Life in OUR America, The Livyjr Files Volume 7 Options

[Livyjr]

"Moody's cuts WaMu credit rating"

By JESSICA MINTZ, Associated Press

Last updated: 6:42 p.m., Friday, March 14, 2008

SEATTLE -- Moody's Investors Service cut Washington Mutual Inc.'s credit rating Friday and said the country's largest savings and loan will need at least $4 billion more than it expected to cover bad mortgages in 2008.

Investors sent WaMu's shares down $1.54, or 12.7 percent, to close at $10.59 Friday.

Moody's said its action reflects a "rapid deterioration" of the housing market in the first few months of the year, echoing the rationale behind another rate cut by Standard & Poor's a week ago.

WaMu has estimated it will sock away up to $8 billion this year to account for borrowers who can't afford mortgage payments.

Moodys' upped its own estimate for loan-loss provisioning to more than $12 billion Friday.

Resulting fiscal-year losses could eliminate the cash cushion that keeps WaMu in compliance with regulations, Moody's said in a news release.

The credit rating agency downgraded Washington Mutual Inc.'s senior unsecured rating to "Baa3" from "Baa2."

It also cut Washington Mutual Bank's long-term deposit rating to "Baa2" from "Baa1."

The new ratings are still considered investment grade, but reflect moderate credit risk.

Moody's also placed a negative outlook on all Washington Mutual entities.

"Although in the fourth quarter the company raised a significant amount of hybrid capital and reduced its dividend, we believe WaMu's necessary provisioning could reduce capital to a point that would lead to further downgrades in 2008," said Craig Emrick, Moody's vice president.

"There are actions management can take in 2008 to address this, including raising additional capital, reducing assets and further cutting the dividend," he said.

"However, the negative outlook reflects the uncertainty around the company's ability to replenish capital."

Another downgrade would put the ratings for the thrift into speculative grade, or "junk," territory.

The rating agency said it could cut WaMu's credit rating further if loan loss provisions top the $12 billion forecast or if the thrift's profitable retail banking or credit card businesses come under "significant stress."

"WaMu is a sound financial institution, but like other companies we are impacted by the lack of market liquidity," Olivia Riley, a Washington Mutual spokeswoman, responded in an e-mailed statement.

"WaMu has several funding sources in addition to the capital markets, including the Federal Home Loan Bank and deposits generated through our retail bank."

[Livyjr]

"Gold tops $1,000 on Bear Stearns crisis"

By STEVENSON JACOBS, Associated Press

Last updated: 5:52 p.m., Friday, March 14, 2008

NEW YORK -- Gold prices bolted above $1,000 again on Friday, hitting a new record after a liquidity crisis at Bear Stearns Cos. rattled Wall Street and fed buying of safe-haven investments.

Other commodities traded mostly lower, with crude oil, copper and agriculture futures falling.

Following weeks of flirting with the $1,000 mark, gold finally breached the milestone Thursday after the dollar plunged against rival currencies.

The dollar hit a record low Friday against the euro, which bought as much as $1.5687.

The greenback's fall has been a major driver of gold because investors consider the metal a safe investment in times of economic turmoil and rising inflation.

Investors pushed gold higher Friday in reaction to a plan by the New York Federal Reserve and JPMorgan Chase & Co. to provide secured funding to Bear Stearns in a bid to keep the troubled investment firm from collapsing amid a global credit crisis.

"The fact that gold was able to power back over $1,000 was very much due to the bad credit-related news that continues to sweep Wall Street," said James Steel, analyst with HSBC in New York.

"The credit crisis keep morphing and the safe-haven buying keeps getting reinforced."

Gold for April delivery gained $5.70 to settle at $999.50 on the New York Mercantile Exchange, after earlier rising as high as $1,009 -- a new trading record.

The metal rose above $1,001 in aftermarket trading.

Gold has gained nearly 20 percent this year amid the tumbling dollar, record-high crude prices and nervousness about the faltering U.S. economy.

Analysts say the metal could go even higher if the Federal Reserve continues its interest rate-cutting campaign when it meets on Tuesday.

Lower interest rates can boost the economy but also tend to undermine the dollar, encouraging investors to buy hard assets like gold and silver.

A weak greenback also makes dollar-denominated commodities like gold cheaper for overseas buyers.

Other precious metals traded mixed Friday.

Silver for May delivery gained 23.5 cents to settle at $20.655 an ounce on the Nymex, while May copper fell 0.30 cent to settle at $3.820 a pound.

In energy markets, crude oil prices dipped modestly, closing lower for the first time in a week as the slide on Wall Street and U.S. economic worries led to profit-taking.

Light, sweet crude for April delivery fell 12 cents to settle at $110.21 on the Nymex, after rising earlier to just below its latest trading record of $111, set Thursday.

Other energy futures rose Friday.

April heating oil futures rose 2.17 cents to settle at a record $3.1465 a gallon after earlier setting a new trading record of $3.222 a gallon.

April gasoline futures rose 0.66 cent to settle at $2.6894 a gallon.

In agriculture markets, wheat, corn and soybean futures plunged amid expectations that the U.S. economic downturn will dampen demand.

Wheat for May delivery plummeted 52.5 cents to settle at $11.915 a bushel on the Chicago Board of Trade, while May soybeans lost 50 cents to settle at $13.5275 a bushel.

May corn fell 10.25 cents to settle at $5.5925 a bushel on the CBOT.

[Livyjr]

"Consumer prices moderated last month"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:22 p.m., Friday, March 14, 2008

WASHINGTON -- Consumer inflation, after pushing relentlessly higher, posted its mildest reading in six months in February thanks to energy and food costs moderating.

The relief, however, was expected to be short-lived, given that energy prices have resumed their upward climb.

The Labor Department reported Friday that consumer prices were unchanged last month, a better performance than the expected 0.3 percent gain.

Core inflation, which excludes energy and food, also held steady in February after a worrisome 0.3 percent jump in January.

The better-than-expected February inflation reading probably will be reversed in coming months because of the recent spike in energy prices.

Crude oil hit a record high this week above $110 per barrel and gasoline pump prices jumped to a national record of $3.28.

David Wyss, chief economist at Standard & Poor's in New York, said that he believed the economy was currently in a recession, which will help ease pressures on prices.

However, he said offsetting that in part was the big decline in the value of the dollar, which is driving up the cost of imported goods.

