4-Sunday, October 2, 1977-The Michigan Daily
4urray save
By GREGG KRUPA
The city has recently passed through
a period .of crisis unrivaled by any
trauma in recent memory. On Tuesday,
Septemiber 13, members of the higher
echelons of city hall were informed that
the city was on the brink of losing bet-
ween $800,000 and $1.4 million, thanks to
unauthorized investments of
questionable legal propriety.
Although City, Administrator
Sylvester Murray shouldered much of
the blame for .the debacle, clearly it
was precipitated by other officials in
city hall. In fact, Murray can be
credited with extricating the city from
the mess within 72 hours after he was
informed of the investments.
IF THE CITY finally emerges from'
the crisis with its' bond and
credit ratings unscathed, it will be bec-
ause of Murray's talents as a per-
suasive negotiator.
The city entered into unauthorized
transactions with the brokerage firm of
Merrill, Lynch, Pierce, Fenner and
Smith in January of this year. In an ar-
bitrage investment the investor, in this
case the city, borrows a United States[
treasury note from a brokerage firm,
and then sells the note for cash. The
money is then used to buy another
treasury note which the investor hopes
will be more profitable than the
borrowed security.
The city thought things were going
well, until it discovered that a Merrill
Lynch counselor, who has since been
fired, had been fabricating the figures
that indicated how well the note was
doing on the mari-ket.
WHEN MICHAEL CARROLL, the
investment counselor, was confronted
by City Accountant Marc Levin, he
agreed to return the money the city had
invested, and "make the city whole."
The money was returned to the city
on June 30. On July 1 the City Con-
troller's office promptly re-entered the
arbitrage agreement with the firm. The
value of the note again declined.
On September 13, Levin and City
Controller Lauren Jedele informed ac-
ting City Attorney Bruce Laidlaw of the
unauthorized investment. This kicked
off an entire week of meetings before
the matter was finally resolved on Sept.
16 when Merrill Lynch agreed once
again to return the money.
On September 21, City Administrator
Sylvester Murray issued a report on the
arbitrage investments which was of-
fered as a "full disclosure" of the
events leading up to the crisis.
BUT MURRAY'S report did not fully
explain the cause of the near
catastrophe,
Why did Jedele and City Accountant
Marc Levin make an investment that
was clearly outside the guidelines
established by Murray in 1975,
especially an investment that is of
questionable legality under state laws?
Murray's report offers no answer.
Are the men in charge of investigating Ann
Arbor's taxpayer's money unfamiliar
with inter-departmental policy and
state law? The only other possibility is
even more ominous-that Levin and
Jedele were aware of the sanctions
against the investment manuver, and
decided to ener the arbitrage anyway,
in the hope that it would f~akemoney
for the city. With only Murray's
inadequate report to guide us, any an-
swer is possible.
JEDELE AND LEVIN also exhibited
irresponsible judgement after the
original decision to make the
questionable investment.
Sometime in late May or early June,
Levin realized that an investment
counselor from Merrill Lynch had
fabricated the figures that indicated
how the note was doing on the market.
The counselor, Michael Carroll
ut stil
initiated a transaction on June 30 that
closed and confirmed the arbitrage
with no loss to the city.
THE CITY HAD been relieved of a
great loss of revenue and Jedele and
Levin were breathing easier. But on the
very next day, City Controller Jedele's
office gave the money right back to
Merrill Lynch. Why, after testing the
iron with a moist finger, and getting
burned the first time, did the Con-
troller's office reapply their entire hand
to the scalding metal?
Once again the note began to lose
value on the market quite rapidly. But
the Controller's office did not inform
the proper city-Acting Attorney R.
Bruce Laidlaw and Administrator
Murray until September 13.
When Murray was asked if any city
officials would receive disciplinary ac-
tion, he said he was still trying to find
out who knew what and when. For the
sake of the city's taxpayers we hope the
investment proves fruitful.
IN HIS REPORT, Murray placed
much of the responsibility on his own
shoulders. This is typical Sylvester
Murray style. Murray, who makes in
excess of $37,000, more than three times
what Mayor Albert Wheeler's salary,
runs the city of Ann Arbor. One has the
feeling that Murray is in total control.
