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"My experience with the Federal Reserve...has led me to conclude that this is an extraordinarily well-run organization."--Alan Greenspan, on a General Accounting Office report knocking the Fed for inadequate internal cost controlsEDITED BY LARRY LIGHT, WITH OLUWABUMNI SHABIReturn to top

WILL JACK SMITH PUNCH OUT EARLY?

GENERAL MOTORS CHAIRMAN Jack Smith is considering early retirement. Not right away, but in four years, when he'll be 62--three years short of GM's mandatory retirement age. So says a source close to the No.1 auto maker's board who has heard Smith talking about his future. "It's a very trying job," the source says. "He's working seven days a week."

Smith doesn't flatly pledge to stay to 65. All he will say, through a spokeswoman: "I don't know what the fuss is all about. I have no plans for retirement." If Smith leaves in 2000, his heir apparent, 54-year-old Vice-Chairman Harry Pearce, would have more time at the wheel--seven years. Pearce is a board favorite and just received additional kudos as GM's point man for the United Auto Workers in the recent 17-day strike over outsourcing.

Smith, who made his mark by turning moribund European operations into a cash cow in the 1980s, hopes to do the same in North America by retirement time. Smith (1994 pay: $5.7 million) became CEO in 1992 and just took on the chairman's title, partly as reward for his work restoring GM's health. But Smith and his wife, Lydia, are said to be eager to enjoy their hobbies, including skiing and safaris.EDITED BY LARRY LIGHT, WITH OLUWABUMNI SHABI By Keith NaughtonReturn to top

ADRIFT IN THRIFTS

RON PERELMAN'S campaign to build a savings and loan powerhouse by gobbling up California thrifts has hit a roadblock. Merger talks recently broke down between his deal-hungry San Francisco Ssuperscript&L and California Financial Holding, parent of $1 billion Stockton Savings Bank. But the snag is likely to be temporary for the wily financier.

Perelman's lieutenants won't say why California Financial, in particular, didn't work out. But they do say thrifts lately want juicier premiums than Perelman paid for the two S&Ls he bought in 1995. Perelman's outfit, First Nationwide Bank, offered $24 a share for California Financial, roughly 30% over its market price--in line with his other recent thrift deals.

Upshot: Perelman's people say they may just wait a while for things to calm down. After all, thrift performances tend to be spotty, so First Nationwide, which he bought in 1994 from Ford Motor, doesn't face much bidding competition. A waiting strategy may work. People close to California Financial, whose 1995 return on equity was a paltry 2.26%, say its board was divided on a sale--and has given management six months to turn it around before putting it back on the block.

Perelman has made First Nationwide a strong takeover vehicle by, among other things, using tax breaks from a failed Texas thrift he bought in 1988. Result: a sizzling 1995 return on equity of 32%.EDITED BY LARRY LIGHT, WITH OLUWABUMNI SHABI By Sam ZuckermanReturn to top

FALL INTO THE GAFFE

GAP, WHICH IS ABOUT AS green as Corporate America gets, just ran newspaper and magazine ads featuring a senator whom some environmentalists call an enemy. The ad campaign, launched Mar. 3 for Gap's Banana Republic chain, featured Senator Ben Nighthorse Campbell (R-Colo.) wearing black jeans astride a Harley Davidson.

So green activists wrote the company threatening a boycott if the ad wasn't pulled. Jonathan Turley, director of the Environmental Law Advocacy Center, accuses the senator of trying to "gut the environmental laws and sell public lands."

The ad is no longer running, but Gap says it was only slated for a week anyway. Campbell "was chosen for his independence of spirit, not his politics," explains Gap Chief Financial Officer Warren Hashagen Jr. Gap's own enviro-activism includes donations to such groups as the Natural Resources Defense Council. A Campbell spokesman says that "special interest pressure" spoiled something fun. The senator donated his $2,000 ad fee to Montana's Dull Knife Memorial College.EDITED BY LARRY LIGHT, WITH OLUWABUMNI SHABI By Linda HimelsteinReturn to top


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