Thursday, June 2, 1977
THE MICHIGAN DAILY
Page Five
Lance blasts interest rates
W A S H I N G T O N VP) -
The nation's banks could make
inflation worse and discourage
business investment and home-
buying by their recent actions
to raise interest rates, Presi-
dent Carter's budget director
warned yesterday.
"I don't think the country
does well when there are ab-
normally high interest rates,"
said Budget Director B e r t
Lance, himself a Georgia
banker until he joined the Car-
ter administration.
JLANCE SAID there appears
to be no economic justification
for the increase in interest
rates.
By implication, he appeared
to be criticizing the Federal Re-
serve Board and its chairman,
Arthur Burns, whose recent ac-
tions to tighten growth of the
money supply are blamed for
the increase in interest rates.
While he didn't criticize
Burns by name, Lance indicat-
ed he doesn't agree with Burns'
oft-repeated statement that
rising interest rates are caused
by rising inflation.
"TIlE AMERICAN people see
high interest rates as synony-
mous with high inflation,"
Lance said. If long-term inter-
est rates should follow the lead
of short-term rates and go high-
er, "I think that is inflationary
and becomes self-fulfilling," he
said.
His criticism of the banks ap-
parently reflects concern that
the increase in interest rates
could dampen the nation's eco-
nomic growth and the recent
progress that's been made in
reducing unemployment.
An increase in long-term
rates could discourage home-
buying, especially by young
couples who cannot afford
higher home mortgage charges,
and also discourages business
investment, which the country
needs desperately, Lance said.
SEVERAL MAJOR banks in-
creased their prime lending
rate from 6% per cent to 6 3/4
per cent on Friday. It was the
second increase in three weeks
in this short-term interest rate
that banks charge their most
credit - worthy corporate cus-
tomers. Lance also had criti-
cized the first increase.
Lance said there was no eco-
nomic justification for the in-
creases because banks have
plenty of money and the de-
mand for bank loans is not
high.
The recent increases in in-
terest rates, coupled with con-
tinuing concern over inflation,
are jointly responsible for the
recent sharp decline in stock
prices on Wall Street, Lance
said.
HE ALSO criticized the banks,
and again by implication Burns
and the Federal Reserve Board
for interest. rate policies during
1974 and 1975 when both inter-
est and inflation were at double-
digit levels and the nation's
economy became mired in a
severe recession.
"They have tried to combat
inflation with interest rates
previously and that did not
work," Lance said. "In 1974 and
1975, banks learned that high
interest rates were not the ans-
wer to their problems."
Lance said that "in no sense
is there a confrontation" be-
tween himself and Burns, who
was named to his post by for-
mer President Richard Nixon.
Many believe Burns is being
considered by Carter for reap-
pointment when his term as
chairman expires next Janu-
ary.
BUT LANCE said the econo-
my needs "interest rates that
are at a reasonable and stable
level to encourage business in-
~vestmsenl."
The money - managing Fed-
eral Open Market (ommittee,
whose members include Burns
analyze Federal Reserve Board
recently decided to push short-
term interest rates upward be-
cause the nation's money sup-
ply had increased at a record
annual rate of 19 per cent in
April.
The committee clearly felt
that rate was excessive and po-
tentially inflationary.
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ichiga House votes in
resolution to bun abrtion
(Continued from Page 1)
Perry Bullard said he was "strongly opposed" to the resolution
"The House has taken a step backward on the right of women to
control their own bodies," Bullard said, adding that he has doubts
about the legality of a single-issue constitutional, convention.
"I THINK IT does open the possibility of a constitutional con-
vention unrestricted in regards to other issues," Bullard said.
Some lawmakers are worried that a convention could lead to
a whole-scale rewrite of the entire constitution.
One such House member, Rep. Bryant, Republican minority
floor leader, made a motion calling for a delay on the resolution
pending an opinion from Attorney General Frank Kelley. The
motion was defeated.
ALSO OPPOSED to the resolution was Rep. Barbara-Rose
Collins (D-Detroit).
"I'm very angry and disgusted that this passed," she said,
"because the people who instigated this bill will probably be
against a bill I plan to propose to allow birth control education in
schools."
Collins also charged that many of the representatives who
voted for the resolution were also for capital punishment.
The resolution specifies that the convention must draft an
amendment extending legal rights to "unborn offspring at every
stage of biological development." It asks that abortions be totally
banned except to save the life of the mother.
AMENDMENTS that would have allowed abortions to protect
the health of the mother were soundly rejected. Proponents of the
measure claimed they were too broad.
Stopcynski, a father of nine, said, "They fought the issue for
two hours but they knew after it failed to go down in committee
that it would pass. But it's a highly emotional deal and every in-
dividual wants to have their say-so." Stopcynski is confident that
his resolution will pass the Senate.
E. L. Burns, chairwoman of the University's Commission for
Women was "stunned."
"It seemed as if we'd made some progress, but it looks to be
the same old step forward/two steps backward situation," she said.
Prof. Corsa, chairman of the Population Planning Dept., agreed
that "the abortion question should be left as it has been set by the
Supremne Court." He called all other types of legislation "unwise."
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