The MacNeil/Lehrer NewsHour

Intro

ROBERT MacNEIL: Good evening. These are the day's top news headlines. The House of Representatives reversed itself and agreed to put tax reform to a vote. The House passed one more stopgap measure to keep the government solvent, but the Senate has yet to act. Surging imports produced another near-record trade deficit in the third quarter. Details of these storin a moment. Jim?

JIM LEHRER: After we summarize the news of the day, Cokie Roberts has the latest on the latest move to save tax reform. Then comes a newsmaker interview with the president-elect of Guatemala, a report on the AIDS problem in Africa, a discussion of why so many banks are going under, and a reporter's view of last night's Mafia murders on the streets of New York.News Summary

MacNEIL: It was a hectic day in Congress. The House passed yet another stopgap measure to keep the government from shutting down, but the Senate has yetto act, and tax reform was brought back from the dead. After yesterday's pleading from President Reagan, enough Republicans reversed themselves and voted to put tax reform to a vote in the House of Representatives. That procedural vote was 258 to 168. Then the House began hours of debate. A vote on the actual tax bill was due late this evening but passage was not assured. The President had won support from recalcitrant Republicans by promising to veto any tax bill that did not include changes they want. Here's a sample of the debate.

Rep. JACK KEMP, (R) New York: What has changed, I want to say to my colleagues, is that the President is now directly involved in this process that he personally yesterday asked us to support.

Rep. BOB MICHEL, (R) Illinois: I'm going to vote for the rule and give the President his chance to carry the day for the issue that he feels so strongly about. I hope you too will join me in at least permitting the debating process to move forward by voting for the rule.

Rep. THOMAS P. O'NEILL, (D) Massachusetts: I believe this process should go forward. There's inequities in every piece of legislation.

Rep. ROBERT LAGOMARSINO, (D) California: The bill before us today is not good, but it can be made better, and I hope it will be.

MacNEIL: Both the White House and the Democratic leadership of the House staked out defensive political positions in case the tax bill failed to pass. Here are part of the comments by the President's spokesman, Larry Speakes, and House Speaker Thomas O'Neill.

LARRY SPEAKES, White House spokesman: Our position is they asked and we delivered. We lived up to our end of the bargain. We now call on the full House to allow tax reform to go forward. We are counting on the Speaker to deliver the same number of Democrats that he delivered in the initial votes. The President this morning, as I said, is meeting with a number of Republicans and will continue to try to get more votes. We're at 50 and growing.

Rep. O'NEILL: Listen, whether it wins or loses I'm not going to shed any tears. This is the President's bill. If the Republicans want to cheer and clap if it goes down, that's all right with me. I'm not going to worry one way or another. I'm just sick and tired of the White House now trying to put the onus that it's up to Tip O'Neill to pass the bill. It's not up to me to pass the bill. It's not my bill, and I had nothing to do with writing it.

LEHRER: The other action today was another continuing resolution, the third such emergency spending bill since September. The House extended the government's borrowing power to keep agencies in funds until midnight Thursday, but by late today the Senate had not yet done so. The administration had threatened to shut down offices and send workers home. A stopgap bill was necessary because the House last night voted down a long-term spending bill. Conservatives were angry at the amount of spending, liberals that it permitted defense spending to rise while freezing grams. A stopgap bill would give time for more negotiation on the long-term measure in a House-Senate conference committee. No stopgap bill will mean another government shutdown crisis tomorrow.

MacNEIL: In economic news the steepest drop since last May. Analysts said severe weather in parts of the country may have been a factor.

LEHRER: The newly-elected president of Guatemala paid an official visit to Washington today. Vinicio Cerezo won a landslide victory to become the first civilian president of that Central American country since the 1950s. He takes office January 14th. He told reporters this morning that he considered himself a friend of the United States, but distanced himself from the U.S. position that Nicaragua is the source of most instability in Central America. He met with Vice President Bush this morning at the White House and paid a visit to Capitol Hill afterward.

VINICIO CEREZO, President-elect of Guatemala: I have to tell you that it is not the last time I am going to come here. I certainly am going to come here to request the necessary support we need to improve the welfare in my country. And I am going to ask always only the things I really need to improve the welfare, to improve democracy, to improve understanding in my country and all Central America.

LEHRER: The White House announced today President Reagan will stop off in Mexicali, Mexico, January 3rd for a talk with Mexican President De La Madrid. It will be the fourth meeting between the two in four years. Mr. Reagan will be on his way back to Washington from his holiday in California.

MacNEIL: Secretary of State Shultz visited Yugoslavia, the third on a swing of communist nations, for talks on trade. But trade got pushed into the background when the secretary criticized his hosts for permitting PLO official Mohammed Abbas to go free after the Achille Lauro hijacking. Here's a report from Rod Stevens of Visnews.

