U.S. government
bails out ailing bank
By SALLY JACOBSEN
AP Economics Writer
WASHINGTON The government forged
yesterday a record $4.5 billion bail-out of
Continental Illinois National Bank & Trust
Co., whose high-flying lending practices left it
teetering with a huge portfolio of bad loans.
The deal, which has some of the
appearances of nationalization, immediately
drew some complaints in Congress that
federal regulators had fashioned the
arrangement behind the public's' back.
But the regulators defended their action,
contending it was the best way to bolster the
ailing Chicago giant and maintain stability in
the banking system.
At the White House, spokesman Marlin
Fitzwater said, "We think it's in the best
interests of depositors and the banking
industry. Although we had some reservations
about the form of the agreement, we think this
is an important restructuring of the bank."
"The bottom line is we have created,
through this transaction, one of the very
strongest banks in the world," said William
Isaac, chairman of the Federal Deposit
Insurance Corp., which plays a key role in the
plan.
In Chicago, David G. Taylor, chairman of
the bank's parent, Continental Illinois Corp.,
said "This is not the go-it-alone path we
aspired to, but at this point it is the best course
open to us." As a condition of the plan, Taylor
must step down.
The corporation's new chief, John E.
Swearingen, retired chairman of the board of
Standard Oil Co. of Indiana, said, "It's a long
road ahead of us and all the twists and turns
cannot be anticipated."
William S. Ogden, former vice chairman of
New York's Chase Manhattan Bank who
becomes head of the bank, urged customers:
"Bear with us. There is no miraculous cure
but a lot of hard work."
Olympics begin tomorrow:
By SCOTT KRAFT
Associated Press Writer
LOS ANGELES With the
Summer Games a day away, a
malady psychiatrists call "Olympic
anxiety" has begun to afflict some
residents upset about hundreds of
armed security forces, the influx of
so many foreigners and, the
prospect of clogged freeways.
Psy'chiatrists said Wednesday
that they are getting more calls
than usual, most of them from
ordinarily well-adjusted people
unsettled by this thought: 16 hot
summer days of intolerable traffic,
packed restaurants and stores
overrun by tourists.
Many more will treat mild
symptoms of stress with antacids
after the Olympics begin tomorrow,
the psychiatrists added.
More than 5,000 of the 7,800
Nelsen to seek support for liberal arts
Hart M. Nelsen
the
daily
The scheme will leave the bank-holding
company with about $3O billion in assets, one
quarter less than the $4l billion of March. Its
nationwide standing will slip from No. 8 to
somewhere in the range of 10 to 20, bank
officials said.
The arrangement must still be voted upon
by the bank's shareholders at a meeting,
likely in September. If they reject theddeal,
the agency said it will withdraw its aid and the
bank will be declared insolvent.
Under terms of the arrangement, the FDIC
will buy $4.5 billion worth of bad foreign and
domestic loans from Continental, at a
discounted rate of $3.5 billion, and inject $1
billion in capital.
With the capital infusion, the agency will
get an 80 percent stake in the bank through a
stock issue that gives it the right to convert
into 160 million shares, or 80 percent of the
parent company's common stock. The agency
doesn't intend to exercise that right until it
decides to end the arrangement.
The bank will write off $1 billion of the bad
loans, resulting in a second-qUarter loss of
about $l.l billion, according to Taylor.
Despite the appearance of a government
takeover, Isaac insisted at a news conference
that the bank wasn't being nationalized.
He said the independent agency was using
money from its $l6 billion insurance fund,
built up by assessments from the 14,800 banks
that have deposit insurance up to $lOO,OOO.
"Not one nickel of taxpayer money is in this
transaction," he said. "As soon as we see this
bank is back on its feet . . . the FDIC will sell
its interest in this bank."
He also asserted, "The FDIC will not . . . be
running this bank."
It did, though, pick the new management •
team of Swearingen and Ogden and intends to
restructure the boards of directors.
