Hundreds of Washington area individual investors-and untold thousands across the country-are not being paid on time by the federal government as Treasury bills mature.
Some of the investors are calling it an unprecedented "default" by the United States government and are demanding interest to cover the extra days during which they don't have use of their money.
Treasury officials blame the delay in making payments-mainly to holding of bills that matured April 26 and May 3-on an unprecedented upswing in Treasury bill investment interest during the current period of high interest rates.
According to Richard Gregg, chief of finance at the Treasury's Public Debt Bureau, applications to buy bills have soared 379 percent since January 1978 while daily bill transactions at Treasury offices are up 427 percent.
This new demand-largely from individuals-has created a paperwork logjam in writing checks and mailing them to investors as the bills expire. Some payments have been more than a week late and one source said some $70 million in money due to investors has been delayed.
Gregg said yesterday that while the worst problems are over, there may be a "slight delay" in sending checks out for Treasury bills that mature today. "We are looking for the checks due May 17 to be out on time," he added.
Gregg cited the combined impact of three developments as causing the unprecedented and embarrassing government delays:
Much of the soaring interest in Treasury bills is coming from small investors who wait until two or three days before a cutoff date to decide on whether they want to "rollover," or renew, their investments or to collect on maturity, depending on the short-term interest rate situation. This creates an enormous work load of check preparation within a few days since some investors are supposed to get full payment while others are due interest after a decision to reinvest.
The congressional delay in approving a new national debt ceiling last month had the effect of concentrating within four days $25 billion of government securities sales, adding to a temporary paperwork jam.
Some modern "wood-processing" equipment, which can handle lists of investors to receive redemption checks, were out of service during the crucial weeks.
According to the Treasury official, workers from other department staffs have moved in to "help out" with the existing crunch.
As for investors' demands that they receive interest on their overdue checks, an official Treasury statement promised only that the government will consider "whether any action can be taken to adjust the matter of interest . . . "