Word: trusts
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Dates: during 1970-1979
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Imagine a vast investment trust, say $1.5 billion or so, that each year takes in hundreds of millions of dollars in small, but regular, tax-deductible cash contributions. Fantasize further that the trustees, with impunity, sink the money into anything they like-the pet projects of some dear friends, for example -while at the same time cutting out of the kitty many of the fund's supposed beneficiaries. Now let imagination truly soar: the trust's investment income is all taxfree...
Businessmen charge he is too zealous. Ralph Nader calls him "a public servant who takes his public trust seriously." His own associates merely marvel that one man can do so much; a colleague says he routinely puts in 17-hour days, "going 90 m.p.h. all the way." Stanley Sporkin, 44, sees his task more simply: to throw a spotlight on wrongdoers. He heads the enforcement division of the Securities and Exchange Commission, which brings charges against companies for violations of securities laws and thus polices 9,000 public companies, 3,500 brokerage houses, 3,700 investment advisers...
...institutions doing about one-third of the S&L business in the state carry private insurance, most of it written by American Savings Insurance Co. The trouble began in early May, when two stockholders filed suit against the state's second largest S&L, the 47-branch Bankers Trust (which has no relation to the well-known New York bank of the same name). The plaintiffs charged that because of mismanagement, Bankers Trust was about to default on some of its $211 million in savings deposits. Bankers Trust officials at first denied it, but several weeks later agreed...
...then dawned on savers in other S & Ls that Bankers Trust not only was insured by, but owned 45% of American Savings. Heavy withdrawals began in the other nonfederally insured S & Ls, and by late June had developed into a full-fledged run on deposits. After conferring with Treasury Secretary William Simon, Mississippi Governor Charles ("Cliff') Finch proposed legislation freezing most business-no withdrawals, no loans-at the nonfederally insured S & Ls. The legislature hustled the bill through in its first emergency session since Hurricane Camille devastated the Gulf Coast...
...insurance in Mississippi: the closed institutions are required to negotiate to join the Federal Savings and Loan Insurance Corp. by April 1, 1977. Meanwhile, 18 have been allowed to reopen, but 22 are still closed, and the savings of their depositors hang in the balance. For example, Bankers Trust Depositor H.G. Fowler, 68, lived with his wife in a mobile home for 18 years while they saved to buy their own house. They did, only six days before the lawsuit was filed against Bankers Trust, and now worry that if they cannot tap their savings accounts, their Social Security income...