Baker Urges Probe of Computerized Securities Trading

Treasury Secretary James A. Baker III said Sunday he would like to see an investigation into the kind of computerized securities trading linked with Friday’s wild stock market fluctuations.

Huge shifts in stock market prices like the 100-point swing in the Dow Jones industrial average Friday on the New York Stock Exchange are “a matter to be concerned about,” Baker said during a televised interview on NBC’s “Meet the Press.”

The swings may be partially due to a growing use by brokers of computers programmed to advise when to buy and sell stocks. Because the computer programs are providing similar information to their various users, vast numbers of investors are reacting to the market the same way, analysts say.

SEC Chief in Agreement

“I’d like to see us take a look at the consequences and effects of computer program trading,” Baker said. “We lose nothing by taking a look at that.”

Baker said John Shad, chairman of the Securities and Exchange Commission, which oversees the nation’s financial markets, agreed with his desire for an examination of computer trading, but Baker did not specify what type of investigation he favored.

Baker also said that the “reasonable and orderly decline” in the U.S. dollar’s value during the past 18 months “has been a good thing for American business.”

But Baker said he was “not talking the dollar down” and warned that an extended plunge in its value, which has touched postwar lows in recent weeks, would tend “to promote a resurgence of inflation” and “could make it more difficult for us to finance our debt” by pushing interest rates up.

He refused several times to cite a target figure at which the Administration would like to see the foreign exchange value of the dollar settle.

The nation has been very fortunate that the decline in the dollar’s value coincided with a decline in world oil prices, so “there has not been a resurgence in inflation,” Baker said.

Asked about the relationship between devaluation of the dollar and the nation’s bulging trade deficit, Baker said he had always felt exchange rates were only “one part of the problem.” To correct the trade imbalance, “you need to do a whole range of things,” Baker said, some of which are already under way and some of which will be discussed Tuesday night when President Reagan delivers his state of the union address to Congress.

Baker said he was pleased with the cooperation Japan and West Germany had shown with efforts to reduce the U.S. trade deficit, which hit a record $175 billion in fiscal 1986, but conceded that they could “maybe” do more. And, he added, “maybe we could do a little more on our budget deficit, which is what they want to see us do.” He declined to set a specific dollar target for reduction in the trade deficit.