Wyss predicted a big jump in consumer prices for March, reflecting the rebound in gasoline and other energy prices that has already occurred.

For February, energy prices posted a 0.5 percent decline.

Gasoline prices fell by 2 percent, the biggest drop since last August.

Gains in food costs eased, too.

They rose by 0.4 percent after a 0.7 percent jump in January.

The price of vegetables, fruit, poultry and pork declined.

But the price of cereal and bakery products shot up by 1.8 percent, the largest monthly increase since January 1975.

The higher costs partly reflect higher energy prices, which raise transportation costs.

Also food prices have come under pressure because of the increased demand for corn in ethanol production.

The flat reading for core inflation in February left underlying inflation rising by 2.3 percent over the past 12 months.

That still is above the Federal Reserve Board's comfort range of 1 percent to 2 percent.

But the good reading in February should bolster the view that the central bank will move aggressively to cut interest rates next Tuesday in an effort to battle spreading economic weakness.

Many private analysts believe the Fed will cut rates by as much as one-half to three-fourths of a percentage point, seeking to either prevent a full-blown recession or at least moderate its effects.

Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh, said the combination of the more benign inflation report as well as continued fallout from the credit crisis would prompt the Fed "to give Wall Street what it wants" with an aggressive three-fourths of a percentage point rate cut next week.

The good news on inflation and words of encouragement from President Bush were not enough to calm jittery nerves on Wall Street.

Investors pushed stocks down sharply after a Federal Reserve-backed plan to alleviate a liquidity crisis at Bear Stearns Cos. touched off concerns about the severity of credit troubles facing big financial institutions.

The Dow Jones industrial average fell 194.65 points to close at 11,951.09.

In a New York speech, Bush acknowledged that prices at the gas pump and grocery stores are up and housing values are down, but he said the economy could weather these "uncertain times" as it has past problems.

The unchanged reading for overall consumer prices in February followed gains of 0.4 percent in January and December and 0.9 percent in November.

Clothing costs, having risen for five straight months, posted a 0.3 percent decline in February.

The cost of new vehicles declined by 0.3 percent and airline fares fell by 0.3 percent.

The decline in airline tickets was not expected to continue in the face of rising energy prices.

The cost of medical care posted an increase of 0.1 percent even though doctors' fees fell.

Medical care, the fastest-rising price category outside of energy, has risen by 4.5 percent over the past year.

For all of 2007, consumer inflation jumped by 4.1 percent, the biggest increase in 17 years.

That big increase has raised concerns about stagflation, the malady that beset the economy in the 1970s when economic growth stagnated at the same time that inflationary pressures increased.

Federal Reserve Chairman Ben Bernanke has said that he does not believe the country is at risk of another bout of stagflation.

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On the Net:

Consumer Price Index report: http://tinyurl.com/228ayx

[Livyjr]

"Fed takes rare path to aid Bear Stearns"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:02 p.m., Friday, March 14, 2008

WASHINGTON -- The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances."

The Fed announcement came in a brief two-sentence statement that was issued as stocks were plunging on Wall Street over worries that a plan to ease a liquidity crisis at Bear Stearns Cos. might not work.

Federal Reserve Chairman Ben Bernanke, delivering a speech later Friday, told a housing group he had had a "busy morning."

He did not elaborate on the Fed's action regarding Bear Stearns.

"The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system," the board said in its statement.

It said members had voted unanimously to approve the arrangement, announced by JP Morgan Chase and Bear Stearns earlier.

Delivering a speech on the economy in New York, Bush voiced confidence in the Fed's actions to aggressively cut interest rates and the Fed announcement last week that it would supply up to $200 billion in loans to cash-strapped financial institutions.

"It was a strong action by the Fed and they did so because some financial institutions that borrowed money to buy securities in the housing industry must now repair their balance sheets before they can make further loans," Bush said.

"Today's actions are fasting moving, but the chairman of the Federal Reserve and the secretary of the treasury are on top of them and will take the appropriate steps to promote stability in our markets."

The plan announced Friday will supply secured funding to Bear Stearns for an initial period of 28 days, seeking to provide short-term relief for Bear Stearns.

Senior Federal Reserve staffers said the arrangement allows JP Morgan Chase to borrow from the Fed's discount window and put up collateral from Bear Stearns to back up the loans.

JP Morgan, a bank, has access to the discount window to obtain direct loans from the Fed, but Bear Stearns, an investment house, does not.

While JP Morgan is serving as a conduit for the loans, the Fed and not JP Morgan will bear the risk if the loans are not repaid, officials said.

This type of procedure, Fed officials said, dates back to the Great Depression of the 1930s but has rarely been used since that time.

In his speech, Bush said the administration had a plan to deal with the problems in credit and housing markets and said he opposed a number of measures pending in Congress to go further by allocating billions of dollars to purchase abandoned and foreclosed home and changing the bankruptcy code to allow judges to adjust mortgage terms.

However, Senate Banking Committee Chairman Christopher Dodd, D-Conn., said the problems at Bearn Stearns, one of the country's largest investment banks, highlighed the need for more aggressive efforts.

"Instead of cheerleading and reacting with tepid measures, the administration should act boldly and decisively to prevent the looming foreclosure crisis from having catastrophic consequences for our economy and our markets," Dodd said in a statement.

Treasury Secretary Henry Paulson praised the Fed's leadership and said that the country's financial system would be able to weather the problems.

"As we have been saying for some time, there are challenges in our financial markets and we continue to address them," Paulson said in a statement.

"This is another challenge that market participants and regulators are addressing."

"We are working closely with the Federal Reserve" and the Securities and Exchange Commission.

Paulson said he appreciated the leadership of the Fed "in enhancing the stability and orderliness of our markets."

The action by the Fed board in Washington represented an endorsement of a rescue effort for Bear Stearns that had already been arranged by JPMorgan and the Federal Reserve's New York regional bank.

It was seen as a last-ditch effort to save the investment bank, which on Friday acknowledged its serious financial problems after a week of denials.

After the situation at Bear Stearns worsened late Wednesday, there were a series of conference calls throughout the day on Thursday with officials from the Fed, the New York Fed and the SEC to assess the potential impact on the broader economy, according to a Treasury official, who spoke on condition of anonymity because of the sensitive nature of the discussions.

This official said that Paulson had been keeping Bush updated on the proposed rescue effort.

JPMorgan Chase is providing an undisclosed amount of secured funding to Bear for 28 days, backstopped by the Federal Reserve Bank of New York.

