THE FRONT
Radioactive Risks THE DEPARTMENT OF ENERGY'S (DOE) "astonishing scientific and technical incompetence" has created a crisis in the management of the nation's nuclear wastes, the Institute for Energy and Environmental Research (IEER) charged last week. In the report, "Reducing the Risks: Policies for the Management of Highly Radioactive Nuclear Waste" largely devoted to problems of selecting disposal sites for the hazardous wastes created by nuclear power and weapons production, the institute's president Dr. Arjun Makhijani called for a complete overhaul of the existing site selection system. "The DOE has long ignored, distorted or suppressed unfavorable data and supports so that it could proceed unhindered in its site selection," Makhijani said. One of IEER's leading charges is that DOE is currently operating without legal health and environmental standards for the selection of nuclear waste disposal sites. The problem began with the 1982 Nuclear Waste Policy Act which required the Environmental Protection Agency (EPA) and the Nuclear Regulatory Commission (NRC) to move quickly to issue health, environmental and technical standards for disposal of nuclear waste and called on DOE to submit a list of prospective sites for a national nuclear waste repository within six months of the passage of the act. Ironically, the urgency of these assignments, the report charges, seriously weakened the process: "The NRC issued its final performance standards while the EPA standards were still in draft form. In theory, the DOE guidelines for site selection and the NRC standards can be revised to conform to the final EPA standards. In reality, once the process of site selection is well advanced, the pressures to come up with health standards that are compatible with prior site selection and technical performance standards would be considerable." When the EPA eventually did issue its final standards, they were criticized as inadequate by such groups as the prestigious National Academy of Sciences (NAS). Overall, the IEER report concludes, the standards are "so flawed and arbitrary as to be meaningless as a criterion for a realistic assessment of damage to public health." In 1987, following a lawsuit against the EPA, the agency's standards were not found to be in compliance with other federal health and environmental laws, and were invalidated. The result, charged Makhijani, is "an Alice in Wonderland situation. The NRC deems it 'reasonable' that a repository site is being evaluated, selected and designed to protect public health and the environment according to standards which have been invalidated by the courts." According to the report, "a single site, Yucca Mountain in Nevada, is being investigated for conformity with the NRC performance standards which relate to unknown health and environmental standards. To top it all off, a $1 billion contract has been issued for beginning the design of the repository at Nevada." The report repeatedly charges the DOE with deceit in its analysis of the site's safety. "Even after committing the country to the risky course of ... using Nevada, one would think that this problem would receive honest and diligent attention on the part of the DOE," it states. "Yet, DOE appears to have designed much of its effort so as to avoid finding out the answers to important questions." (balance of this article omitted here; unscannable) ------------------------------------------------------------------------------- [] MULTINATIONAL MONITOR June 1989 VOLUME 10, NUMBERS 6, JUNE 1989 Corporate Welfare GOVERNMENT REGULATORY agencies have failed to handle the failures of banks and savings and loans in the best interests of the people they are supposed to represent: American citizens. They have either failed to operate bankrupt financial institutions (e.g. Continental Illinois, taken over by the FDIC in 1984) or have simply refused to consider nationalizing failed institutions when doing so would have cost taxpayers less money in the long term (e.g. First Republic Bank of Texas, which failed in August 1988). Instead the government has begun a new strategy which culminated in late 1988 with the Federal Home Loan Bank Board turning over hundreds of failing S&Ls to private investors who promised to place some cash up front. Some of these deals involved the outlay of large amounts of taxpayer funds. A study of the deals by the Mid America Institute for Public Policy Research, commissioned by the Bank Board, contradicts FHLBB chairman M. Danny Wall's assertion that the sales were cheaper to the government than simply shutting the failing institutions down. First Nationwide Corporation of San Francisco has received praise for its purchase of several failing S&Ls. This enormous S&L, the second largest in the United States, is owned by Ford Motor Company. According to an internal Bank Board document, the "substantial capital backing" that Ford offers was a principal reason for selling six failing S&Ls to First Nationwide. The Bank Board claimed in a letter to House Banking Committee Chairman Henry Gonzalez (D-Tex) that it would cost $2.68 billion to liquidate the failing institutions, as opposed to the $1.80 billion the First Nationwide deal cost the Bank Board and the Treasury (including tax benefits of $202 million). The confidential Bank Board analysis also, however, acknowledged some disturbing features: "We note that from December 31, 1987 through October 31, 1988, [First Nationwide] management has grown the institution by $6.8 billion to its present $24 billion; this represents an annualized growth rate of about 47.4 percent ... There is some concern that current management may not have sufficient depth and breadth to manage successfully an institution this size. Additionally, given the vast geographic dispersion of its franchise, First Nationwide may not have the internal controls in place to accomplish such growth. Operating results thus far in 1988 seem to support this view." First Nationwide losses amounted to $1.6 million the first 10 months of 1988, following profits of $158 million during the previous two years. In taking over the failing S&Ls, First Nationwide asked the Bank Board for, and received, substantial regulatory concessions on issues such as prohibitions against management interlocks and minimum capital requirements. These protections are critical to prevent the self-dealing and risky investments which contributed to the S&L crisis in the first place. Poor 1988 earnings and declining levels of capital with which to leverage its huge asset base prompted Ford's November 1988 decision to sink $300 million in capital into First Nationwide. And the recent S&L purchases have forced Ford to invest as much as another $253 million. Perhaps this is the point at which major industrial corporations like Ford come full circle. On the basis of a higher rate of return in the financial sector, they redirected capital there, away from needed improvements in plant and equipment. Whereas high real interest rates made such a strategy shift more profitable during most of the 1980s, the turmoil in the financial markets may already be coming back to haunt both Ford and the taxpayers who are supporting its S&L gamble. -Patrick Bond