Columbia Missourian Newspaper 1977-08-16

              I - Im &wm u
J 7:30 p.m., "An Evening of One-- I
I Acts," Stephens Warehouse I
Theater, adults $1. 8
I Exhibits
See Sunday's Vibrations I
magazine for a complete listing j
i of exhibits. I
j Movielistings oe page 33 !
Special loan
key to whole
Lance probe
'Correspondent9
dealings at issue
N.Y. Times Service
WASHINGTON The investigation
of Budget Director Bert Lance's
financial dealings has thrown new light
on the way banks and bankers do
business with each other. Much of the
attention has focused on the
"correspondent" relationship between
banks.
The questions raised about Lance,
who was a banker before President
Carter named him to the powerful OMB
post, are based on personal loans he
received and the correspondent deals
his bank made with his lenders.
The Lance controversy has sensitized
bankers to the point that few are willing
to be quoted by name. Almost
unanimously, though, they say what he
did was business as usual in the
banking industry.
"As far as I know, Lance hasnt
raised any eyebrows in the banking
business," said the former head of the
correspondent division of a major
Chicago bank. "It's quite common to
look to a correspondent for personal
financial needs. A correspondent is a
banker's banker."
Lance received a $2.6 million lean
from Manufacturers Hanover Trust Co.
latsigltf
of New York to buy stock in the bank he
headed. National Bank of Georgia.
Later he refinanced that loan and
bought more stock with a $3.4 million
loan from First National Bank of
Chicago.
In both cases, National Bank of
Georgia woo establishing
correspondent account at the bigger
bank at about the same time Lance was
getting his loan.
Since correspondent accounts do not
receive an interest, the charge leveled
at Lance has been that he used the
accounts the bank's money, not his
own as partial payment for his loan.
The accusaton is that some of the
money National Bank of Georgia had on
deposit was a "compensating balance"
for Lance's loan. This was reinforced
by the existence of an internal
memorandum at Manufacturers
Hanover linking the correspondent
account to "20 per cent of the facility"
or loan.
A compensating balance is an old
practice in banking. Even when a
person borrows money, he usually
needs a bank balance to transact
business. Banks usually will quote a
lower interest rate on a loan if the
balance is kept with them, because the
bank can make additional interest
income by lending the funds.
One common correspondent account
is between a medium-siz- e regional
bank, such as Lance's, and one of the
giant banks in New York or Chicago.
National Bank of Georgia, for example,
has deposits of more than $300 million.
Its New York correspondent,
Manufacturers Hanover, is 86 times
nigger with $26 billion in deposits.
The correspondent bank provides a
wide variety of services for the smaller
bank. If the smaller bank is not in the
Federal Reserve system, the
correspondent clears its checks from
across the country.
It gives the smaller bank a chance to
participate in big loans and bond un-derwriti- ngs.
If the smaller bank has a
chance to make a good loan larger than
its legal limit, it can pass on the excess
to the larger correspondent.
The larger bank provides expertise in
areas where it would not pay the
smaller one to have its own experts,
and provides training services.
In fact, a Manufacturers Hanover
official said the bank has a 41-pa- ge
catalogue of services it offers to its
(See SMALL, page 14)
69th Year No. 280 tlaml Morn'mgl h Tuesday Aug. 16, 1977 14 Pages 15 Cents
$" H& . s
By Elizabeth Campbell
Missonrisa staff writer
Consulting engineers gave the coal
gasification project the green light to go
to phase three Monday, and proposed
three sites for the mid-Misso- uri plant.
Two of the sites are in Boone County.
The 300-pa- ge report concludes that
the proposed plants would be
economically feasible.
The $50,000 study, presented Monday
by representatives of the engineering
firm, Lutz, Daily, and Brain, was
commissioned by the Mid-Misso- uri
Council of Governments and the Green
Hills Planning Commission. Colum-bia's
share of the study was $20,000.
An area centered about one mile (1.6
kilometers) east of Hallsville in north-western
Boone County, an area near
Rocheport in southwestern Boone
County and an area centered about two
miles (3.2 kilometers) northeast of
Armstrong in northwestern Howard
County are the mid-Misso- uri sites.
Sites near Milan in Sullivan County
and near Unionville in Putnam County
were recommended for the Green Kills
area.
Availability of coal and water sup-plies
have already been confirmed, and
specific sites for each region are to be
selected by the end of phase three. Con-struction
would begin by the end of 1979.
and the plant would begin operation bv
1382.