The Securities and Exchange Commission issued a statement saying it has been "in close contact" with Treasury, the Federal Reserve and the Federal Reserve Bank of New York during discussions concerning an agreement by J.P. Morgan Chase & Co. to provide a secured loan facility to The Bear Stearns Companies.

"We will continue to work closely together in a way that contributes to orderly and liquid markets," the SEC said.

Last week, the Fed announced an industry-wide rescue package that would provide as much as $200 billion in loans to banks and investment houses and allow them to put up risky home-loan packages as collateral.

It was the Fed's latest effort to stem a global credit crisis that began last August with rising loan defaults for subprime mortgages, loans provided to borrowers with weak credit histories.

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Associated Press reporters Marcy Gordon, Jeannine Aversa, Terence Hunt, Stephen Bernard, Madlen Read and Joe Bel Bruno contributed to this report.

[Livyjr]

"Fed takes rare path to aid Bear Stearns"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:02 p.m., Friday, March 14, 2008

WASHINGTON -- The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances."

Delivering a speech on the economy in New York, Bush voiced confidence in the Fed's actions to aggressively cut interest rates and the Fed announcement last week that it would supply up to $200 billion in loans to cash-strapped financial institutions.

"It was a strong action by the Fed and they did so because some financial institutions that borrowed money to buy securities in the housing industry must now repair their balance sheets before they can make further loans," Bush said.

"Today's actions are fasting moving, but the chairman of the Federal Reserve and the secretary of the treasury are on top of them and will take the appropriate steps to promote stability in our markets."

"Fed chairman vows to help homeowners"

By JEANNINE AVERSA, Associated Press

Last updated: 4:52 p.m., Friday, March 14, 2008

WASHINGTON -- Fighting to stem a dangerous wave of home foreclosures, Federal Reserve Chairman Ben Bernanke pledged Friday to do all that is possible to help struggling homeowners.

The Fed is "strongly committed to fully employing our authority, expertise and resources to help alleviate their distress," Bernanke said in a speech to the National Community Reinvestment Coalition's annual meeting here.

Record-high foreclosures are aggravating problems in the housing market and for the national economy, which many fear is on the verge of a recession or in one already.

Bernanke didn't offer new recommendations -- as he did earlier this month -- but rather spoke of the various steps the Fed already is taking to address current problems and to prevent another crisis of this sort.

The Fed, for instance, has proposed a rule to protect homebuyers from some of the same dubious lending practices that contributed to the housing and credit debacles now shaking the country.

Subprime borrowers -- those with tarnished credit histories or low incomes -- have been hurt the most, although problems have spread to more creditworthy borrowers.

"Far too much of the lending in recent years was neither responsible nor prudent," Bernanke said.

"The terms of some subprime mortgages permitted homebuyers and investors to purchase properties beyond their means, often with little or no equity," he added.

"In addition, abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would not have chosen knowingly."

At the end of last year, more than one in five of the roughly 3.6 million outstanding subprime adjustable-rate mortgages were seriously delinquent -- meaning they were either in foreclosure or 90 days or more past due.

That rate is about four times higher than it was in the middle of 2005, he said.

Meanwhile, in 2007, about 45 percent of foreclosures were on prime, near-prime or government-backed mortgages, he added.

The meltdown in the housing and credit markets are not only straining homeowners but also have forced financial companies to rack up multibillion losses.

The situation has unhinged Wall Street, put the Federal Reserve and the Bush administration in crisis-management mode, rattled the public and sent politicians -- including those vying to be the next president -- scrambling for solutions.

Underscoring the urgency: Bear Stearns Cos., one of Wall Street's venerable investment banks, received a rescue package by the Federal Reserve and JPMorgan Chase & Co. on Friday -- just hours before Bernanke spoke.

It was a last-ditch effort to save the institution.

The Federal Reserve responded swiftly to pleas from Bear Stearns that its coffers had "significantly deteriorated" within a 24-hour period.

The bank, which had made a fortune in mortgage-backed securities, has ran up $2.75 billion in write-downs since last year, and faced a possible collapse without some kind of lifeline.

Before launching into his prepared remarks, Bernanke mentioned that he had a "busy morning."

He did not elaborate.

To help brace the economy from all the fallout, the Federal Reserve is expected to cut a key interest rate, now at 3 percent, next week.

The debate is whether it will be a half percentage point or an even bigger three-quarter-point reduction.

Bernanke, in his speech, did not provide clues on that front.

Instead, the Fed chief's speech stuck closely to steps the Fed is taking to prevent prospective homebuyers from getting burned in the future when they take out a mortgage.

On this front, the Fed has a proposal that would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income.

It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

The proposal also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.

"The combination of stricter regulation and better disclosure will not solve all the problems," Bernanke said.

"We do believe, however, that this proposal will give consumers much better information," he added.

In addition to this effort, Bernanke said a "strong uniform oversight of different types of mortgage lenders is critical to avoiding future problems."

The housing collapse dragged down home values, clobbering borrowers.

Many were left with mortgages that exceeded the value of their homes.

They were further socked by low introductory rates on their adjustable mortgages, which then reset to higher rates, making their monthly payments difficult or impossible, to afford.

"For a number of years, rapid increases in house prices effectively insulated lenders and investors from the effect of weaker underwriting, providing false comfort," Bernanke said.

In a speech earlier this month, Bernanke urged lenders to help distressed homeowners by lowering the amount of their loans.

At the time, Bernanke suggested such a longer-term permanent solution may work better than shorter-term and temporary ones, where the distressed homeowner could find himself in trouble again.

To date, permanent home mortgage modifications that have occurred have typically involved a reduction in the interest rate, while reductions of the principal balance of the loan have been quite rare, he said.

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On the Net:

Federal Reserve: http://www.federalreserve.gov/

[Livyjr]

"Fed chairman vows to help homeowners"

By JEANNINE AVERSA, Associated Press

Last updated: 4:52 p.m., Friday, March 14, 2008

WASHINGTON -- Fighting to stem a dangerous wave of home foreclosures, Federal Reserve Chairman Ben Bernanke pledged Friday to do all that is possible to help struggling homeowners.

"Far too much of the lending in recent years was neither responsible nor prudent," Bernanke said.

"The terms of some subprime mortgages permitted homebuyers and investors to purchase properties beyond their means, often with little or no equity," he added.