, Isaac said it will not have hiring or firing
power or make business decisions.
"This is a private sector bank," he insisted
Californians brace themselves for invasion
athletes from 141 countries and
thousands of journalists and
visitors have flooded into Los
Angeles this week. So far the
weather has been mild and the
freeway traffic has been lighter
than normal. But next week
freeway traffic is expected to
increase by 10 percent.
"People have a sense that they're
being invaded," said Dr. Duke
Fisher, a psychiatrist at Del Amo
Hospital in Torrance, Calif. "It's
very clear that one of the things
that is precipitating stress is
anxiety related to the Olympics."
One problem is the security
forces, numbering in the thousands
and including 80 helicopters and
two blimps operated by police
officers.
"Looking out my window I
normally see students, a wide open
oasis into the community," said
By BILL FERRELL
Collegian Staff Writer
The College of The Liberal Arts has the chance
to secure the very best new scholars for faculty
positions, the new dean of liberal arts said.
"It's a buyer's market in academe right now,"
Hart M. Nelsen said. "We have a chance to
acquire assistant professors and also those of
higher rank who are absolutely superb."
Previously, the ability to secure top faculty
depended more on networking, or knowing the
right people, Nelsen said.
"My interest will be first in providing as many
resources to the faculty as possible," he said.
Secondly, Nelsen said he will do everything
possible to encourage quality of teaching, quality
of research and development of quality faculty.
Nelsen said he was very impressed with the
University's.aggressive program development.
"Penn State seems light years ahead in study
abroad programs."
He said he is also very much in favor of the
merit system for faculty salary increases.
While he served as chairman of sociology at
two other universities, Nelsen said he based
much of his salary recommendations on merit
"I've found that the best teachers are also the
best researchers," Nelsen said. If lectures are
fresh, this probably indicates that the profesSor
is keeping up on research.
Nelsen said he applauds University President
Bryce Jordan's goal of making Penn State one of
one • ian
`People have a sense that they're being
invaded. It's very clear that one of the things
that is precipitating stress is anxiety related
to the Olympics.'
—Dr. Duke Fisher, psychiatrist in Torrance, Calif
Scott Fraser, a professor of
psychology at the University of
Southern California, site of one of
the Olympic villages. "Now I see
strands of fences and barbed wire,
people walking around with walkie
talkies.
"Intellectually you can say this is
part of the security forces that are
here to make sure everyone's well
being is maintained. But
emotionally, you're confronted with
forces meant to control and inhibit
people."
Adding to the surreal atmosphere
l'
I.o`
President Reagan watches as U.S. Senator Paula Hawkins, R•Fla., points to the crowd at
yesterday's rally in Atlanta. Reagan proclaimed "the election year has begun," and accused
Walter Mondale of writing off the South.
is the rainbow of pastel-colored
banners dressing up the villages.
"With the psychedelic colors, you
start thinking that as soon as the
helicopters clear away, Dumbo will
come flying in, like in a carnival,"
Fraser said. "You don't usually
associate a carnival with a prison."
Any major event and the •
Olympics will be the biggest show
ever staged in this part of the world
can be a target for deviants and
people seeking a moment of
attention for themselves or their
cause, psychiatrists said.
the nation's top 10 universities.
"I think it's a reasonable goal and, in fact, if we
didn't have it as a goal we would be doing a
disservice to the state."
The University'.s College of Liberal Arts has
experienced financial problems over the past few
years, Nelsen said. During an inflationary
period, the University could not build its budget
at the rate it should have.
Some departments within the College of
Liberal Arts have been left in precarious
positions as a result, he said. In some
departments, vacancies left by full professors
have been filled by assistant professors.
In some instances positions were lost because
of a need to cut the budget, he said.
"It's not a good situation," he said. "I can
think of several departments that really should
have significant financial enhancements."
Some departments are in need of new positions
for maintenance of their national reputations,
Nelsen said.