ROD STEVENS, Visnews [voice-over]: Belgrade, day three in U.S. Secretary of State George Shultz's whirlwind tour of Eastern Europe. At an official reception he was greeted by 61-year-old Yugoslavian Prime Minister Milka Planine. But this meeting was more than just handshakes and diplomatic smiles. Prime Minister Planine is worried about her country, its increasing inflation, declining living standards solutions to the problems but has failed. It's now looking for American help to get the country out of a bind, but Mr. Shultz wasn't about to promise anything. He was there to listen and to make a complaint. He told the prime minister that the United States objected strongly to the release of alleged Achille Lauro hijacker Abul Abbas. However, he did say that he knew the government had close ties with the PLO and he understood why Abbas wasn't detained. Before leaving the meeting he made it clear that the United States saw the ship hijacking as terrorism and would not condone any support for such an act.

MacNEIL: Canadian investigators today confirmed that the thrust reverser on one engine of the DC-8 that crashed in Newfoundland was found in the wreckage in a deployed position, but they said they were not sure whether it had deployed before the crash and thus caused the plane to slow down and veer to the right. Peter Boag, the chief investigator, said more time was needed to study it. Meanwhile, U.S. planes continued to ferry bodies of the 248 U.S. soldiers killed in the crash to Dover Air Force Base in groups of 35.

LEHRER: And finally today, a federal court jury acquitted a former assistant secretary of the Navy of charges he illegally concealed job contacts with General Dynamics while still working for the government. George A. Sawyer said in Alexandria, Virginia, after the not-guilty verdict was returned that his confidence in the system, the best in the world, had been restored.

And that concludes our version of the news of this day. Now comes a further update on what's happening to tax reform, a newsmaker interview with the president-elect of Guatemala, and looks at the problem of AIDS in Africa, the upsurge in bank failures and the latest Mafia murders. Tax Reform: Taxing Experience

MacNEIL: Our first focus is tax reform. As we reported, the House this afternoon agreed to put the bill to a vote later this evening, and is now engaged in debate. Cokie Roberts of National Public Radio has been following tax reform's tortured progress, and she joins us now from Capitol Hill. Cokie, what is it they're going to be voting on this evening?

COKIE ROBERTS: Well, they're going to vote on a couple of things. They have a Republican bill that's a substitute to the bill that cate, and then that is expected to be defeated, and then they will vote on the Ways and Means Committee bill, the bill we've been hearing about all these many months that's been put together mainly by the Democrats on the committee, but with some Republican support.

MacNEIL: Now, the fact that Mr. Reagan was able to persuade enough Republicans to reverse themselves on the procedural vote and to get this to an actual vote on the substance tonight, does that mean there are enough Republicans to pass it?

Ms. ROBERTS: Probably. It is hard to say at this point, ,and they will want to have the vote on their own substitute first. But the fact that they've brought the bill to the floor is very significant because in some ways it's easier, you know, to vote against the procedure than it is to vote against the bill itself. It's very hard to go home to your constituents and say, "I voted against tax reform."

MacNEIL: Especially when a very popular President has said it is his highest legislative priority.

Ms. ROBERTS: A very popular President has said that, and the Speaker of the House of Representatives has said that. Not that it's his highest priority, but he got up on the floor today in a very quiet but forceful speech. The entire House seemed to be there. I've never seen the chamber quite so full. And it was extremely quiet and attentive while the Speaker was asking for people to vote on the rule and saying how important this tax reform legislation was. When you have both the Speaker and the President pushing for a bill, it's likely to pass.

MacNEIL: But the bill they're going to vote on -- do I understand it correctly? The Democrats have not accepted any changes that would make it more palatable to the Republicans, is that right?

Ms. ROBERTS: Republicans basically just have to swallow their pride and say, "Yes, Mr. President, I'll give you this one." Not much was changed at all. They did get a sense of the House of Representatives resolution that they can pass if the bill passes, which will say that they think the date should be changed to 1987, but that of course is not at all binding. That's just something saying to the Senate, this is something we think should be the case. And it may or may not pass. They also got an agreement from the President that he would write a letter saying that he would veto any bill that contained the aspects that they considered the most onerous. So they have promises here, but they have nothing binding in law at all.

MacNEIL: And they have miles to go before they sleep. I mean, they've still got to get this out of the Senate, don't they, and the President seems to be banking a lot on being able to improve the bill for the Republicans when it gets to a conference with the Senate. Now, how do the prospects for that look to you?

Ms. ROBERTS: Well, the prospects in the Senate on tax bills never look very smooth. The House is always the place that sort of writes a bill that is more under control, and it comes to the floor with a rule and all of those things. The Senate tax bills do tend to get out of hand under the best of circumstances, and this bill, you know, the only reason it's gotten anywhere near as far as it has -- this bill has been declared dead and alive, dead and alive many times. The only reason it's gotten anywhere near this far is because the President has put some weight behind it, and Democrats feel that it would be a political mistake not to be out front on something called tax reform. But the substance of the bill is still something that a lot of people don't like. The Speaker said today, as he's said many times, he has 21 universities in his district, they don't like the bill. Businesses don't like the bill. Depending on what the Senate does about state and local governments, that could be a big problem in the bill. So it's got a long, long row to hoe, and Senator Packwood has said that he doesn't think that he could change the House bill.

