing and saved $66,000 by switching to a New Brunswick supplier. Because lumber brokers pay with U.

S. money worth about 17 percent more in Canada, Canadian mill owners can offer huge discounts from Maine prices and still earn a profit, Lebel said. SEATTLE, WASH. (AP) That big galoot in the unemployment line, with the blue ox double-parked outside, is Paul Bunyan. In the Pacific Northwest, where legendary logger giant Bunyan was said to roam, a depression in the lumber business has silenced many clattering mills and left thousands of people jobless.

The problem is nationwide, but it hits especially hard in the Northwest. In Oregon, the forest industry is the largest employer. It is the second largest, behind aerospace, in Washington State, which is estimating monthly losses at $45 million. In the East, the hardest hit area is Recession talk keeps market down NEW YORK, N. Y.

(AP) The stock market continued its retreat Monday after the Reagan administration conceded the nation is undergoing a recession and new indicators emerged of a declining economy. The Dow Jones average of 30 industrials, which tumbled 21.31 points last week, dropped another 4.58 points to close at 847.13. At one point during trading, the blue-chip average was off 7.04 points. But buying picked up slightly late in the day as interest rates fell in the nation's credit markets. Stocks falling in value outnumbered gainers 3-2 on the New York Stock Exchange.

Analyst Alan Poole at Laidlaw Adams Peck said the president's nil ivn it VII STREET concession, coming after earlier repeated administration denials of a recession, raised fears among investors that the downturn is probably worse than Reagan says. Poole also said investors are confused about the President's budget strategy. Indications grew in Washington that Reagan would trim his congressional budget-cutting requests. "If he Reagan goes ahead with his budget-cutting program we could have a worse recession, if he goes back on the program we could have worse inflation," Poole said. A further sign of the economy's weakness came as the Federal Reserve Board said U.S.

manufacturers operated at 78.5 percent of capacity in September, the lowest rate since October 1980. The Commerce Department reported housing starts fell 1.7 percent in September to an annual rate of 918,000, the lowest since February 1975. The only lower rate was in October 1966. And automakers' stockpiles of new cars grew to a 69-day supply on Oct 1 from a 64-day supply a month earlier, the industry journal Automotive News reported. Analyst Robert Errigo at Prescott Ball Turben attributed the market's slide to disappointing third-quarter earnings reports from major corporations, a reflection of the declining economy.

Big Board volume totaled 41.59 million shares, up from Friday's 37.80 million. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 48.13 million shares. 1 1 mi CMc TrVf-Mw Ytrt Nl WASHINGTON. D. C.

If there is anything resembling the eye of a hurricane in the Reagan administration, it is imperturbable Murray Weidenbaum. chairman of the President's Council of Economic Advisers. Even thoueh criticism of the Reaeanomics is intensifying and many Republicans in Congress and White House politicians are getting nervous, Weidenbaum insists that the President's nroeram is on course and that "the Republic will survive" even if Reagan doesn't get all the budget cuts he's seeking. In an interview in his high-ceil- inged office next to the White House, Weidenbaum also said that the .011 THE EC0E10IJK By BILL NEIKIRK current slowdown in the economy will not be classified as a recession, even though there probably will be at least two consecutive quarters of decline. Some excerpts: Q.

There seems to be a lot of concern in the White House and Congress about the economic situation with the elections coming up. Interest rates are still high and there's worry about a recession. To what extent does this affect you and your resolve to keep a steady course? A. I think a steady course is required. In a very real sense, I think we are ahead of the situation.

The people who might have preferred policy to be based entirely on controlling inflation now see the merits of the policy which are designed to deal with both inflation and the problem of inadequate growth. The tax cuts no doubt are making the budget-balancing task more difficult; nevertheless, that's our response to the problem of economic growth. Q. What people are you talking about? 1 A. The standard old-time conserva tives who favored the root-canal approach of economics, as we used to call it, in varying Republican administrations.

That says you just fight inflation, and cut spending, and maybe even increase taxes. We want to cut spending, but we sure want to cut taxes, too. Q. How much pressure is there from the White House for easing up on monetary policy? A. One thing I'm pleased to say, everyone in the administration knows that monetary restraint is essential to bringing inflation down.

There are no advocates for a shift to easier money policy. If they are, they are well hidden. They haven't come out of the closet. Q. Do you see a recession at this point? A.

I don't think we are in a recession now. We are in a period where the economy is marking time. Q. Before it's over, might it be officially classified as a recession? A. I doubt it Remember last year we had one quarter of very severe downturn, and that got called a recession.

It isn't necessarily two quarters of decline that is the rule of thumb for a recession, but it depends on how deep, how widespread. Q. When will the turnaround begin? A. It could happen in the fourth quarter, which we are now in, but that may be too encouraging. It could be in early 1982.

Q. Is a permanent decline in inflation reflected in the statistics? A. I think the GNP deflator, which is the economists' favorite measure of inflation, will continue to show single-digit results. If you use the GNP deflator, the period of escalating double-digit inflation is behind us. Q.

For the next three or four years? A. Oh, sure. Next year, we expect 7 to 8 percent, the year after that 6 percent, and the year after that hopefully down to 5 percent. Q. Many economists say we are in a roller-coaster economy.

High interest rates knock down the economy, the economy rises when interest rates fall enough, but then interest rates rise again, knocking the economy back down. Why is it you don't see that kind of scenario? A. That just looks at the supply and demand relationship for funds and ignores the Inflation premium in interest rates. I think the inflation premium under our scenario will decline as prices come down. There will be continually declining nominal interest rates.

Q. Do you think high interest rates and the threat of foreign competition in some industries is going to have a big impact on wage rates next year? A. I would expect so. It will be a situation in which it's going to be harder for companies to pass on labor costs in the form of higher prices. It's going to have a dampening effect on all sorts of cost increases.

I wouldn't limit that to labor costs. Not only that, we have seen a number of instances where companies, which have been generous compared to what the market would support, have had to lay off large numbers of workers. I think there's an educational process. Q.What effect will your policies have on wage rates in next year's big round of bargaining? A. Our attitude toward private wage and price decisions is just that they are private decisions.

We have avoided jawboning. In fact, what we did in the coal strike is indicative. We stayed out of the coal strike. I think that's the pattern to follow. 1 do think the whole program, increasing productivity and reducing inflation, is going to reduce the various elements ofcost Retailers' profits up Retail corporations' after-tax profits averaged 1.7 cents per dollar cf sales in the second quarter of 1981, an increase from 1.1 cents in the first quarter, the Federal Trade Commis- sion staff reported.

The report said the statistic stood at 1.6 cents In the second quarter of 1980. 1.