Although Murray has been accused
by several members of the city
bureaucracy of being "anti-people" no
one accuses him of being an inept ad-
ministrator. At City Council meetings
the administrator pours out infor-
mation on past and present affairs as if
he has a microfilm library stored in his
head.
The city has experienced tremendous
growth since Murray became the ad-
ministrator in 1973. His plan for the
reorganization of city hall, submitted to
Council this week suggests the ad-
ministrator's job has become too cum-
bersome for one person to handle.
AS COUNCILMAN Ronald
Trowbridge (R-Fourth Ward) said,
"We can't assume that Sy is om-
nipresent."
A city member once said that pigeons
don't walk on the roof of City Hall
without consulting Sylvester Murray
first. But how can Murray be faulted for
not knowing about the bad investments,
gets
blame
when the officials directly involved did
not tell him things had gone awry?
Once Murray became aware of the
situation, the city acted with incredible
speed. Within 72 hours after Murray
was told, Merrill Lynch areed to rein-
burse the city's losses, with interest,
and the crisis was over.
MURRAY IS NOW acting to insure
the city will not be disciplined by the
state treasurer or lose its bond rating
with Chicago and New York investment
houses.
The city uses idle cash from 19 In-
dividual accounts which are pooled into
one investment fund. The interest ear-
ned from the pool is prorated and
returned to the individual accounts"in
proportion to the idle cash the account
contributed to the pool.
Mayor Wheeler said that a system of
checks and balances has been set up to
make sure that the city does not
become involved in another investment
crisis. The Mayor has been quoted as
saying he thought "we were going ',t
hell in a wastebasket.
Thanks to Sylvester Murray the path
of the wastebasket has been altered.
IIE
£idclit3an
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LO0OKING
BACK
Eighty-Eight Years of Editorial Freedom
420 Maynard St., Ann Arbor, M1 48109
Vol. LXXXVIII No. 22
I
News Phone: 764-0552
Edited and managed by students at the University of Michigan
Grade deflation: Needed
L SA DEAN Billy Frye said last.
'Week that the grade inflation holi-
day is over, and we think it's about
time.
"Faculty attitudes about grading
are toughening," Frye warned. "It
was a long, long time agowhen a 'C'
was a respectable,, even honorable,
"grade ... Enough of us changed our
standards to let grades float up."
Now, apparently, professors are
drawing the line against the near-auto-
matic 'B' that has become as expected
as Michigan losses in the Rose Bowl. A
3.0 was once a commendable grade
point average; now it is a sign, in many
departments, that its bearer barely
opened a book all term. Parents who
watch grades as a stock broker watch-
es dividends, wail over the 'B' average
thes days.
Frye is correct in detecting a
iening up among professors, we
. it a very healthy thing.
ano elected us Puritans for the
day? Well, no one, but it is all too easy
for all of us to sigh a silent prayer of
thanks for the wonders of grade infla-
tion when the report cards come out
each term. We swear each term to do
better, but many departments simply
make sluffing off too easy to pass up.
RADES WERE LESS inflated
twenty and thirty. years ago,
when an 'A' was something more than
slightly out of the ordinary. But it is
ironic that our parents needed college
preparation less tharl this generation,
In an increasingly caplex-and specia-
lized world, grade in£IJtion is making a
substantial contribution to an
academic environment woefully
inadequate to the needs of today's col-
lege graduates.
If a university education is to mean
anything, if anyone is to learn and be
creative, the institution must be
demanding. That means that
professors must, in the classic phrase,
"grade tough."
BUSINESS STAFF
DEBORAH DREYFUSS.......................Business Manager
COLLEEN HOGAN..................Operations Manager
ROD KOSAUW.............................. Sales Manager
NANCY G t ..............Display Manager
ROBERTGCARPENTER...... Finance Manager
PETE PETERSEN........ .........Advertising Co-ordinator
PHOTOGRAPHY STAFF
ALAN BILINSKY ....:..................:Chief Photographer
ANDY FREEBERG..................... Chief Photographer
BRAD BENJAMIN...s............ Staff Photographer'
JOHN KNOX............ .......... .Staff Photographer
CHRISTINA SCHNEIDER................ Staff Photographer
'1
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GIMME A MALE!