"In addition, abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would not have chosen knowingly."

Meanwhile, in 2007, about 45 percent of foreclosures were on prime, near-prime or government-backed mortgages, he added.

"Fed takes rare path to aid Bear Stearns"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:02 p.m., Friday, March 14, 2008

WASHINGTON -- The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances."

Senior Federal Reserve staffers said the arrangement allows JP Morgan Chase to borrow from the Fed's discount window and put up collateral from Bear Stearns to back up the loans.

JP Morgan, a bank, has access to the discount window to obtain direct loans from the Fed, but Bear Stearns, an investment house, does not.

While JP Morgan is serving as a conduit for the loans, the Fed and not JP Morgan will bear the risk if the loans are not repaid, officials said.

"Dollar drops on trouble at Bear Stearns"

Associated Press

Last updated: 4:42 p.m., Friday, March 14, 2008

NEW YORK -- Another stunner from Wall Street on Friday sent the dollar to record lows against major currencies as U.S. banker Bear Stearns Cos. acknowledged it was in dire financial straits.

The euro traded for an all-time high $1.5687 Friday, while the dollar -- which has repeatedly hit record lows this week -- fell below the Swiss franc for the first time ever.

Meanwhile, the dollar hit its lowest point against the Japanese currency in 12 years.

The U.S. government and JPMorgan Chase & Co. bailed out Bear Stearns Cos. Friday, a last-ditch effort to save the investment bank after a week of denials that it was in trouble.

JPMorgan Chase is providing secured funding to Bear for 28 days, backstopped by the Federal Reserve Bank of New York.

Bear Stearns lost half of its value within 30 minutes of the market open.

The dollar hit an all-time low of 0.9969 francs on the Zurich exchange Friday before edging back up to 1.0004 francs, compared with 1.0143 it traded in New York late Thursday.

In 1971, the U.S. dollar was worth four francs.

Ashraf Laidi, chief foreign exchange strategist for CMC Markets in New York, pointed to "speculation that the world's major central banks will mount coordinated intervention to stabilize the rout of the dollar."

The dollar, which on Thursday fell below 100 Japanese yen for the first time since late 1995, again dipped as low as 98.88 yen Friday.

It clawed back some ground and traded at 99.21 yen, compared with the 102.04 yen it traded Thursday.

In other trading, the British pound fell to $2.0218 from $2.0292, while the dollar slipped to 1.0137 Canadian dollars from 1.0141 Canadian dollars.

The dollar has been weighed down by worries about the outlook for the U.S. economy, which in turn have fed expectations that the Federal Reserve will continue to lower interest rates.

Lower interest rates can jump-start a nation's economy, but can also weigh on its currency as traders transfer funds to countries where they can earn higher returns.

The European Central Bank has taken a tough anti-inflation stance and has shown no inclination so far to cut rates for the 15-nation euro zone.

[Livyjr]

"Fed chairman vows to help homeowners"

By JEANNINE AVERSA, Associated Press

Last updated: 4:52 p.m., Friday, March 14, 2008

WASHINGTON -- Fighting to stem a dangerous wave of home foreclosures, Federal Reserve Chairman Ben Bernanke pledged Friday to do all that is possible to help struggling homeowners.

Underscoring the urgency: Bear Stearns Cos., one of Wall Street's venerable investment banks, received a rescue package by the Federal Reserve and JPMorgan Chase & Co. on Friday -- just hours before Bernanke spoke.

It was a last-ditch effort to save the institution.

The Federal Reserve responded swiftly to pleas from Bear Stearns that its coffers had "significantly deteriorated" within a 24-hour period.

The bank, which had made a fortune in mortgage-backed securities, has ran up $2.75 billion in write-downs since last year, and faced a possible collapse without some kind of lifeline.

"Fed takes rare path to aid Bear Stearns"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:02 p.m., Friday, March 14, 2008

WASHINGTON -- The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances."

While JP Morgan is serving as a conduit for the loans, the Fed and not JP Morgan will bear the risk if the loans are not repaid, officials said.

"Treasurys rise on CPI, Bear bailout"

By LESLIE WINES, Associated Press

Last updated: 3:32 p.m., Friday, March 14, 2008

NEW YORK -- Treasurys rallied Friday, benefiting from a stock market unnerved by liquidity troubles at Bear Stearns and data showing unexpectedly mild inflation last month.

Bear Stearns Friday revealed it will tap JPMorgan Chase & Co. for a four-week secured loan facility to boost the company's liquidity.

JPMorgan will make the loan in conjunction with the New York Federal Reserve.

Throughout this week, investors have been concerned about the investment bank's possible explosure to collapsing fund Carlyle Capital and other at-risk investment funds.

Carlyle Capital, an arm of private equity firm Carlyle Group, invested heavily in poor-quality mortgage assets and has had to default on $16.6 billion in debt.

The market was concerned that Bear Stearns could end up seizing low-quality mortgage-backed securities as collateral from Carlyle.

That likely would have left Bear Stearns unable to sell those assets.

Bear Stearns already had taken significant writedowns on its own mortgage-related holdings.

The emergency funding was awarded in response to pleas from Bear Stearns that its liquidity had "significantly deteriorated" in the past day.

The admission caused investors leery of further risk in the financial markets to push stock prices lower and once more place their bets on the safety of government-backed bonds.

Action Economics said investors adopted "a decidedly frightened view of the Bear Stearns news."

Bear Stearns' news also sent the cost in the credit default swap market of buying protection against a default on a Bear Stearns corporate bond to a record high, according to Phoenix Partners Group.

The benchmark 10-year Treasury note rose 21/32 to 100 21/32 with a yield of 3.42 percent, down from 3.53 percent late Thursday, according to BGCantor Market Data.

Prices and yields move in opposite directions.

The 30-year long bond advanced 1 16/32 to 100 14/32 with a yield of 4.35 percent, down from 4.45 percent late Thursday.

The 2-year note rose 12/32 to 101 3/32 with a 1.43 percent yield, down from 1.62 percent.

The yield on the 3-month note fell to 1.20 percent from 1.37 percent as the discount rate slipped to 1.18 percent from 1.34 percent.

Bond investors, who abhor inflation, also cheered news that consumer prices were tamer than expected in February.

The Labor Department said consumer prices were unchanged last month, a better performance than the expected 0.3 percent gain.