MacNEIL: But if they didn't pass it tonight, if your "probably" turned out to be wrong -- just to give ourselves a little hedge here -- if they didn't pass it tonight, that really would be tax reform dead for the time being?

Ms. ROBERTS: I think so. I think so. I think it'd be very hard to bring this bill back in an election year, a tough election year, too. The Senate's at stake.

MacNEIL: Finally, just let me ask you one other thing. The House passed this continuing resolution so the government won't go bust. Once again Pauline was pulled off the rails. But the Senate I understand has just passed it now, I just heard. Now, why was the Senate holding it up?

Ms. ROBERTS: The Senate was holding it up because the House had left in had said that the synthetic fuels corporation could not spend any money. It is scheduled to go out of existence and there was a little concern in the House that in its dying days it was going to spend about a billion dollars. And they prohibited it from doing that. The Senate balked at that because there were a couple of senators who were scheduled to get some of that billion dollars in their states. They wanted to go ahead and get it, but apparently they've been able to settle that so that the government can operate.

MacNEIL: So there won't be another government shutdown crisis tomorrow, but in the meantime the conferees of House and Senate have got to go back into that cockpit and fight over these real issues again of how much is in that long-term spending bill.

Ms. ROBERTS: No question. Especially the military part of the bill. That's the real sticking point, and the interesting thing is is that it was the liberal Democrats in the House who led the revolt against the bill, in a real surprise move in the middle of the night last night. And they've said go back, cut some out of that defense spending, and give us some of the reforms that we keep passing in the House of Representatives in terms of how the military spends its money.

MacNEIL: Well, Cokie Roberts, thank you very much for enlightening us. AIDS in Africa

LEHRER: It has become a painful ritual in this country, the weekly government report of the number of new cases of AIDS in the United States. But there is no precise tally for the number of AIDS cases worldwide. At a meeting in Geneva today the World Health Organization announced a new strategy to collect data on AIDS and stem the global spread of the deadly disease. Until now the health agency has not received reports of the number of AIDS cases in any central African nations. But in its report today the WHO cited recent studies that estimate the incidence rates in some of those countries could be as high as those in New York and San Francisco. Rwanda and Kenya are two such central African nations where AIDS is feared to be epidemic, as we seen in this report by James Withington of Thames Television.

JAMES WITHINGTON, Thames TV [voice-over]: Rwanda is one of the poorest countries in the world. It is also one of the worst hit by AIDS, with an infection rate of up to 20 in the towns, a country where doctors face endless problems from traditional diseases like malaria and dysentery, a country where some see AIDS as the worst and most baffling problem of all.

Dr. CASIMIR BIZIMUNGU: The most disturbing thing with AIDS is that once the disease has been determined you are sure to die. At least until now. Because we have no cure, we have no vaccine, so you are really sure to die. That's the most disturbing element.

WITHINGTON [voice-over]: In the capital, Kigali, the main hospital provides proof that the disease is not confined to men. Here women get AIDS almost as often as the men do. Four women in this ward are suspected of having the AIDS disease. If the doctors are right, the medical problems they now face are caused because the AIDS virus has destroyed the natural system of immunity within the body. Doctors don't tell them about AIDS. There's no point, they say, when nobody has ever recovered from the disease.

The feeling in the hospital is one of hopelessness. They've dealt with around 300 AIDS cases, but establishing the true extent of the problem is a slow business. Without the facilities to test blood for AIDS, most of the samples have had to be analyzed thousands of miles away in Belgium. Testing the blood has given European doctors an insight into the seriousness of the African epidemic.

Dr. NATHAN CLUMECK: Some optimistic people are saying AIDS is not a problem in Africa since people are dying from diarrhea or schestosomiasis or malaria. That's true, That's true, but that's true for small children, for old people, for people who are living in [the] countryside, but not for people who are wealthy or living in big cities. And my feeling is that the AIDS could be one of the leading cause of death among the people aged between 20 to 40 in big cities, big African cities.

WITHINGTON [voice-over]: Even more worrying, the disease is being passed on to the children of Rwanda. Babies can catch it in the womb if their mothers are infected. The children's wards at Kigali have seen 50 cases. A quarter of them have died. It's feared that malnutrition and other diseases may sometimes weaken the children's resistance and make it easier for the virus to develop into the AIDS disease.

Dr. BIZIMUNGU: We know today that the virus can be transmitted from the mother to her own fetus. Children after the age of six months many times get -- fall into malnutrition, so I think once again that they are a threatened kind of species. I mean, a kind of population group. They are really threatened because, if you fall into malnutrition, you get your immunity totally decreased, then the child will hardly defend himself or herself.

WITHINGTON [voice-over]: So why is the disease spreading so fast? One reason could be hygiene. The queue for the traditional medicine man. The patient has jarred his thumb. The healing process involves cutting the skin in several places with a razor blade. The blood rises, and the healer rubs on a secret compound. He explains how well it will work. He says his healing compound is a closely guarded family secret. More orthodox doctors believe that this use of unhygienic techniques is one way in which the AIDS virus could spread.