The total capital outlay of each 300-megaw- att
plant is expected to range
from $347.2 million to $358.4 million,
according to the engineers.
The cost of the plants probably would
be financed by the sale of municipal
revenue bonds, said James Lundsted,
director of Columbia Water and Light
Department and chairman of the Coal
Gasification Advisory Committee.
Bonds would be issued at an interest
rate expected to range between 6 and 7
per cent. The payback period for the
bonds would be 25 years.
Financing would be handled by a
consortium, Lundsted said.
The Texaco process of coal gas- -
(See STUDY, page 8)
"""' " " ' '
Deaftla learn """
Joe Patterson, 39, of Vancouver, Wash., plunges to his death by
jumping off the Interstate 5 bridge in Portland, Ore., despite the
attempts of his wife Ella to stop him. The photographs were taken
by an Oregon Journal staff photographer Bill Murphy who was on
his way to work when the incident occurred Monday.
Imsfide
REACTION from the proponents
and the opponents
ANALYSIS of the study and its
assumptions
A MAP of the proposed plant
locations
On page 8
Traffic loop
changes
rejected
By Cheri Duncan
Misscurian staff writer
The City Council Monday night
rejected any changes in the downtown
traffic loop after hearing a suggestion
from the Downtown Task Force to
allow direct exits from the loop at
Eighth and Ash streets and Ninth and
Locust streets.
After the decision. Mayor Les
Proctor, a task force member, angrily
declared the task force inactive.
"I think the task force has ap-proached
this more objectively and
more openmindedly than the council."
Proctor said.
The group will not meet again, he
said, until the results of a second public
opinion survey on the loop are made
available in early October.
Task force member Tom
Eaumgardner presented the proposed
change to the council. He said it in-volved
"two very minor alterations"
which would allow traffic to cross the
loop when cars on the loop are stopped
by lights.
-- Second Ward Councilman Don Mosby
said he thought the plan would violate
the concept of the loop by allowing
traffic to move across rather than
around it. He asked Public Works
Director Ray 3eck for an opinion.
"I recommended to the task force
that this change be made," Beck said.
He said disadvantages of the plan
would be reduced chances for right
turns with red lights, increased traffic
at the affected intersections and
possibly more through traffic from the
University.
The plan's chief advantage is that it
(See WILSON, page 14)
Fire fighters delay work slowdown vote
By Jim Drinkard and George Mazurak
Missourian staff writers
Columbia firemen voted Monday
night to postpone a decision on a
possible work slowdown until a secret
ballot of fire fighters can be taken.
Mel Tipton, secretary of Local 1055 of
the International Association of Fire-fighters,
said the decision to postpone
the vote was made to allow firemen on
all shifts to take part and to prevent
members of the union from becoming
subject to mass emotions that he said
sometimes accompany mass votes.
Tipton said the results of the vote
would be available by Thursday.
The firemen interrupted their
meeting at the Fire and Police Building
Monday night long enough to file into
the City Council chamber across the
street.
There, Tipton told the council the
impasse procedure it was considering
was "something we can live with." The
procedure was drawn up by City
Manager Terry Novak and city em
ploye group representatives.
The proposed procedure called for
any items on which the employe
bargaining group and the city could not
agree to be referred automatically to
a"fact-findin- g" board.
The firemen left the meeting after the
provision was deleted by a 4--3 vote of
the council. The deletion, proposed by
Fourth Ward Councilman Jim
Goodrich, gives the council the option to
circumvent a fact-findi-ng procedure if
it believes it will be unable to grant
further labor demands.
Goodrich, Mayor Les Proctor, First
Ward Councilman Pat Barnes and
Second Ward Councilman Don Mosby
supported the deletion. Fifth Ward
Councilwoman Fran Beach, Third
Ward Councilwoman Diane Farish and
Sixth Ward Councilman Clyde Wilson
voted against it.
Tipton said the amendment to the
impasse procedure reduces it to "a
piece of window dressing."
The council defeated two other
amendments proposed by Goodrich
that would have limited the geographic
area from which fact-findi- ng board
members could be drawn and denied
any benefits of the procedure to em-ploye
groups that threatened strikes or
work slowdowns.
The fire fighters present applauded,
when the council defeated those two
amendments.
The council postponed final action on
the impasse procedure on a tabling
amendment by Wilson to give employe
groups a chance to "react" to the
amended document.
Jail construction uncertain without grant
ByT.C.Murov
Missourian staff writer
Construction of the proposed Boone
County Jail addition probably will be
postponed indefinitely because the
jail's design does not meet
requirements of a federal grant.
