July 2, 1996

Supreme Court Finds Shift By U.S. Unfair to S.& L.'s The Supreme Court ruled that the Government knowingly went back on its word through accounting changes that plunged three savings and loans into insolvency. The case could cost taxpayers billions in breach-of- contract damages.

In the second major hospital merger deal in a month, two of New York's largest teaching hospitals, Beth Israel Medical Center and Long Island Jewish Medical Center, announced yesterday that they intend to merge, creating a far-flung health empire tailor-made for the city and its suburbs. The agreement comes a mere two weeks after two of Manhattan's giant medical centers -- New York University and Mount Sinai -- stunned the health care industry by announcing that they would join forces.

When Morgan Stanley & Company needed to slice tens of millions of dollars in costs, a task neither pleasant nor the least bit glamorous, it turned to Elaine La Roche. Ms. La Roche, who is 47 years old, has gotten the job done briskly. She cut travel expenses by declaring expensive hotels like the St. Regis in New York off-limits. John J. Mack, Morgan Stanley's president, found himself flying coach on a recent trip to Atlanta. She has trimmed the corporate-services staff by about 160 jobs, including the firm's library staff, leaving some investment bankers growling that they now must do much more of their own research. She has also negotiated better terms for many of the services the company uses.

The Digital Equipment Corporation said yesterday that Enrico Pesatori, the head of its computer systems division and a man whom many people believed might one day run the company, had resigned, effective immediately. Mr. Pesatori's duties -- running Digital's midrange and personal computer businesses -- will be taken over temporarily by Robert Palmer, the company's chairman, president and chief executive.

A Federal District Court judge who had blocked New Jersey's law that requires the state to inform schools and women's groups of the names and addresses of paroled sex offenders today upheld the key portion of that law.

The Federal authorities today arrested 12 people it said were members of an Arizona paramilitary group and charged them with conspiracy to blow up a number of Federal buildings, the Phoenix Police Department headquarters and an Arizona National Guard center. The authorities said that those arrested called themselves the Viper Militia and trained in the desert with explosives for what one member said was an "upcoming war" with the Federal Government.

A car caught fire yesterday in the parking garage of a six-story luxury condominium building, and its driver died, the authorities said. The building's sprinkler system apparently prevented the flames from spreading, and no one else was injured, said Lieut. Steve Kalman of the Hackensack Fire Department. He said the police did not know why the driver, who lived in the building, was unable to escape the fire.

The Clinton Administration is pressing ahead with a plan to transform background investigations of many Government employees into a profit-making business run by a newly created private company, despite protests from some members of Congress, Cabinet officials and investigators worried about confidentiality and security lapses. Under the plan, which has been in the works for a year and a half and will take effect at the end of this week, about 40 percent of security and other background checks on Government employees and job applicants will be taken over by an employee-owned, profit-seeking company. The employee-owners will be the 700 workers in the Office of Personnel Management's Office of Federal Investigations, which now does the checks.

Hours after he canceled yet another series of public meetings today, President Boris N. Yeltsin emerged from seclusion to deliver a stiff, brief television address urging Russians to vote for him on Wednesday. The wooden, tightly choreographed speech and a stream of assurances from Government officials that Mr. Yeltsin was fit and ready to win were intended to calm an electorate made anxious by the 65-year-old President's complete absence from public view in the past week.

As the secret budget talks between Gov. George E. Pataki and legislative leaders dragged on tonight, other lawmakers wandered about the Capitol, frustrated, befuddled and outraged that they will soon be asked to vote on a slew of complex bills in a fevered dash to end the legislative session by the Fourth of July. The two leaders of the Senate and the Assembly have told the other 209 lawmakers that they plan to hammer out a complete budget deal in the next 48 hours. Along the way, the leaders intend to push voluminous bills through both houses, barely giving members time to figure out what exactly they are voting on -- or what is in the budget bills they are going to be asked to vote on next.

A GLOBAL network of undersea microphones, built by the Federal Government at a cost of $16 billion to spy on enemy ships and submarines, is beginning to rock to the beat of whales singing, fish schooling, seabeds shaking, volcanoes erupting and even nuclear arms exploding. The undersea ears can pick up noises that reverberate through the sea over distances of hundreds and even thousands of miles. Their sensitivity is such that they have tracked the movements of a single whale for weeks on end as the cetacean, a blue whale, repeatedly sang its deep songs.

Attempts to take advantage of customers, by employees of the Bankers Trust New York Corporation were far more widespread than the bank had indicated earlier, according to the conclusions of an investigation released yesterday by two independent lawyers. Bankers Trust's "derivatives business was not well managed or controlled in certain important respects and certain individuals at B.T. -- concentrated principally on the N.Y. interest-rate desk and N.Y. corporates desk -- exploited these weaknesses for their own purposes," the report said.