In Rwanda's hospitals, poorly sterilized needles may also be transmitting the virus from one patient to another in minute quantities of blood. To prevent that, needles should be used only once. In Rwanda they can't afford to throw them away, so the needles are used again. But according to the Belgian doctors, the main reason for the spread of AIDS lies elsewhere.

Dr. CLUMECK: Some people are believing that insects could play a role. Some others are believing that needles -- unsterilized needles. I think that it's more simple than that, and in Africa, like in Europe or the United States the virus is mostly transmitted by sexual contacts. Not homosexual contacts; by sexual contact, heterosexual contacts.

WITHINGTON [voice-over]: The lesson of Rwanda is that the disease spreads heterosexually. One survey showed that 20 of townspeople were infected. This compared with 4 in rural areas. But even that 4 is a nightmare by Western standards. A doctor briefs his staff. He's been trying out the latest drug which doctors in America believe might control AIDS. Unfortunately, the news from America suggests the drug loses its effectiveness after a time. The doctor wants to see for himself whether the problem is the same with his own patients. With so few medical facilities, most AIDS victims have been sent home, and the only way to contact them is to braodcast an appeal over the airwaves. The nurse carries his message to AIDS patients up the hill to the radio station. The announcement first, then the names of the patients are read out one by one. Meanwhile, the virus is spreading still further. A survey in the south of the country showed 80 of prostitutes were infected, and most of them had symptoms of the disease.

In Nairobi, the capital of Kenya, the skyline may be different, but the problem is the same, as it is in other cities along the equatorial belt. Nairobi is one of the most prosperous cities in Africa. With its racetrack and its casinos it's something of an international playground, and tourism is vital to the economy. The government's response to AIDS is to play down the idea that there's an epidemic.

[on camera] In the building behind me the Kenyan AIDS task force has been meeting this morning, but the result of their discussions won't be conveyed to the Kenyan public. The government, perhaps understandably, takes the view that they don't want to stir up panic about the disease. The danger of their approach, though, is that it may keep in the dark the very people whose behavior could contribute to the spread of AIDS.

[voice-over] A Nairobi discoteque. The AIDS virus is less widespread there than in Rwanda, but here too the prostitutes are infected, over half of those studied in the city. Many women come to this discoteque to enjoy the dancing, but some, like Hannah, will take money for sex.

HANNAH, Kenyan: Well, actually I'm really afraid of AIDS, and I hope whenever I can cruise somebody I have to ask him about himself. And I would -- I ask him about what he does and also whether he's afraid of the disease.

WITHINGTON [voice-over]: But will the AIDS virus make her change her lifestyle?

HANNAH: It's true you can stick to one, but maybe this one will have it, yeah?

WITHINGTON: So you could still catch it?

HANNAH: You could still catch it.

WITHINGTON [voice-over]: In spite of a virtual news blackout, everybody knows the virus is here. What they haven't been told by the government is that in the hospitals people are dying of AIDS. The country has become a link in the international chain of infection.

MacNEIL: Still to come on the NewsHour, a newsmaker interview with the new president of Guatemala, the rising number of bank failures and the assassination of mob boss Paul Castellano. New Latin Leader

LEHRER: The people of Guatemala elected a president 10 days ago for the first time since the 1950s. His name is Vinicio Cerezo; he is with us tonight for a newsmaker interview. But first some lead-in material on him and his country from our special correspondent, Charles Krause.

CHARLES KRAUSE [voice-over]: Despite its physical beauty, Guatemala has a long tradition of political violence. Ever since a U.S.-backed coup in 1954, the country's government has been dominated by the military. But now the army has decided to yield some of its power to civilians. Guatemala's transition to democracy began in November. Eight candidates ranging from the far right to the moderate left ran for president. A run-off election between the top two vote-getters was held just 10 days ago on December 8th.

The winner, and now president-elect, Vinicio Cerezo, is a 42-year-old lawyer and lifelong member of the moderate Christian Democratic Party. He won an overwhelming 68 of the vote by promising to reform Guatemala's almost feudal economy and by promising to try to improve the military's dismal record on human rights. Often using brutal tactics, the army has largely defeated a guerrilla insurgency in the countryside, but the army is also blamed for killing thousands of innocent Indian peasants and urban political activists alike.

In 1977 the Carter administration, appalled by the violence, cut off all U.S. military aid to Guatemala because of the army's continuing abuse of human rights. Cerezo himself was the target of three assassination attempts a few years ago and was forced to campaign this year with a pistol tucked in his belt. The army now appears ready to allow Cerezo to become president next month, but the big question is how much real power he will have.

In Washington today Cerezo met with members of Congress as well as administration officials. He reportedly told them he hopes the United States will provide more economic aid to help him consolidate democracy in Guatemala, after 30 years of military rule.

LEHRER: And President-elect Cerezo is with us now. Mr. President, welcome and congratulations on your election. What kind of aid have you asked for specifically?