He said he would like to see enlargement of a
cooperative program between the College of
Business Administration and the Department of
Sociology.
He said he would also like to see other
intercollege programs developed if the funds
were available.
"I want students to experience contemporary
programs and those demand that we be fully
staffed and have the resources for those faculty
Please see NEW DEAN, Page 14.
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Friday, July 27, 1984
Vol. 85, No. 26 14 pages University Park, Pa. 16802
Published by students of The Pennsylvania State University
©1984 Collegian Inc.
v r7.;:i
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Pattishall
should aim for top
By BILL FERRELL
Collegian Staff Writer
One major problem faced by the
University is securing adequate
resources to develop and retain
the University's top reputation
among other academic
institutions, the new chairman of
the Council of Academic Deans
said.
"I think we already are in the
top 10 in a number of our
important majors spread
throughout the University," Evan
G. Pattishall Jr., dean of the
College of Human Development,
said.
"The problem is how do you
continue to help them produce
excellence and provide enough
resources to the other equally
important majors to develop and
improve their excellence."
Pattishall was elected chairman
of the council for the 1984-85
academic year by council
members in April. He assumed the
office of chairman on July 1.
The tasks of the chairman are to
continue to develop better
communication and exchange of
ideas between deans and to work
with the deans in identifying
problems, issues and
opportunities in building strong
academic programs in each of the
colleges, Pattishall said.
In the last few years, the council
has been more proactive and
responsive to academic and
administrative problems in the
inside
• A former Penn State University student accused of leading a band of
students on an $lB,OOO burglary spree has pleaded guilty and agreed to
aid police in their continuing investigation, attorneys said. Page 2
index
Opinion
Sports..
Weekend
weather
Mostly cloudy and cool today through tomorrow with occasional rain and
thunderstorms. The rain may be heavy at times. High both days near 73
degrees. Low tonight 58 by Glenn Rolph
Reagan
woos
South
By TERENCE HUNT
Associated Press Writer
HOBOKEN, N.J. President
Reagan, battling Walter Mondale
from the South to the industrial
Northeast, said yesterday the race
for the White House offers a choice
between a strong America and "a
nation that begs on its knees for
kindness from tyrants."
With tough rhetoric and appeals
to patriotism and family values,
Reagan wooed political support
from southerners, women,
Italians and blue-collar workers.
In Atlanta, Reagan accused
Mondale of "writing off the South"
and said the key issue in 1984 is one
of leadership.
"It's about what we want for our
children a free nation or more
bondage of the tax and tax, spend
and spend variety; a strong nation
that is deeply proud of the ideals it
represents in the world or a nation
that begs on its knees for kindness
from tyrants; 'a free nation where
our children can grow and become
anything they want to be, or a
tired place where a' big
government far away will take
everything they work hard for,"
Reagan said.
Without mentioning Mondale
and Ferraro by name, Reagan
said, "they think prosperity is an
illusion and they think peace
through strength is destabilizing.
Let me tell you what I think: Only
if you read the record of their
AP Laserphoto
administration backwards does it
have a happy ending."
says PS U
University, he said.
The council, he added, has
changed from a council of '
information-sharing to a true
deliberative body.
The council not only shares
ideas and makes
recommendations to the
University president and
executive vice president, it also
responds to the problems and
issues that the administration
takes to the deans for
consideration, he said.
Pattishall said he was pleased
the University Board of Trustees
approved a system of salary
increases based entirely on merit.
"The merit notion is long
overdue," he said. "It's very '
appropriate for University
faculty, but I think we also have to
recognize merit in more than
publications and research
grants."
Merit must be considered on
more than just the usual heavy
emphasis on numbered
publications, Pattishall said.
"We also have to find some way
to consider faculty who are
making major contributions to
student development, in
mentoring other faculty and in the
development and testing of new
ideas."
The additional funds approved
by the University Board of
Trustees for the Colleges of
Engineering and Business
Administration will provide more
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