NorthernDistrict Judge Dick Farmer
said Monday that, if the county does not
receive the "pocket of poverty" grant
from the U.S. Department of Com-merce,
1979 revenue sharing funds
could be used to pay for it Asked if he
knows of any other possibilities for
financing, he said, "I can't think of
any."
Farmer said he did not know when
construction would begin on the jail if
the grant is not received.
The county does not meet federal
requirements because its jail design
calls for two-ma- n, instead of one-ma- n,
cells.
Farmer said he will visit the National
Gearing House for Criminal Justice
Planning and Architecture Wednesday
to discuss the problem. The
clearinghouse, an affiliate of the Law
Enforcement Assistance Ad-ministration,
established the one-m-an
cell requirement in 1971.
The clearinghouse, located in
Champaign, 111., approves plans for
correctional facilities which are to be
constructed with federal funds.
"I'm not optimistic at all about what
we'll be able to accomplish" in
discussions with the clearinghouse,
Farmer said. But, he said the visit is
necessary to ensure "adequate jail
facilities" for Boone County.
Mike Dane, coordinator of correc-tions
planning and programs for the
clearinghouse, told the Columbia
Missourian the clearinghouse "can't
compromise on the single cell
requirement because it is a standard. "
The reasons for the single occupancy
requirement of the guidelines, Dane
said, are:
To provide an inmate safety from
another inmate.
To give the inmate a sense of
security.
To provide a more normal en- -
vironment for the inmate.
The grant is a "pocket of poverty"
grant from the Economic Development
Administration of the U.S. Department
of Commerce. The county is applying
for the $1.5 million, of which it expects
to receive 250,000 for the jail, with the
city of Columbia.
The County Court saw the federal
funds as a boon after the lowest bid for
the jail addition was $552,000, which
was about $150,000 more than the last
(See DELAY, page 14)
School district hit with high insurance
By Mary Little
Missourian staff writer
The Columbia school district has
been hit with a 255 per cent increase in
insurance costs, although the district's
insurable building value has risen only
32 per cent since a three-yea- r policy
was Issued in 1974.
The district apparently is the victim
of vandalism of school buildings and
insurance losses elsewhere.
Under a three-ye-ar pdicy in 1974 with
the Hartford Insurance Co. o? Con
necticut, the district paid $46,000 for
fire and extended coverage on $30.8
million of school buildings and their
contents, said Ed Saunders, beard of
education treasurer.
But when the policy was to be
renewed March 1 o this year, the board
was faced with an increase in rates it
hadn't expected.
"Everyone told us it would be twice
as much but we didn't think it would be
three timer as much," Saunders said.
In March the board picked the
Hmr&ford Insurance Co., the km bidder.
for one year of fire and extended
coverage on $40.7 million worth of
school buildings and contents for a
$54,536 premium. The only other
company bidding, Wightman Insurance
Agency of Springfield, submitted a
proposal of $63,264, Saunders said.
The board contracted the policy with
the intention of canceling it after six
months and reinstating the same policy
on Sept 1 fo? one year at the same rate,
Saunders said.
The board made this arrangement
bec&'cse the budget for 1876-7- 7 allowed
only $25,000 for a newinsurance policy,
but the actual cost for one year was
more than twice that. To keep the
budget balanced, the board arranged to
purchase six months of insurance for
$27,268, he said.
Saunders said the main reason for
increased rates is that insurance
companies have experienced a high-los- s
ratio across the nation because of
vandalism, protests and riots that
damaged school buildings.
In Missouri, the Hartford Company is
affiliated with the Insurance Services
Office (ISO), that calculates standard
rates. ISO manager Tom Scott said
rates are based on the class of risk that
the purchaser falls under.
He said it is possible that Columbia's
school district, which has a relatively
low vandalism rate and has not filed a
claim in 23 years, is paying for high
vandalism rates in other districts in
Missouri.
"It's very difficult to insure schools
anymore," said board member Charles
St. John, agency director of State Farm
Insurance Co. in Columbia. Insurance
companies nationwide have levied
increase in rates for school buildings
and their contents, he said.
Saunders said the rates also jumped
partly because the district's insurable
building value increased $10 million the
past three years. The value has in-creased
so dramatically primarily
because the cost of replacing buildings
has skyrocketed in recent years and
because of building additions, he said.
Buildings usually are insured for the
amount it costs to rebuild them,
Saunders said.