President-Elect VINICIO CEREZO: Well, we have to talk about economic aid because we are going to emphasize the economic assistance, because the most important challenge for the new democracy is to resolve our economic crisis. Then we will need the support of the real democratic countries in the world to enforce the chances for this new-borning democracy in Guatemala.

LEHRER: What about the question that Charles Krause raised in that piece, which was, are 0ou in fact going to be allowed to govern the country by the military?

President-Elect CEREZO: Well, I'm going to try. I'm going to try. And certainly if I could maintain the popular support in the country, if I could maintain the political agreement we have between the political parties to enforce in some way the military people to leave the power in the hands of the elected government, and if we could find the international economic support and political support, we are going to lead the country, certainly.

[TEXT OMITTED FROM SOURCE] the political power in the hands of the politicians. We have many different signs. The killings --

LEHRER: What kind of signs?

President-Elect CEREZO: Well, the killings have diminished in the country. The repression also has diminished, and we, the politicians, we could work -- before we never l process, the free election in Guatemala is really the best sign we have because in 20 years we never saw that kind of free election. This is real incredible for Guatemala.

LEHRER: Do you feel very much under the gun, that if you don't deliver something very quickly that the military is just going to show up one day and say, sorry, Mr. President, we're taking the country back over from you?

President-Elect CEREZO: Well, you know that maybe in the near future in Guatemala every time we are going to think that another coup could happen and the military could return to power. But I feel in this moment there is a real good tendency inside the army, especially between the young officers. It is true that the middle-level officers, they have accepted that it's better for the military people and for the country to accept the role of the politicians in the country, because if not, if they return to the control, the political power, the country is going to polarize again, and they could receive a bad situation. They're sure to confront a civil war in the country, and they could lose the power.

LEHRER: Is your government going to make any attempt to prosecute those military officers who are responsible for past human rights abuses?

President-Elect CEREZO: Well, like in any democratic government we are going to support the supreme court to do the things they have to do, because the most important thing in the country is to establish the rule of law again. And if the supreme court wants to do something, they have to do it. And the role of the government is to give the supreme court enough power and to avoid any obstacles to permit them to do their job.

LEHRER: Do you feel that you have a mandate from the people to prosecute those people, to weed them out from the military and prosecute them, send them to jail?

President-Elect CEREZO: Yes. We are going to be -- we are going to be very hard in terms of if somebody is out of the law we are going to improve the -- to support the supreme court to follow the trial they have to do, and if they consider that somebody is guilty, we are going to permit them to condemn them.

LEHRER: Mr. President, how do you view U.S. policy toward Central America? Do you think the United States is playing it right down there now?

President-Elect CEREZO: Well, in relationship with Guatemala I have to recognize that the United States has played a real good role in terms of improving democracy in my country. And I feel that if they continue maintaining this behavior in Central America and they accept that the emphasis is politics and not military, they are going to play a good role in Central America in favor of democracy.

LEHRER: The United States believes that Nicaragua is the major instrument of instability in Central America. Do you agree with that?

President-Elect CEREZO: Well, I couldn't say something like that, but I would like to change the point of view. Maybe I would like to emphasize in political agreements and not military programs.

LEHRER: What does that mean, sir?

President-Elect CEREZO: It means that if it is very dangerous for Central America to emphasize the military problems. If the United States is working in two minds, talking about military problems with Nicaragua and talking about democracy in Central America, we are going to try to improve the participation in the United States only in the political problems and not in the military, because we would like to avoid a confrontation in Central America.

LEHRER: Do you feel that you are allied with Nicaragua? I mean, what is your position toward the Sandinista government?

President-Elect CEREZO: Well, I am trying to have good relationships with all the Central American countries, always looking for democracy and pluralism. And I'm going to talk with the Nicaraguan government, and I'm going to respect the own way of the Nicaraguan people, but I am going to request and to talk with them about how we could improve the chances for the pluralistic system that could take place in Nicaragua.

LEHRER: Secretary of State Shultz said recently that he felt that the Soviet-Cuban influence in Central America was a cancer on the area, and until it is removed there would be problems there. Do you agree with that?

President-Elect CEREZO: Well, I respect the point of view of Mr. Shultz, but my point of view is different in the sense of we are more interested to resolve our problems between us. We are concerned that we are living in a big world, interrelated, and maybe there are influences in some countries, like Nicaragua, from different countries. But we have to accept that it is impossible to avoid it.

LEHRER: And it doesn't worry you at all?

President-Elect CEREZO: But not if we could maintain the process of Contadora or any agreement looking for peace. We have to accept that we are living with a reality. Nicaragua exists in Central America.

LEHRER: As Charles Krause reported, there were three assassination attempts on you. Who were these people who were trying to kill you, and are they still out to get you?

President-Elect CEREZO: Well, the people who tried to kill me were working in the national police during the time of the Lucas Garcia government, and some of them maybe received the support of some officers in the army. But in this moment most of those people are out of the police. But anyway I have to accept that we have to reorganize the national security in Guatemala and maybe dismantle the secret police because they were guilty of most of the kidnaps and the attempts against the politicians in the near past.

