No longer will U.S. Savings Bonds -- which currently pay 7 percent maximum interest -- be touted as a means of "putting your financial worries to rest." Henceforth, the emphasis will be on buying bonds as a means of forced savings such as payroll deductions.
In toning down its ads for the bonds, the Treasury succumbed to consumer pressure. Last fall the Gray Panthers, a senior citizens lobby, threatened to bring suit against the government for promoting the low-interest bonds with "fraudulent" hyperbole at a time when other investments were paying much more.
Yesterday the Federal Trade Commisssion informed the group's attorney. Robert L. Gnaizda of San Frnacisco, that "there appears to be a sincere effort on the part of officials at Treasury to be sensitive to issures raised by the FTC staff and by your complaint." The director of the bureau of consumer protection, Albert H. Kramer, added that the 1980 ad campaign contains "noticeable, significant modifications."
No public announcement of the change, other than the letter to Gnaizda which was released on request, was made by the FTC or by the Treasury. This backdoor approach to regulation was necessary because the Ftc has to jurisdiction over advertising by sister government agencies.
But in the best government tradition, Kramer reported that the commission had established an "ongoing liaison relationship" with the Treasury, meaning the FTC would keep an eye on its ads.
The Gray Panthers also had complained about an administration decision to dub Savings Bonds "energy bonds" ater President Carter called on the American people to buy a stake in the country's future energy needs. Because the proceeds from these so-called energy bonds still went into general revenues, the idea soon was dropped quietly.
The senior citizens, whose lobbying efforts were instrumental in pushing through small-saver certificates over the opposition of financial institutions, wanted the Treasury to disclose the adverse impact if inflation on bonds.
The government declined, noting that promoters of competing investments, such as money market certificates, don't mention how inflation affects them. That issue, Gnaizda said yesterday, soon will become academic anyway due to an expected rise the Savings Bond interest rates.
The rise was requested by the Treasury to bolster sales of Savings Bonds which had declined in July of this year to $73.3 billion from the $808 billion outstanding a year earlier. Last month the House passed a bill allowing the Treasury to set the rates which now are imposed by Congress; the Senate is expected to follow suit in September. The legislation would permit a 1 percentage point increase evry six months as warranted. One point would mean savers would receive an extra $733 million in interest.
It is not yet clear whether the increase would apply at all maturities. The current Savings Bond rate of interest paid in the first year is 4 1/2 percent. It rises to 7 percent if the Savings Bond is held to full maturity of 11 years.