February 5, 1991

Citing the war and a weak economy, the nation's largest car maker slashed its dividend nearly in half and announced it was reducing its salaried work force and its capital spending plans. Page D1.

President Hashemi Rafsanjani of Iran today offered to serve as a mediator between the United States and Iraq to seek a peaceful end to the Persian Gulf war. Iraq had no immediate public reaction, and the overture was received coolly by the Bush Administration. American officials said they did not intend to be drawn into any negotiations with Iraq over a cease-fire, or any other peace plans, and would stop the war only for an unconditional Iraqi withdrawal from Kuwait in accordance with the United Nations resolutions. U.S. Immediately Skeptical "What's to mediate?" asked the State Department spokeswoman, Margaret D. Tutwiler, commenting on the Iranian offer. "We would be pleased, obviously, if anyone could get Saddam Hussein to fully comply with these U.N. resolutions. The only mediation in our opinion that would be appropriate would be for the people who communicate with Saddam Hussein to convince him to comply with the 12 United Nations resolutions."

In an apparent slap at the nation's senior banking regulator, L. William Seidman, the Bush Administration will recommend that his agency lose its authority to supervise banks, senior Government officials said today. The recommendation would strip the Federal Deposit Insurance Corporation of its role as a regulator of the nation's more than 12,000 banks, but the agency would continue to insure deposits. The recommendation is scheduled to be announced on Tuesday, when the Treasury Department discloses the details of its long-awaited proposal to Congress to overhaul the banking system.

In the budget they sent to Congress today, President Bush and his advisers tried to neutralize the strongest political point the Democrats have developed in the Bush Presidency: the argument that this Administration favors the rich at the expense of the poor and the middle class. Mr. Bush reintroduced his pet proposal to cut the tax on capital gains, a measure that would mostly benefit affluent taxpayers.

Several communities in the San Francisco Bay area have enacted what labor lawyers say are the nation's first local laws that specify the wages to be paid to employees of private businesses. Alarmed business groups, fearing that such laws will become a nationwide trend, are seeking to have them struck down in court. That action has set the stage for a highly emotional battle between the business groups and labor unions, which support the laws and stand to benefit from them.