LEHRER: Including those on you?

President-Elect CEREZO: Certainly.

LEHRER: Yes, sir. Well, again, Mr. President, thank you for being with us tonight, and congratulations on your victory and, by all means, good luck.

President-Elect CEREZO: Thank you a lot. Overdrawn?

MacNEIL: Next, why have there been more bank failures this year than any time since the Great Depression, and what's being done about it? Judy Woodruff is in charge. Judy?

JUDY WOODRUFF: 1985 has been a mixed year for the nation's banks. While overall profits have been strong, 113 banks have gone out of business. In addition, the Federal Deposit Insurance Corporation, or FDIC, estimates there are close to 1,200 banks which are performing poorly. The savings and loan industry isn't in much better shape. The government's General Accounting Office estimates over 400 thrifts are insolvent, meaning their liabilities exceed their assets. The thrift industry was shaken by two crises this year, the first in March, when the state of Ohio closed 69 S&Ls after a severe run on deposits; the second in Maryland two months later, which was halted only after 102 thrifts were closed. To learn more about what's behind these statistics, I talked with two government officials yesterday in the thick of banking issues.

[voice-over] They are L. William Seidman, who is head of the Federal Deposit Insurance Corporation, which insures all commercial bank deposits and oversees more than 8,000 state-chartered banks. He is joined by Robert Clarke, comptroller of the currency, whose agency supervises almost 5,000 national banks.

[interviewing] Mr. Clarke, let me begin with you. Why is it that we have had record bank failures this year, despite the fact that we're supposed to be in a recovery?

ROBERT CLARKE: Well, I think the failures that you have had this year have been in areas of the country which have had peculiar economic problems. While there is an overall recovery going on, you have certain areas such as the agricultural area of the economy that is still having very serious problems and, as the record will reflect, a lot of the banks that have failed are in those areas.

WOODRUFF: But not all of them.

Mr. CLARKE: But not all of them. That's correct.

WOODRUFF: So what does that say? I mean, is this a problem that just exists in pockets, or how widespread is it?

Mr. CLARKE: Well, if you keep in perspective the fact that the banking industry as a whole, as compared to other industries, has had relatively small numbers of failures, I think you can say that it's not really a widespread problem, even though the numbers certainly in comparison to other years is high.

WOODRUFF: How concerned are you about it?

Mr. CLARKE: Well, very concerned. I think you have to be concerned any time you see banks closing, because closed banks have an adverse impact on the economies of the particular areas where they are, on the citizens in the communities which they serve.

WOODRUFF: What about you, Mr. Seidman? How concerned are you?

L. WILLIAM SEIDMAN: Well, I think that we're going to see bank failures maybe in these numbers for quite awhile. We have a much more competitive industry than we had some years ago. We want to keep it as low as possible. But I don't think we're ever going to go back to the days when the bank failure is a major event.

WOODRUFF: But there doesn't seem to be the level of alarm that one might expect with 113 bank failures this year now. Why is this?

Mr. SEIDMAN: Well, one of the reasons is, I believe, that these have been relatively small banks. Their average size has been about $25 million in deposits. So while they have an important effect in the community that they're in, they are not a major factor in the banking industry.

WOODRUFF: Let me ask you about something, Mr. Seidman. Your agency has just now delayed implementing a rule that would require the FDIC to publicly disclose banks that have had disciplinary actions taken against them. Why is that? Why not disclose?

Mr. SEIDMAN: Well, I'm very much in favor of disclosure but, frankly, that rule, which was put in before I caldn't be subject to the same kind of disclosure. It seems to me that that's unfair and it makes people wonder, what are those boys doing in Washington? So we today simply delayed that rule to see if we could work out a joint program with the comptroller's office so that we could have a uniform rule for all banks in the country.

WOODRUFF: But you eventually would like to see some sort of disclosure?

Mr. SEIDMAN: Very definitely.

WOODRUFF: How do you feel about that, Mr. Clarke?

Mr. CLARKE: Well, I would agree that disclosure is important, and I think what you have to do is figure out what disclosure is the most meaningful to the consumers out there. As you know, we have a proposed disclosure rule that is out for comment, and the comment period, I believe, expires on January 28th, and we plan to have at least one public hearing on the proposal and have received, as of this morning, 82 comment letters. So it's attracted a lot of attention.

WOODRUFF: But in general do youthink bank customers should know before they put their money in a bank what that bank's situation is with the federal regulators?

Mr. CLARKE: I think they should. I think it's important to note that an awful lot of information is available about banks today just for the asking.

WOODRUFF: To the average consumer?

Mr. CLARKE: To the average consumer, yes.

WOODRUFF: But if they go in and they make a special request, is that right?

Mr. CLARKE: That's right. But it is available. If people are concerned enough about the condition of the bank that they want to know what it is before they put their money there, they can find out a great deal about it already.

WOODRUFF: Is that enough, in your mind?

Mr. CLARKE: I think that as a general rule it probably is enough, but that there are some areas in which we probably should require the banks to make the disclosure more visible and not put the burden on the customer or the shareholder to find out that information.

