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April 03, 1980 - Image 6

Resource type:
Text
Publication:
The Michigan Daily, 1980-04-03

Disclaimer: Computer generated plain text may have errors. Read more about this.

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8 Convenient Locations:
Q East Liberty at
Maynard
Q South University at
East University
D Carpenter Road at
Packard Road
LPlymouth Road' at
Huron Parkway
o Maple Village
Shopping Center
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Page 6-Thursday, April 3, 1980-The Michigan Daily
DISCUSSES TAX PLAN WITH STATE LEADERS
Milikien battles revenue losses

LANSING (UPI)-Gov. William
Milliken and interest group leaders
agreed yesterday to work on a tax
reform proposal-but the governor
warned that any plan resulting in a
revenue loss for the fiscally ailing state
is unacceptable.
Milliken told the gathering of union,
farm, legislative, and local government
lealders the state is facing "some'very
difficult times" with "wrenching"
decisions on 1981 budget cuts yet to
come.
HE BLASTED Robert Tisch's
proposal for a 50 per cent property tax
cut since it would seriously drain the
state treasury, and called on those
attending to work together on a
"responsible" plan.
The Milliken administration is
working on a proposal coupling
property tax reductions of $500 per1
family with an increase in the state
sales tax.
Milliken and others hope to develop a

consensus plan which can be placed on
the ballot as an alternative to the Tisch
proposal.'
INVITED TO the conference were
legislative leaders plus representatives
of a wide range of organizations
including the AFL-CIO, the United Auto
Workers union, the Michigan Education
Association, and the Michigan Farm
Bureau, as well as organizations
representing school boards; townships,
cities and counties.
"I start from the premise that we
have already to a marked degree put a
cap on state spending," Milliken said in
his opening remarks.
"My judgement is... any plan which
results in a reduction in available
revenue to the state of Michigan ... is
not a plan that can hve my personal
support," he said.
Milliken said the Tisch proposal
would be "an absolute disaster for
Michigan" since it would require the
state to cover local government
revenue losses-an estimated $2 billion.

POETRY READING
with LINDA SILVERMAN
and
ANCA VLASOPOLOS
reading from their works.
Thursday, April 3 -7:30
Refreshments
No admission charge
GUILD HOUSE, 802 Monroe

Due to Good
will not -be a

Friday there
noon lunch-

APPhoto'
GOV. WILLIAM MILLIKEN meets with Michigan-lawmakers and interest
groups to discuss tax shift proposals, including a plan to shift a portion of
property taxes to an increased sales tax. Milliken said he wants to develop
an alternative to the Tisch proposal of a 50 per cent tax cut.
s
Che-mical Bank leads

eon.
GUILD HOUSE, 802 Monroe

Feds give
30-day
break to
debtors
From AP and UPI
WASHINGTON - The Federal
Reserve Board moved yesterday to
protect consumers from suddenly
having to pay off existing credit card
balances under stiffer terms.
The board clarified regulations for
tightened consumer credit which it
had announced March 14 as part of
the government's stepped-up anti-
inflation effort.
IF CUSTOMERS stop using an ac-
count, they will be able to pay off
their outstanding debt on the
original terms, the board decided.
But if a borrower continues to
charge on an account, "he or she will
have to agree to pay the entire
balance in accordance with the new
terms," the board said.
The reserve board said it believes
the 30-day notice period will
"prevent unfair surprise to con
sumers," help creditors plan better
and "contribute to the goal of.
restraining the growth of consumer
credit," now at record levels.
CURRENTLY, 17 states require
lenders to notify customers of credit
account changes, with warning
periods that range from three mon-
ths to a year. These rules are
preempted by the board's 30-day
notice requirement. The 33 other
states let lenders change terms sim-
ply by telling customers.
Federal truth-in-lending statutes
do require a minimum 15-day
notification period for all customers
in all states.
The board's decision yesterday
covers a wide variety of changes in
credit account terms, including in-
creases in finance charges, im
position of additional credit fees, a
rise in minimum monthly payments,
a lowering of borrowing limits on
credit, cards, and revisions i the
way monthly bills are calculated.
MANY RETAILERS, however,
are not able to raise interest rates.
significantly because they already
are bumping against state usury
ceilings, said board member Nancy
Teeters.
These usury laws - which
generally limit credit card interest
rates to 1.5 per cent a month or 18
per cent a year - are not affected by
the board's decisions.
Th\ changes also won't affect a
lender's right to increase collection
activities, close existing accounts
or stop opening new ones.
THE NEW RULE is retroactive to
March 14, meaning if a creditor
mailed notices of new repayment
terms to consumers after that date,
and if these are inconsistent with
yesterday's rule, the creditor must
change the terms and re-notify all
customers.
The -new regulation applies to
credit cards issued by banks,
retailers, and oil companies and
other forms of "open-ended" credit
where loans continue indefinitely
with no fixed date for final
repayment.