Core inflation, which excludes energy and food, also held steady in February after a worrisome 0.3 percent jump in January.

The more moderate February readings were the result of a quirky decline in energy costs that is likely to prove short-lived.

Still, the news gives the U.S. Federal Reserve the green light to cut rates once more at its monetary policy meeting next Tuesday because the central bank will not to worry so much about near-term inflation.

"The inflation genie is still in the bottle," said Bernard Baumohl, managing director of The Economic Outlook Group.

However, if inflation had risen sharply, the central bank would have been under pressure to keep rates higher.

The Fed has cut the overnight fed funds rate from 5.25 percent before the current credit crisis to its present level of 3 percent.

Bond market investors are expected another reduction of about 0.50 percentage point next week.

Other data showed the weakening economy taking a toll on consumers.

Sentiment this month slipped to a 16-year low, according to a University of Michigan/Reuters survey.

The consumer sentiment index dropped to 70.5 in March from 70.8 in February.

[Livyjr]

Consider for a moment, if you will, in forming your own thoughts about the contents of this thread, these words of then-DEMOCRATIC Governor of the State of New York Mario Cuomo in 1986 concerning New York State's "HISTORY" of corruption as it stood right exactly then:

"TEN YEARS AGO, a study by the Joint House-Senate Subcommittee on Investigations estimated the costs of white-collar crime at MORE THAN forty-four BILLION dollars".

"The incidence of white-collar crime has not abated in the last decade; instead, it has spiraled ever-upward as economic crime has become increasingly profitable and sophisticated!"

"The effects of major economic crime can be devastating: THE WHOLE SOCIETY suffers as crimes against business become crimes against consumers."

"GREEDY, WHITE-COLLAR PROFITEERS WILL NOT BE STOPPED until we adopt strong measures to stop them!"

- Governor's Approval memorandum, New York State Legislative Annual -1986, p.236

THE FINANCIAL TIMES

"Regulators will feel loss of a risk-taker"

By Aline van Duyn in New York and Brooke Masters in London

Published: March 13 2008 02:00 | Last updated: March 13 2008 02:00

Eliot Spitzer's departure as New York governor raises questions about whether the state's regulators will be able to maintain the pivotal position in global financial regulation they have had since Mr Spitzer's days as attorney-general.

Mr Spitzer was key to keeping alive the US system of competing regulators, in which states and the national government have overlapping responsibilities.

Mr Dinallo described a January meeting he held with banks about the bond insurance crisis as "like Nixon going to China" and urged them last month to "reward the risk I am taking".

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm," he said.

Yet without the backing of a risk-taker such as Mr Spitzer, many financial industry executives are wondering whether that will be possible.

http://www.ft.com/cms/s/0/5638c10e-f0a0-11...?nclick_check=1

"Officials say Spitzer spent tens of thousands of dollars _ maybe $80,000 _ on call-girl ring"

By MICHAEL GORMLEY, Associated Press

Last updated: 7:42 p.m., Tuesday, March 11, 2008

On Monday, when the scandal broke, prosecutors said in court papers that Spitzer had been caught on a wiretap spending $4,300 with the Emperors Club VIP call-girl service, with some of the money going toward a night with a prostitute named Kristen, and the rest to be used as credit toward future trysts.

In the court papers, an Emperors Club employee was quoted as telling Kristen that Client 9 -- Spitzer, according to investigators -- "would ask you to do things that ... you might not think were safe," and Kristen responded by saying:

"I have a way of dealing with that."

"... I'd be, like, listen, dude, you really want the sex?"

"Spitzer gone,reforms remain"

By RACHEL BECK, Associated Press

Last updated: 1:02 p.m., Friday, March 14, 2008

NEW YORK -- Investors everywhere are better off today because of Eliot Spitzer.

That may be hard to see now amid the news that the so-called moral crusader was caught on a wiretap after allegedly arranging a meeting with a prostitute.

On Wednesday, he resigned as the governor of New York.

Whatever he might have done in his personal life, though, doesn't tarnish that he made the investment environment more open and friendly for individual shareholders.

Before Spitzer got involved when he was New York's attorney general, no one knew of the conflicts that existed in stock research or that mutual funds were giving trading perks to wealthy investors and hedge funds.

"He took apart a closed circle that lived on favors and back-scratching," said Barry Ritholtz, CEO and director of equity research at the investment firm Fusion IQ.

"Spitzer wasn't coming after Wall Street."

"He was coming after the bad actors."

Plenty of those actors didn't like that Spitzer -- who jumped on any opportunity he could to build his national stature -- shined a bright light on their back-room dealings.

After the dot-com bubble had burst and companies long heralded as corporate America's finest were collapsing under the weight of scandal, Spitzer went into attack mode.

His first targets were the big investment firms that had made so much money during the stock market's surge in the late 1990s.

Little did we know that much of it was at our expense.

We would soon learn that their game was fixed: Research analysts were recommending stocks so that their investment-banking colleagues could win more lucrative business from those same companies.

Spitzer subpoenaed e-mails from Wall Street firms and used those messages to build a solid case of how they misled investors.

The findings were shocking, especially for anyone who bought a high-flying Internet stock during the market boom.

One e-mail showed star Merrill Lynch & Co. analyst Henry Blodget describing InfoSpace Inc., one of the firm's highest-rated stocks, as "a piece of junk."

Another exchange had Salomon Smith Barney telecommunications analyst Jack Grubman telling a friend that his recommendation of AT&T stock helped secure spots in an exclusive Manhattan nursery school for his twin daughters.

Ten Wall Street firms eventually agreed to a $1.4 billion settlement, and new rules were put in place that separated banking and research.

Independent research was also made more available to investors, and the firms were required to disclose potential conflicts of interest.

"Sheriff" Spitzer had arrived.

Spitzer also began uncovering that mutual fund brokers had been giving special trading privileges to select clients.

One was called "late trading," an illegal practice of accepting buy and sell orders at the 4 p.m. price long after the market closes.

There were also issues of "market timing," which allowed short-term trading of funds intended to be longer-term investments.

Market timing is largely legal, but many funds prohibit it because it gives the larger firms an advantage over smaller investors.

That meant some investors were profiting at the expense of others, and mutual fund boards had fallen down on the job by not protecting the interests of all their shareholders.

The mutual funds, including Bank of America, Putnam and Janus, ended up paying multimillion-dollar fines and regulators enacted new reforms to eliminate the practices.