GIMME ANNER,
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1
Energy tug of war
r"lHE U.S. Senate and Presi-
. dent Carter were busy tuss-
ling over a long, meandering,
twisted and sometimes frayed
length of rope this week - the en-
ergy program. After days of liter-
ally exhausting debate and fili-
bustering, the concern no longer
seems to be over who will be vic-
torious in the political tug of war.
The question now is: Where is the
tangled rope going to snap? And
what will the resulting energy
policy mean to the average
American pocketbooks?
The two sides line up like this:
The President has asked for
continued regulation of oil and
gas prices in his energy program,
along with new "incentives" for
oil companies to increase produc-
tion of domestic oil. Under the
Carter plan, the industry would
be allowed a margin of profit
small enough to force the com-
panies to find new fuel reserves,
yet large enough to pay for costs
of discovering such reserves. "I
do not support complete deregu-
lation of natural gas prices which
would provide windfall profits
without significantly increasing
supplies," the President said at a
news conference Thursday. His
program would give oil produc-
ers the equivalent of the world
price.on oil, but only for newly
discovered supplies. Also con-
tained in the President's plan are
national conservation measures,
including a "gas guzzler tax" on
Senators seemed more likely to"
compromise on price regulation
rather than eliminate govern-
ment controls altogether. A par-
tial deregulation, along with in-
creased prices for newly discov-
ered oil would also have the effect
of discouraging consumption.
The Senate and Carter still
basically disagree on the gas
guzzler tax. The Senate Finance
Committee has eliminated the
tax, at least for the time being,
from the Senate version of the en-
ergy plan.
President Carter seemed op-,
timistic Thursday that the
Senate, like House had done
before it, would "realize that this
is a major domestic legislative
product." The House has already
gone over the 'President's pro-
gram and despite several weeks
of "disappointments" for Carter,
resolved to leave the energy plan
intact.
Carter emphasized that no final
action had been taken by the
Senate in regard to the plan, and
much work has yet to be done.
The tussling over the energy
"rope" will in the meantime con-
tinue to be quite a show.
DNA revisited
D EOXYRIBONUCLEIC acid,
that elusive substance
which is crammed into our body
cells and is better known as DNA,
got some more attention on cam-
pus this week. The Biological Re-
search Review Committee -
University. With the formation of
the nine-member Committee C
last year, a process for certifying
the safety of faculty DNA pro-
jects was initiated.
THE FIVE experiments ap-
proved for the year will not
require extraordinary lab pre-
cautions. But for future; more
cautious, activities, the Commit-
tee announced that two Univer-
sity laboratories, renovated for
"moderate risk" DNA research,
will be federally certified for use
in a matter of weeks.
The labs include specigl air
ventiliation and filtering
systems, special safety cabinets,
and an air exhaust system that
prevents the contaminated lab
air from mixing with any other
building air.
Despite the low risk status
given to the five newly approved
projects, Committee C voiced its
concern this week for safeguard-
ing lab facilities and insuring that
medical personnel are adequate-
ly trained and monitored in their
work this year.
, * * *
Grade inflation
FOR ALL YOU pre-profes-
sional types and those ex-
pecting to further academic
careers with a glamourous stint
in graduate school, be warned:
LSA Dean Billy Frye warned
Thursday that Grade Point Aver-
ages, (GPA), for the terms be-
ginning in late 1976 were on the
to Poppa -;all the officialsseem.
to think that grades will fall about
as slowly as they have risen -,
and it's been more than a ten-.
year trend.
** *
No doe
O NCE UPON a time there was
this state legislature in-
Lansing which made overtures to
changing the official state animal
from a wolverine into a white-
tailed deer.
It's no fairy tale. In fact it's
pretty grizzly. The Michigan:
House voted Tuesday to alter the
state animal. With Senate ap-
proval, the Michigan Wolverines
could very well be twitching;
furry little hind ends in the face ofx
their gridiron opponents, rather,
than baring tooth and nail.
It would be a remarkablej
change, wouldn't it? Somehow we
gather that before the Univer-0
sity dumps the wolverine, capital
city legislators will have grown,
their own little fluffy white tailsd
to wag between their legs.
44
IT IS PROBABLY a fact that'
there were more neck cramps-
in Ann Arbor this past week than'
during any other week this year.
And if chiropractors and orthepe-
dic surgeons were scurrying
about the city trying to figure out
what was going on, they needed
to look no farther than up. The
Blimp. Clumps of pedestrians
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