WOODRUFF: You don't think, Mr. Seidman, the burden should be on the customer?

Mr. SEIDMAN: Well, I would say that we want to make it easy for them, not hard, to find out about the institution that they're doing business with. The thing we have to be careful is that we have thousands of small banks and we can't burden them with things that they can't really handle, as we have with major banks.

WOODRUFF: We at MacNeil-Lehrer had a report several months back on the problems of a failed bank in small town in Nebraska. You may remember it. That was in Verdigris. The farmers there were blaming the FDIC for taking over the town and controlling the way they did business. Is that a fair criticism of what the FDIC was doing?

Mr. SEIDMAN: Well, I don't think it's fair, but I guess it's understandable. When a bank fails we are the trustees who come in and take over the bank and handle the bank in whatever way we can to pay off our insurance and to deal with the customers. So we get there, unfortunately, when the news is bad and so people do often look at us and say, what are these strangers coming in from out of town? However, I think we've been doing a better job lately and if you would want to come back and look at another one, we might have improved some.

WOODRUFF: How do you feel about that? Do you think, Mr. Clarke, that there's something more that the federal regulators could be doing to ease the problems that many of these farm banks are having?

Mr. CLARKE: We are exploring, as I know Bill's agency is exploring, ways that we might be able to do that, and not just for the farm banks, but for banks in other parts of the country that are similarly adversely impacted. And I don't think we have any specific suggestions to put forth, but we're very sympathetic with the problem and are actively trying to see if there are some things we might be able to do.

WOODRUFF: But is it fair to say that the farm banks are in a worse situation in general than most banks?

Mr. CLARKE: It all depends on whether you ask the owner of a farm bank or the owner of an energy bank or the owner of a real estate bank.

Mr. SEIDMAN: But there are more of what we classify as a farm bank -- that is, one with 25 loans in the farm area -- there are more of those on our problem list than any other single group.

WOODRUFF: Looking at a way to deal with the farm banks separately from other banks, because it is in some ways a peculiar problem?

Mr. SEIDMAN: Well, we're going to be asked to testify before the Congress early next year, and that will be the question: what, if anything, should you do for the farm banks?I think that it's fairly obvious that if we do some things for farm banks there will be another industry like energy in right after them, so we have to look at it on a national basis, even though we'll be talking about agriculture.

WOODRUFF: Let me quickly move to another subject. As you both know, there are many consumer groups that have complained that the banking fees on checking accounts and so forth have skyrocketed since banking deregulation and that the banks are making more profits than they should out of this. Is that a fair criticism?

Mr. SEIDMAN: No, I don't really think that is a fair criticism. In the first place, banking is very competitive in most places so that the banks are competing for customers, and so they're not free just to set things the way they want to. There's a marketplace out there. As far as banking profits are going, certainly historically they are not high. So I don't think that that would be a fair statement.

WOODRUFF: Mr. Clarke, do you agree?

Mr. CLARKE: I think that deregulation has caused banks to focus on what their costs are, and there have been some very interesting studies made of what it costs a bank to provide just the basic checking account. And many bankers discovered, much to their amazement, when they had those studies done that they were losing money hand over fist on your basic checking account. And I think they have re-evaluated what they should be charging for that service. And I do think that banks have to be sensitive to what the customer can afford to pay and we have put out, as I understand it, a release encouraging bankers to make services available on as economic a basis as possible.

WOODRUFF: But I gather you're both saying that it's okay for the banks to make a little more money off these checking accounts and other services they provide to the customers, because they were losing money on that before?

Mr. SEIDMAN: I think what we're really saying is that they've begun to run this on the basis of what their costs are, and that has shown that they needed to raise some prices in certain areas. But I don't believe they'll have a free hand. There'll be people around that provide a service at a reasonable cost.

WOODRUFF: Gentlemen, there's much, much more that I'd like to ask you about, but we'll have to save that for another time. Mr. Seidman, Mr. Clarke, we thank you both for being with us.

Mr. SEIDMAN: Thank you.

Mr. CLARKE: Thank you. Enjoyed being here. Murder, Inc.

MacNEIL: Next tonight we follow up on the assassination of reputed Mafia boss Paul Castellano. The 73-year-old Castellano, police say, headed the nation's most powerful Mafia unit, the Gambino family. He was shot in the rush hour yesterday as he tried to leave his limousine to enter a well-known Manhattan restaurant. Also killed was his aide, Thomas Bilotti. Both men were shot six times in the head and body. Witnesses said three men drew semi-automatic weapons from under their trench coats and fired at close range. Then they fled on foot into the crowds. Castellano had been on trial in federal court in New York since last September on charges of conspiracy to commit murder. With us to provide some background on the story is the police bureau chief for the New York Daily News, Murray Weiss.

Mr Weiss, first of all, how important a figure in organized crime was Castellano?

MURRAY WEISS: Well, if you just look at the sheer size of the family that he operated, it had 250 members and 500 associates, considered to be the largest and most powerful of the five traditional families. Therefore, it de facto makes him the most powerful organized crime figure, probably, in the United States of America.