Spitzer kept finding new corners of the financial world to sniff out.

He was still on the prowl after leaving the attorney general's office to become governor in 2007.

Just last month, he testified before Congress about the financial woes facing bond insurers.

As his probes expanded the list of wrongdoing he uncovered, the criticism against him also grew.

Spitzer's targets would talk of his heavy-handed role and bullying demands.

Some called his attacks overzealous, nasty and personal, most notably in the case against former New York Stock Exchange Chairman Richard Grasso's $187.5 million pay package -- a case that still hasn't been resolved.

Many on Wall Street grew to fear and despise Spitzer.

That's why there were cheers on trading floors when the news broke Monday that the 48-year-old father of three -- identified in court papers as "Client-9" -- spent thousands of dollars on a call girl at Washington's swanky Mayflower Hotel on the night before Valentine's Day.

"I'm deeply sorry that I did not live up to what was expected of me," Spitzer said during Wednesday's news conference when announcing his resignation.

At that moment, much of the good he did was tainted with the whiff of scandal.

"Because of what has happened to Spitzer now, people have begun to question all the reforms that he put into place, and they shouldn't," said Charles Elson, director of the Weinberg Center for Corporate Governance at University of Delaware.

"No matter who the messenger was regarding reform, the message was right."

Whatever happened in the Mayflower Hotel on Feb. 13, it doesn't alter that plenty of people on Wall Street were cheating, and that Spitzer helped clean things up.

------

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

[Livyjr]

"Spitzer gone,reforms remain"

By RACHEL BECK, Associated Press

Last updated: 1:02 p.m., Friday, March 14, 2008

NEW YORK -- Investors everywhere are better off today because of Eliot Spitzer.

That may be hard to see now amid the news that the so-called moral crusader was caught on a wiretap after allegedly arranging a meeting with a prostitute.

On Wednesday, he resigned as the governor of New York.

After the dot-com bubble had burst and companies long heralded as corporate America's finest were collapsing under the weight of scandal, Spitzer went into attack mode.

His first targets were the big investment firms that had made so much money during the stock market's surge in the late 1990s.

"Sheriff" Spitzer had arrived.

March 14, 2008

"Eliot Spitzer's 'Emperor's Club'"

By Robert Tracinski

As the political eulogies for Eliot Spitzer are written, a lot will be said about the alleged contradiction between his "righteous," "crusading" public persona and his tawdry personal life.

For example, in a remarkably insipid column today, Gail Collins of the New York Times professes utter amazement at the revelation about Spitzer, as if it came out of nowhere, like space aliens landing in the middle of Central Park.

"You never know," sighs this middle-aged naïf.

The New York Post's man in Albany, Fredric Dicker, is having none of it.

"I Knew He Was a Fraud & a Hypocrite from the Day He Swaggered into Capitol" blares his headline.

Yet even Spitzer's critics still criticize him for "hypocrisy"--which implies that he espoused the right ideals but failed to live up to them.

All of this gets the story wrong.

The real lesson here is the continuity between Spitzer's professional career and the scandal that ended it.

The common theme of his public and personal life is identified, ironically enough, in the preposterously pompous name of the call girl ring Spitzer patronized: the "Emperor's Club VIP."

That says it all, doesn't it?

Spitzer wanted to puff himself up as an "emperor," a big-shot VIP who is the center of everyone's attention, with everyone else just there to bow to his whims.

The detail that really made this psychology clear -- the detail that perfectly fit the psychological profile of a sociopath -- was the way Spitzer dragged out his ashen-faced, shell-shocked wife to appear by his side at both of his press conferences this week.

Her presence was unnecessary for any rational reason, but she was there because a sociopath views other people are mere pawns to be manipulated to serve his whims -- so if he feels he needs Silda to stand by him to show her support, out she comes, and the psychological cost to her doesn't even register on his consciousness.

The tawdry incident that touched off this scandal is, in fact, the least despicable part of the whole affair.

At least the call girl was, to all appearances, a willing participant and well paid.

Spitzer was even a generous tipper, we've been told.

But Spitzer's professional life, rather than being better than his personal life, was worse.

If in his personal life he paid money for attractive young women to create the illusion of his own supreme importance, in his professional life he achieved this illusion by abusing the power of the state, acting as a bully who threatened to "steamroller" over other people's lives and careers.

Spitzer's "crusading" career as New York's attorney general is a catalog of abuses of prosecutorial power.

He tried cases in the media instead of the courts by releasing embarrassing documents at press conferences and leaking carefully selected facts to sympathetic reporters.

This is slander under the color of law, an attempt to ruin a target's reputation without actually have to prove the allegations against him.

Spitzer smeared his victims by digging into their personal lives and spreading rumors about their infidelity (another disgusting irony of this affair).

He blackmailed businesses into paying massive fines by threatening to file corporate indictments that would cripple a firm's ability to operate, even if it were eventually acquitted.

He threatened respectable businessmen with the prospect of being hauled off in handcuffs in front of their families.

He did everything he could, in short, to bully the rest of the world into a solicitous state of submission--the state of terrorized subjects groveling before a tyrannical emperor.

A man like this is usually considered to have an ego that is too big, but the opposite is actually true.

This kind of bullying is proof that Spitzer was so insecure he needed to prop up his faltering ego by forcing others to cringe in fear before him.

His hiring of prostitutes is the dead giveaway, because it adds a touch of the pathetic: he needed the attention and adulation of others so badly that he had to pay for it.

What still generates a residue of sympathy for him among commentators on the left is Spitzer's rhetoric about being a moral crusader.

But even here, there is no real contradiction.

Spitzer's ideological appeals were always to a kind of anti-business populism; it was always about envy and resentment of the wealthy and successful.

It is a natural transition from this leftist ideology to the psychological of power-lust.

The attitude leftist class warfare encourages and enables is: Who do these Wall Street big shots think they are, acting as they're bigger and more important than me?

I'll show the bastards!

I'll tear them all down, ruin their businesses, force them out of their cushy jobs, and humiliate them.

Eliot Spitzer is a timeless example of the basic conundrum of government: the fact that anyone who really wants to wield power is, by that very fact, the last person who should be allowed to do so.

I call this the Washington Conundrum, named after George Washington--who is arguably the first man in history to demonstrate the solution: the only person who can safely be allowed to wield power is someone who seeks it out of dedication to the cause of liberty.