P9

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"

THE
DAVID'
BROBERG
BAND
Aprl16
Michigan Theatre'
with special guests
Dick Siegel and the Ministers
of Melody
tickets are 6.50 and 7.50 and are available at
Michigan Union box office only (11:30-5:30).
0 MAJOR EVB41S presentation

prime rate increase;
NBD, others follow

(Continued from Page 1)
Chemical's executive vice-president.
"It is, we believe consistent with the
government's anti-inflation program."
The Fed has sought to make lending
more expensive for borrowers as well
as lenders in hopes of curbing inflation
by slowing the growth of borrowing
debt.
As banks are forced to pay more to
acquire money, they pass the higher
cost on to borrowers by raising interest
rates and through other devices.
"THESE HIGH rates are in keeping
with the general trend of the money
markets and lending markets," said
Donald Miller, vice chairman of
Continental Illinois National Bank &
Trust Co., which followed Chemical to
20 per cent.
Bank of America, the nation's
largest, and several other major banks
also pushed their prime rates to 20 per
cent yesterday.
Money analysts have expressed
surprise at the , continued strong
demand for business loands in the face
of skyrocketing interest rates. The
government has said commercial and
industrial loans on the books of the
nation's large banks jumped $818
million in the most recent reporting
week, following a $1.4 billion rise the
previous week.
"YOU'D THINK that with rates what
they are, borrowing would slow down,
but it hasn't," Miller said. "Loan

demand here remains very vigorous."
The prime rate applies to loans made
to only the largest corporations, such as
General Motors Corp., while other, less
creditworthy borrowers pay interest
rates a few percentage points higher.
The rates on consumer loans are not
tied to the prime, but generally move in
the same direction. Home mortgage
rates, for example, have risen several
percentage points since January and
now stand at 17 per cent at many'
lending institutions.
ALTHOUGH THE prime has reached
20 per cent, businesses actually pay a
higher rate on the funds they borrow
because banks commonly require
corporate borrowers to leave up to 20
per cent of their loan proceeds in a non-
interest-bearinjg account.
There are some indications that the
higher interest rates are slowing the
economy. The Commerce Department
has said new construction declined four
per cent and factory orders fell 0.6 per
cent in February.
Federal officials also announced
yesterday that people seeking a
government-backed mortgage for a
single-family house will have to pay as
much as 14 per cent interest.
The one per cent increase, effective
today, applies to all single-family home
mortgages insured by the Federal
Housing Administration or backed by
the Veterans' Administration.

'.

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April Showers Are Coming!

NYC train strikers
ordered back to work

At Nylon Rain Jacket for $4
and Matching Pants for
$25.50
by SIERRA WEST
B. Ponchos
" Vinyl for $1.99
" Rubberized Canvas for $14.50
" Nylon for $20.00
by SIERRA WEST
C. Mountain Parkas
from $55.00
by TRAIL WISE, CAMP 7
and WOOLRICH
IN Gortex for $100.00
by BANANA
D. Cagoule for $50.00
by SIERRA WEST
E. Rainslickers
in Rubberized Yellow
and Green for $10.00

3.00
B.'

(Continued from Page 1)
yesterday morning's rush hour,;
compared to the normal 165,000 a day.:
However, enforced car pooling led to an
increase in the number of passengers
from .250,000 to 600,000, according to
Connell.
The TWU strike against the MTA ,
began early Tuesday morning after a'
deadlock over union wage demands. A'
few hours later the single union of
striking trackworkers shut down the
LIRR in a separate wage dispute with
the MTA.'

service out of the city provided by
Conrail, which operates trains carrying
66,000 persons a day to Westchester and
Putnam counties, north of the city, an
to Connecticut.
It was the first time the 330 miles of
LIRR track had been shut down at the
same time as the municipal bus and
subway system.
Contract negotiations were expected
to be reopened with a small Teamsters
union of LIRR trackmen who walked
off the job Tuesday morning.
rI

Attention College Seniors
The Committee on Public Policy Studies
The University of Chicago
TWO YEAR MASTER'S
DEGREE PROGRAM,
Application Deadline May 15

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