MacNEIL: What kind of businesses were they in?

Mr. WEISS: Well, in recent years, in the past decade or so, as have most organized crime figures, they've gotten into more white collar kind of crimes, and the Castellano people, particularly, have been into labor, construction, meat, poultry, in addition to the normal, traditional kinds of organized crime dealings like gambling, racketeering, extortion. So the panorama is wide and pervasive here in New York City and throughout the country.

MacNEIL: For people who aren't voracious readers of this literature, what does the Mafia do in businesses like meat and poultry and so on?

Mr. WEISS: To them, they increase the price of what the consumer in America pays for ultimately. If, on a small-business level, someone tries to open a business and deal with another company to get its poultry or get its buildings built, they will eventually either not be able to do it, if they don't deal with the right people, or, if they deal with the right people, clearly the price that they will pay will be a, shall we say, non-bargained price. And eventually someone who walks into the store, that price is going to get passed on to them. If you believe law enforcement people like the FBI, you're talking about hundreds of millions of dollars, a second government, an invisible government, if you will, in which all across the nation people are paying for it.

MacNEIL: Now, the people you have contacts with, the prosecutors and the police, what are they guessing today, or speculating, was the reason for bumping off Castellano?

Mr. WEISS: Well, you have to look at it from a few points. He's under indictment, currently on trial in the first of several cases, probably the weakest. And he's been tied up legally in court for over a year; he was going to be tied up in court for even longer. There are, shall we say, people waiting in the wings within his own family to take over. A week ago Mr. Castellano's second in command, Neil Dellacroce, passed away. So now you have the number-two position open. Castellano is there waiting to fill that spot. There's a theory here that the person who was heir apparent to the number-two spot, a man from Howard Beach, Queens, named John Gotti, may have orchestrated this hit on Paul Castellano. To do this, one might need the approval of other families. In this case what's known as "The Commission," the heads of all the families that meet, which Mr. Castellano is said to have been the head of --

MacNEIL: Like a godfather?

Mr. WEISS: The godfather. That's who we're talking about here. There are wiretaps on several of the heads of the other families where they speak in the foulest terms about Paul Castellano, and these tapes will be played next year at the Commission trial, the sootti needed support or the approval of the other families, it certainly would have been there because they have long disliked him.

MacNEIL: Why?

Mr. WEISS: Well, they rose through the ranks the hard way, so to speak, to eventually take over the rackets, the organized crime families, in a very difficult environment, meaning New York. Paul Castellano, however, they feel got his job because the late Carlo Gambino, the boss of all bosses for a couple of decades before he died in '76, married one of Castellano's sisters. So, ergo, they sit there and they go, this warm, mild-mannered, less severe guy --

MacNEIL: His sister married the boss?

Mr. WEISS: Exactly. And the boss passed on the throne, shall we say?

MacNEIL: If this theory is wrong and whoever orchestrated the killing did not get approval from other families in the Commission, and did it just as a freelance job, because he wanted to rise himself through the Gambino family, what does that mean? Does that mean a possible war between the families, more killings?

Mr. WEISS: Very possible. Very possible. The way I look at it is --

MacNEIL: Is that given kind of equal weight now today among the people you talk to?

Mr. WEISS: Well, let's say this person John Gotti, who I named, did it on his own; he didn't ask for anybody's approval. He might be able to get away with it, because the heads of the other five -- the other four families are also under indictment. They're also going to be part of the Commission trials, and they're also the subject of their own loss of powers within their families. So if I were them I might be looking over my shoulder to see if a John Gotti in my own mob is going to take care of me. If that doesn't happen, then it's clear a war could break out between all the families. What you have to see here is an old regime -- not just in the Gambino family, not just Paul Castellano. The heads of all the families are old, and John Gotti is a younger, newer breed. And the same thing is happening in all the families. So you may see tremendous warfare in the next year or two between families, within families. This could be a very fascinating scenario played out on the streets of New York.

MacNEIL: And this business about them being tied up in court, in these federal cases against them, that's just like any kind of corporation; it couldn't tolerate having its head or its second in command permanently away doing something else for very long; it wouldn't be efficient.

Mr. WEISS: Well, often in the past a major Mafia figure goes to jail and continues to control the family. But in this case you have the whole hierarchy on trial, each one is old, and this is very embarrassing. This is a very embarrassing situation going on here.

MacNEIL: We have to leave it there, Mr. Weiss. Thank you for joining is.

Mr. WEISS: Thank you.

LEHRER: The Lurie thought for the day is about our national mourning for the victims of the Newfoundland plane crash.

[Lurie cartoon -- stripes from flag-draped coffin in Fort Campbell spread out and unite the country]

MacNEIL: Once again the main stories of the day. The House of Representatives reversed itself and agreed to a vote on tax reform. Congress passed one more stopgap measure to keep the government solvent. Surging imports produced another near-record trade deficit in the third quarter. Good night, Jim.

LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer; thank you and good night.