But take away the love of liberty--and the ideological framework of individual rights that supports it--and we return to the squalid pattern of most of human history: power not only corrupts, but attracts, rewards, and promotes the most corrupt types of human character.

Without the love of liberty and the principles of liberty, we don't get George Washingtons in public office.

Instead, we get the Emperor's Club VIPs--self-aggrandizing thugs like Eliot Spitzer.

Robert Tracinski writes daily commentary at TIADaily.com. He is the editor of The Intellectual Activist and TIADaily.com.

http://www.realclearpolitics.com/articles/...erors_club.html

[Livyjr]

March 14, 2008

"Eliot Spitzer's 'Emperor's Club'"

By Robert Tracinski

As the political eulogies for Eliot Spitzer are written, a lot will be said about the alleged contradiction between his "righteous," "crusading" public persona and his tawdry personal life.

For example, in a remarkably insipid column today, Gail Collins of the New York Times professes utter amazement at the revelation about Spitzer, as if it came out of nowhere, like space aliens landing in the middle of Central Park.

"You never know," sighs this middle-aged naïf.

http://www.realclearpolitics.com/articles/...erors_club.html

THE JEWISH DAILY FORWARD

"Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal"

Opinion By Alan Dershowitz

Wed. Mar 12, 2008

When Eliot Spitzer was my research assistant in the 1980s, he was a young man of great brilliance, high integrity, conservative demeanor and enormous promise.

It pains me deeply to see him brought down so far, and so quickly, by private sexual misconduct.

I think somewhat less of him now than I did before I heard this week’s news of his indiscretions, largely because of what he did to his family — but let’s all take a collective deep breath and try to regain a sense of proportion about the essentially private actions of this public man.

Throughout our history, men in high places have engaged in low sexual activities.

From Thomas Jefferson to Franklin Roosevelt to John Kennedy to Lyndon Johnson to Bill Clinton, great political figures have behaved like adolescent boys in private, while at the same time brilliantly and effectively leading our nation in public.

The laws criminalizing adult consensual prostitution — especially with $5,000-an-hour call girls — are as anachronistic as the old laws that used to criminalize adultery, fornication, homosexuality and even masturbation.

These may be sins, but there are no real victims, except for family members.

Our nation, unique among Western democracies, is obsessed with the private lives of public figures.

Whether it be Larry Craig soliciting favors in an airport bathroom or Rush Limbaugh getting illegal pharmaceuticals in a parking lot, this obsessive focus on the private imperfections of public figures threatens to drive many good men — and soon, good women — out of public life for fear that they will brought down by their private peccadilloes.

The back pages of a good number of glossy magazines and local newspapers openly advertise what everybody knows to be expensive call girl services.

They’re advertised on television, in tourist brochures and on the Internet.

Millions of people around the world use prostitutes and call girls.

The trade can be tawdry and sometimes exploitive, as when young girls are enslaved and prostituted against their will.

But adult women who make the choice to sell their bodies for sex for $5,000 an hour are not victims, and if the trade is tawdry, it certainly doesn’t warrant 5,000 overheard phone calls, 6,000 intercepted emails and the use of surveillance and undercover agents — all of which could have been put to better use in seeking to prevent acts of terrorism or predation against innocent victims.

We are a nation of hypocrites who publicly proclaim against acts that so many of the proclaimers perform in private.

Yes, Eliot Spitzer can be charged with hypocrisy for prosecuting prostitution rings while patronizing prostitutes himself.

The voters would have had every right to hold his hypocrisy against him had he run for office after completing his term.

They could have considered the recklessness of his conduct in evaluating his ability to perform his public functions.

But forcing him to resign constitutes an abuse of the political and criminal processes, an abuse that would only be compounded by using vague criminal statutes to prosecute him for federal crimes for which no one is prosecuted.

There is another issue that is potentially quite troubling in this case.

The story about how Spitzer’s alleged crimes were discovered does not ring true.

As a criminal defense lawyer, I have dealt with many money laundering and other bank-related cases.

The financial transactions that allegedly gave rise to the federal government’s interest in Spitzer do not generally result in a criminal investigation.

I strongly suspect that we will learn more about how the feds came to focus on Spitzer’s financial transactions.

The money laundering statute is so vague and open-ended that it can be used selectively to target political and economic opponents.

On this issue, stay tuned.

We have not heard the last of it.

As a nation we must learn how to distinguish between sin and crime, between activities that endanger the public and those that harm only the actor and his family.

The criminal law should be reserved for serious predatory misconduct.

Nor should this story of personal fallibility dominate the news, as it continues to do while our soldiers are killed in Iraq and the Democrats choose their candidate for president.

Sex sells soap, at least in the United States — but a married man going to a prostitute is simply not a big deal.

We must restore our sense of proportion and priorities.

Alan Dershowitz is a professor of law at Harvard University.

http://www.forward.com/articles/12885/

[Livyjr]

THE JEWISH DAILY FORWARD

"Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal"

Opinion By Alan Dershowitz

Wed. Mar 12, 2008

When Eliot Spitzer was my research assistant in the 1980s, he was a young man of great brilliance, high integrity, conservative demeanor and enormous promise.

It pains me deeply to see him brought down so far, and so quickly, by private sexual misconduct.

Yes, Eliot Spitzer can be charged with hypocrisy for prosecuting prostitution rings while patronizing prostitutes himself.

But forcing him to resign constitutes an abuse of the political and criminal processes, an abuse that would only be compounded by using vague criminal statutes to prosecute him for federal crimes for which no one is prosecuted.

As a nation we must learn how to distinguish between sin and crime, between activities that endanger the public and those that harm only the actor and his family.

Sex sells soap, at least in the United States — but a married man going to a prostitute is simply not a big deal.

Alan Dershowitz is a professor of law at Harvard University.

http://www.forward.com/articles/12885/

March 14, 2008

"Eliot Spitzer's 'Emperor's Club'"

By Robert Tracinski

All of this gets the story wrong.

The real lesson here is the continuity between Spitzer's professional career and the scandal that ended it.

The common theme of his public and personal life is identified, ironically enough, in the preposterously pompous name of the call girl ring Spitzer patronized: the "Emperor's Club VIP."

That says it all, doesn't it?

Spitzer wanted to puff himself up as an "emperor," a big-shot VIP who is the center of everyone's attention, with everyone else just there to bow to his whims.

