September 9, 1991

Momentum is building rapidly in Congress and among Federal regulators to repudiate and rewrite many laws and economic regulations that were pillars of the New Deal of the 1930's. The changes, advanced by the Bush Administration and moving quickly through Congress, which returns from its summer recess on Tuesday, represent a fundamental shift in the philosophy of regulation. Earlier in this century, rules were formulated to restrict the growth of financial powerhouses; the new view holds that conglomeration is better for the economy and helps the nation to compete internationally.

The Justice Department has expanded its investigation of the Treasury securities scandal that has shaken Salomon Brothers Inc., and prosecutors are now conducting parallel civil and criminal inquiries in Washington and New York, people involved in the case said over the weekend. A handful of criminal subpoenas have been issued, most of them directed at individual traders, and prosecutors have asked a number of Salomon executives or their lawyers for interviews, these sources said. The Federal Bureau of Investigation has also joined the inquiry, and its agents have met with representatives of the firm.

The Economy Momentum is building in Congress and among regulators to repudiate and rewrite laws and economic regulations that were pillars of the New Deal in the 1930's. The changes, advanced by the Bush Administration and moving quickly through Congress, represent a fundamental shift in the philosophy of regulation. [ Page D1. ]

Joshua and Stephen Muss may not be the closest of cousins, but they do have several things in common. Each is part of a legacy of builders in the New York area, and each feels frustration over separate construction projects planned for Brooklyn. Joshua, the head of the Muss Development Company, is trying to build a 31-story office building and hotel complex in downtown Brooklyn, while Stephen, the head of Alexander Muss & Sons, has plans for a five-building, 1,600-apartment complex in Brighton Beach.

When Wilfredo Caraballo was a young man plying the rough turf of the South Bronx, he, like many other Hispanic men, had a lot of trouble with the police, he said. "In 1973, a cop put a gun in my face and said: 'I know that face! I know that face!' "

Having adopted an emergency redesign of the Soviet Union's political face, officials of the new national transitional Government face the daunting challenge posed by the crippled Soviet economy, where growing budget deficits and soaring inflation are dampening plans for rapid free-market innovations. Officials estimate that inflation could increase as much as tenfold this year, with deficits doubling as the new, weaker union government and its newly sovereign republics contend with the bleak economic environment.

Stefan Edberg, all flawless finesse in the pursuit of his first United States Open championship, was the player who did all the pouncing in a high-stakes game of cat and mouse with French Open champion Jim Courier yesterday at the National Tennis Center. In a lopsided final beneath a pastel haze on the Stadium Court, Edberg won his fifth Grand Slam title in eight Grand Slam finals.

A spectacular fire of suspicious origin destroyed the ceiling and roof of the Staten Island ferry's cavernous Manhattan terminal yesterday morning, disrupting service for thousands of riders on a commuter workhorse that is one of New York City's most glamorous sightseeing attractions. As flaming chunks of asbestos-laden ceiling debris cascaded onto the passenger concourse and dense clouds of dark smoke billowed over New York Harbor just after 8 A.M., scores of early-morning riders and shopkeepers fled the terminal in panic, and a quiet Sunday amid the ghostly empty skyscrapers of lower Manhattan was turned into a war zone of wailing sirens and firefighting apparatus.

"Tribalism," Dr. Gabor Nagy said, shocked by the growing Balkanization of the New York City Council. Dr. Nagy is one of eight municipal officials from Eastern Europe who have been observing New York City government this summer under the auspices of Freedom House, a New York-based human-rights organization. He spent two weeks in the office of the Council Speaker, Peter F. Vallone, and, after Thursday's Council primary elections, returns to Budapest where he is chairman of the City Council's Commitee on Human Rights and Minorities. In Budapest, the major minority group is the city's gypsies, who make up less than 10 percent of the population.

For the beleaguered and increasingly insecure leader of Soviet Georgia, who has struggled for decades to get the Soviet Union and the world to recognize the independence of his fiercely proud republic in the Caucasus Mountains, the victory in Moscow of the forces of democracy after last month's failed coup was nothing to cheer about. President Zviad K. Gamsakhurdia says he wants nothing to do with the Soviet Union any more, whether it is a democracy or a dictatorship. All he wants is real autonomy for Georgia, which he rules like a freely elected despot, preoccupied with plots, real and imagined, to do him in and keep his land under Moscow's domination.

A Guide to Contests For the City Council What could be one of New York City's most important municipal primary elections in years will take place on Thursday. The Council will expand to 51 members from 35, with the goal of increasing minority representation. A look at the races, the candidates and the issues. Pages B4 and B5. Scores Slain in South Africa Black factional clashes around Johannesburg left 42 people dead days before the two main rival groups are to sign a peace plan. Page A2. For Schools, New Faces Unprecedented turnover in teachers and principals may make for an unpredictable opening day for New York City's schools. Page B1. Judge Thomas in Rehearsal Judge Clarence Thomas goes before the Senate Judiciary Committee Tuesday after a summer of preparation for the questioning. Page A12. Plutonium's Discoverer Dies Edwin Mattison McMillan, a pioneer in modern chemistry and physics, died at the age of 83. Page B10.

The United States is borrowing a European weather satellite to fill a potential gap in photography from space that would leave American forecasters without vital pictures to track storms and hurricanes. It is the first time that an operating spacecraft has been lent to avert a possible crisis, and paradoxically, it is the United States, which pioneered weather satellites, that is asking others for help.