European Stars and Stripes (Newspaper) - October 9, 1991, Darmstadt, Hesse                                Page 18 a the stars and stripes wednesday october 9,1991 Money matters . Bond ads called misleading tax free College savings limited Bank says by Albert b. Crenshaw the Washington Post Washington a . Savings Bonds Quot say the advertisements a now tax free for  its a very attractive pitch. Anything that is tax free today is rare indeed and As College costs soar beyond the reach of the Middle class the Appeal of government guaranteed tax exempt savings is obvious. So the ads placed by the Treasury department As part of its marketing Campaign for series be savings Bonds Are drawing a Good response. But there a a problem. For a substantial segment of the population the Bonds Are not tax free. That makes the ads deceptive according to the College savings Bank a Princeton n.j., financial institution that markets certificates of Deposit specifically designed for College savings. The Bank has complained to the Federal Trade commission the securities and Exchange commission Congress and the Treasury a so far with Little effect. The hitch is that while series be Bonds Are indeed tax free for College for Many people the exemption  out As income rises. For single people the exert option starts to fade when adjusted Gross income exceeds $41,950 and vanishes completely at $57,700. Married couples begin to lose the Benefit when their income tops $62,900, and they lose it completely at $94,350. The limits Are indexed for inflation so they will be higher by the time the savers child goes off to College. But income from the savings Bonds counts against the limit. Thus a conscientious Saver could find that when the time comes to Cash in the Bonds to pay tuition the income is enough to restrict or eliminate the tax advantage. Peter Roberts president of the College savings Bank said More than 1,000 people have contacted his institution about using savings Bonds for College. A we constantly come across people who have purchased the series be Bond believing it is tax free a Roberts said. But because of their income Levels a they done to qualify a he said. The Treasury in response to the charge has said that its consulting with the Etc and will make changes a where  . Officials told the Bank that the vast majority of americans have too Little income to be affected by the income limits and Treasury brochures spell out the limitations Anc restrictions. But College savings Bank argues that a great Many people done to realize the limits exist and even for those who do an important principle is involved. The Treasury is a doing what a commercial company could not do a said Garret g. Rasmussen of Patton Boggs amp blow the Washington Law firm representing the Bank. Advertisements for investments such As Mutual funds must make All sorts of disclosures but not the Treasury a. A a it a a double Standard a said Rasmussen adding that Many savings Bond ads contain a no disclaimers whatsoever a which is a something that if one of our commercial clients did it they would immediately be dragged before the Etc and forced to sign a consent decree if not make  unfortunately for College savings neither the Etc nor any other Agency has the authority to drag the Treasury anywhere. Both the Sec and the Etc have t expressed sympathy but informed the Bank that they Lack Legal Power to act. However Rasmussen said the Etc especially has been cooperative and Treasury officials have told the Bank that they Are working with that Agency to review the promotional materials. The educational Benefit for be bondholders was written into the Law two years ago and for some parents the benefits can be significant. But there Are a number of restrictions besides the income limits so that Bonds should be weighed carefully alongside alternative vehicles such As College savings cd Mutual funds and tax exempt and Zero Coupon Bonds. To be tax free savings Bonds must have been purchased after dec. 31,1989, and they must be in the parents name not the child a name. And the proceeds must be used to pay tuition and fees at a qualifying institution. The earnings Are not tax exempt if the Money is used for room and Board. The College savings Bank offers a cd pegged to the inflation rate of College costs. Roberts Points out that Money saved through his Bank though taxable can be used for any purpose. Some states now offer tax exempt Zero Coupon Bonds that can be timed to mature As a child reaches College age. Choosing the Best alternative Isnit easy. But financial planners do agree on one thing with costs rising at present rates it is essential that parents begin saving As much As possible As soon As possible. Fed expected to drop interest rates a notch by Greg Steinmentz new Day new York a expect the Federal Reserve to lower interest rates a bit. That a the prediction of economists who have studied the latest Batch of government data. If they re right and companies take the bait by borrowing More and expanding their businesses it could help the Economy get Back on track. But even if the actions fail to turn the Economy around right away lower rates will be Good news for Consumers and businesses whose loan rates Are adjustable. Home equity borrowers for example would see their monthly payments fall. Eugene j. Sherman chief economist for the Federal Home loan Bank of new York issued a report monday forecasting that the fed will move to lower one rate As Early As this week. He anticipates a Quarter of a percentage Point Cut in the Federal funds rate which Banks charge on overnight Loans to each other. The fed can influence the rate now at 5.25 percent by buying and Selling Treasury securities. Sherman also said that the discount rate which the fed charges on its Loans to Banks will be brought Down by half a percentage Point to 4.5 percent by years end. The rate is already at its lowest level since 1973. A recovery might have begun last May Sherman said but it a appears to have decelerated. We believe that enough economic data have now accumulated to give the fed reason to ease rates again. A the Economy needs lower rates to keep the recovery alive a said Lyle Gram Ley a former fed governor who is chief economist for the mortgage Bankers association. Sherman said Banks will respond to lower fed rates by reducing their prime lending rates now at 8 percent. The prime determines the Cost of business and Home equity Loans and less directly mortgage  a snap inventor Heung y. A says he really has a better Mousetrap which he demonstrated in Alexandria a. When a mouse ventures inside looking for goodies and Steps on the treadle the trapdoor Clicks shut and Critter can to escape. The mouse can then be released outside or the trap with the mouse inside can be thrown away All for a Cost of $1.50  lifts ban on phone information services Washington apr the seven regional Bell Telephone companies got the go ahead monday to enter the highly competitive electronic information services Market when a Federal appeals court effectively lifted a four year ban against such activity. A this ruling underscores the urgent need for legislation to protect Consumers from restrictions on their choices a Drain on their pocketbook and threats to their privacy a said Cathleen p. Black president of the american newspaper publishers association. A we will continue this  the $41 billion newspaper Industry was the big loser and the regional phone companies with an estimated $70 billion in combined annual revenues were the big winners monday in the . Court of appeals. A ban prohibiting the phone companies from trans mitting information services such As sports scores Stock quotations and weather reports on local Telephone lines had been in effect since 1987. On july 25, . District judge Harold Greene rescinded the ban but stayed the effect of his ruling until higher courts acted on appeals. On monday the appellate court vacated his stay which meant that the phone companies were free to enter the information Market. Ronald Stowe a Washington spokesman for the seven regional phone companies said they were delighted with the appeals court decision. A Consumers and businesses have been asking us for years to provide information services such As electronic yellow pages but we have been unable to do so because of the Federal courts ban he said. A now with the lifting of the stay we take another step Forward in bringing american Consumers ame can business and the american Economy into to mainstream of the information age a Stowe said. Congressional sources said the newspaper Indus had hoped legislation would delay the Telephone coi panics entry into the Market. A House Energy Ai Commerce subcommittee on telecommunications h scheduled hearings on the Issue for oct. 22-23.of Fps Cooper d-tenn., planned to introduce Bill in the House on tuesday aimed at achieving t publishers association goals. Only hours before the appeals court acted Black h r ii Ona res club luncheon that the divers of 12,000 electronic information services a will threatened if the phone companies Are allowed to cd tool both the medium and the