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CALIFORNIA STATE TREASURER'S ATTEMPT TO BLOCK BANK'S ADVERTISING CAMPAIGN QUESTIONED BY PUBLISHER

 CALIFORNIA STATE TREASURER'S ATTEMPT TO BLOCK BANK'S
 ADVERTISING CAMPAIGN QUESTIONED BY PUBLISHER
 PRINCETON, N.J., Nov. 25 /PRNewswire/ -- Peter W. Eldredge, publisher and executive vice president of Newsweek magazine, defended College Savings Bank's anti-zero-coupon bond advertising campaign which has been subject to sharp criticism by Kathleen Brown, California state treasurer.
 In October of 1991, Brown denounced the bank's national anti-zero- coupon bond print campaign which was launched in April of this year. The bank's product, the CollegeSure(R) Certificate of Deposit, competes with California's zero-coupon "college-savings" bonds and similar programs of other states. The bank's advertisements have appeared in Newsweek in addition to many investment and business magazines and newspapers.
 In a letter written to the editor of Newsweek dated Oct. 16, Brown made reference to College Savings Bank's advertisement and asked that Newsweek apply "a stricter 'truth-in-advertising' standard ..." The treasurer maintained that College Savings Bank's advertisement "goes too far by asserting that a perfectly valid alternative for funding future college education costs, the zero-coupon bond, is unsafe and unsound."
 On Nov. 8 Newsweek pulled the bank's newly updated anti-zero-coupon bond advertisement that disputed Brown's claims. The advertisement, which was scheduled to appear in the Nov. 18 issue of Newsweek, has subsequently appeared so far in The Wall Street Journal, The New York Times, San Francisco Chronicle and California Journal.
 Eldredge, however, questioned Brown's intervention in a letter written on Nov. 18. He stated, "Companies do have the right to advertise benefits of their products and services. Companies also have the right to express opinions within advertisements. That is just what the College Savings Bank did in ads published in Newsweek magazine in September."
 Eldredge emphasized that opinions differ with regard to financing a college education and he referenced an article titled "How to Pay for College" written by personal finance columnist Jane Bryant Quinn which appeared in the Oct. 21, 1991, issue of Newsweek. Although Eldredge did not discuss content, it is interesting to note that in the article, Quinn referred to zero-coupon bonds as "bum college investments" -- in agreement with College Savings Bank's rationale that zeros are not appropriate investments for college savers.
 In closing, Eldredge maintained that Newsweek's readers are educated consumers and he was confident that the readers are discerning enough to separate editorial matter from advertising copy and to know the differences and purposes of each.
 Brown, in other ways, has tried to blunt College Savings Bank's anti-zero-coupon bond message. On Nov. 4, 1991, in an article appearing in California Public Finance, Brown wrote in defense of zero-coupon bonds, "While financial institutions that invest in zeros may significantly increase their risk of failure, the only possible negative consequence for families using zeros is that they may not have invested enough to cover their full college costs," after seeing a letter in the same publication on July 1 written by Peter A. Roberts, chairman of College Savings Bank.
 Brown continued, "A family, as the investor, has to determine just how much it needs to save and when it needs to have the money available. A family's success is predetermined at the time of its initial investment, since the reinvestment yields are locked in and the values of the bonds at maturity are guaranteed at par. Neither the program nor the investment vehicle will fail to perform if the design of the program is understood. It is a family's up-front work in determining its future college liabilities which determines its current investment needs. Once this determination is made, the family is free from further investment decisions."
 Furthermore, in the Nov. 18 issue of Muniweek, a spokesperson for the state treasurer said Brown plans to write to other publications such as The New York Times and The Wall Street Journal to stymie the bank's advertising.
 Roberts said, in response to the treasurer putting pressure on the news media to refuse the bank's advertisements, "Kathleen Brown may have violated the Federal Civil Rights Act by misusing the power of her office to deprive the bank of its speech rights protected by the First Amendment of the United States Constitution." Former U.S. Appeals Court Judge Shirley M. Hufstedler has been retained to advise College Savings Bank on this matter. Hufstedler was the first U.S. secretary of education (1979-81). She currently is a member of the law firm Hufstedler, Kaus & Ettinger, Los Angeles.
 Despite the obstacles Brown has created, College Savings Bank still contends that no one can accurately predict the cost of college in the future and a family risks failure if it attempts to use a fixed-rate asset such as a zero-coupon bond, to fund a variable-rate liability such as the future cost of college. The bank continues to successfully market its CollegeSure CD and has a vast network of supporters, including brokers, universities and individuals nationwide. In fact, College Savings Bank has received substantial press over the years. In her new book titled, "Making the Most of Your Money," Simon & Schuster (1991), author Jane Bryant Quinn refers to the CollegeSure CD as the "granddaddy" of bank prepaid tuition plans and describes its value: "CollegeSure's chief appeal is its guarantee. If college inflation runs higher than it is today, this CD should meet it, while fixed-rate investments (zero-coupon bonds) would fall behind."
 For more information, call College Savings Bank at 609-987-3770.
 -0- 11/25/91
 /CONTACT: Peter A. Roberts, chairman, College Savings Bank, 609-987-3770/ CO: College Savings Bank; Newsweek ST: California, New Jersey IN: FIN ADV SU:


SB-SM -- DE030 -- 6979 11/25/91 15:43 EST
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Date:Nov 25, 1991
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