The detail that really made this psychology clear -- the detail that perfectly fit the psychological profile of a sociopath -- was the way Spitzer dragged out his ashen-faced, shell-shocked wife to appear by his side at both of his press conferences this week.

Her presence was unnecessary for any rational reason, but she was there because a sociopath views other people are mere pawns to be manipulated to serve his whims -- so if he feels he needs Silda to stand by him to show her support, out she comes, and the psychological cost to her doesn't even register on his consciousness.

If in his personal life he paid money for attractive young women to create the illusion of his own supreme importance, in his professional life he achieved this illusion by abusing the power of the state, acting as a bully who threatened to "steamroller" over other people's lives and careers.

He did everything he could, in short, to bully the rest of the world into a solicitous state of submission--the state of terrorized subjects groveling before a tyrannical emperor.

This kind of bullying is proof that Spitzer was so insecure he needed to prop up his faltering ego by forcing others to cringe in fear before him.

His hiring of prostitutes is the dead giveaway, because it adds a touch of the pathetic: he needed the attention and adulation of others so badly that he had to pay for it.

Eliot Spitzer is a timeless example of the basic conundrum of government: the fact that anyone who really wants to wield power is, by that very fact, the last person who should be allowed to do so.

I call this the Washington Conundrum, named after George Washington--who is arguably the first man in history to demonstrate the solution: the only person who can safely be allowed to wield power is someone who seeks it out of dedication to the cause of liberty.

But take away the love of liberty--and the ideological framework of individual rights that supports it--and we return to the squalid pattern of most of human history: power not only corrupts, but attracts, rewards, and promotes the most corrupt types of human character.

Without the love of liberty and the principles of liberty, we don't get George Washingtons in public office.

Instead, we get the Emperor's Club VIPs--self-aggrandizing thugs like Eliot Spitzer.

http://www.realclearpolitics.com/articles/...erors_club.html

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

EB SAYS: Harvard Law Prof. Alan Dershowitz continues to be one of Spitzer's biggest defenders, writing: "A married man going to a prostitute is simply not a big deal."

JOHN GALT RESPONDS: After reading Harvard Law Prof. Alan Dershowitz's March 12, 2008 article in the JEWISH DAILY FORWARD entitled "Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal", I have come to the conclusion that the Harvard Law professor is little more than an arrogant stupid man ...

And perhaps it is his corrosive influence on the young and impressionable Eliot Spitzer that is at least partly responsible for Eliot Spitzer's fall from grace today ...

While to the Harvard Law Professor, a "married man going to a prostitute is simply not a big deal", that is not at all what this case involving Spitzer in New York was all about ...

And you would think that an alleged intelligent man like this Harvard law professor Dershowitz would be the first, and not the very last, to be able to grasp that fact ...

But then again ...

The Dershowitz dude is a lawyer ....

And so ...

As a lifelong citizen of New York State, I am stating to this Dershowitz dude in public here that he is WAY WIDE of the mark in this matter of Eliot Spitzer PROTECTING a prostitution ring that he was then using the services of .....

This has nothing to do with whether or not prostitution is a good thing, or a bad thing, or new, or ancient, which it most certainly is, from a reading of history ...

The rebel Jesus in the Bible in one case stepped in to prevent the stoning to death of a woman thought to be a prostitute ...

"Let he who is without sin cast the first stone ..."

And that was some 2,000 years ago, now ...

In many civilizations, past or present, prostitution is a fact of life, and is not necessarily illegal or unlawful ...

BUT ...

That has nothing to do with what happened here ...

And the efforts of this Dershowitz dude to trivialize Spitzer's behavior are in fact ludicrous ....

Spitzer was not JOE CITIZEN, here ....

Some poor hapless schmoe caught with a $50 hooker down in Newark, New Jersey ...

He was the elected governor of the State of New York ...

And BY OUR New York State CONSTITUTION, which is not subject to being voted on or nullified by citizens of other states of this union, including Dershowitz over there in Massachusetts ...

When he swore his oath of office here in NYS, Spitzer swore to uphold the NYS Constitution ...

Which made it his duty to US, the CITIZENS of this state, to take care that the laws of NYS were faithfully executed ....

And there is where he failed, and miserably so ....

A point that the arrogant and ignorant Dershowitz is apparently totally unable to comprehend ...

Here, in America, for good or bad, LIBERTY is defined as:

Freedom from all restraints EXCEPT such as are justly imposed by law.

- Black's Law Dictionary

Now, there is where my disagreement with the Dershowitz dude would stem from in this specific case ...

Whether or not it should be, and that is a moral judgment, prostitution is and remains illegal in NYS and America ...

And Dershowitz can make all the arguments that he wishes to the effect that laws against prostitution in NYS or America are not in fact "JUSTLY IMPOSED BY LAW" ...

BUT ...

I myself am of the mind that once a law is made law, then until revoked or repealed or deemed unconstitutional, it is law ...

Whether or not it was "justly imposed" in my personal opinion does not alone serve to negate it ...

AND AS NYS GOVERNOR, Eliot Spitzer did not have the unilateral authority, jurisdiction or discretion to "decriminalize" prostitution so that HE could then participate in it, to the ruin of his family ...

This Dershowitz dude, on the other hand, seems to have a feel that a bunch of people like him can merely get together and decide that they don't like this or that law, such as the laws against prostitution, and thusly negate the law as if it did not exist ...

WITHOUT HAVING TO GO THROUGH THE DUE PROCESS OF HAVING THE LAW CHANGED OR NULLIFED IN COURT OR REPEALED ...

Which I believe is part of what led Spitzer to his ruin here in NYS, starting right at DAY ONE ...

When he tried to become a CAUDILLO ...

Instead of assuming the constitutional duties of a governor of the State of New York ...

And so ....

Posted by John Galt on March 14, 2008 6:37 PM

http://www.nydailynews.com/blogs/dailypoli...6.html#comments

[Livyjr]

FORBES

"Credit Crunch - What To Do About Wall Street"

Liz Moyer, 02.14.08, 3:05 PM ET

So who's to blame for the subprime mess?

Banks?

Investors?

Regulators?

Ratings agencies?

The epicenter of all this finger-pointing: Capitol Hill Thursday, as lawmakers, regulators, and executives gathered to debate how to deal with the crisis gripping the credit markets, particularly the perilous state of the mortgage bond industry.

New York Governor Eliot Spitzer, in testimony to the House of Representatives finance committee, laid the blame at the feet of federal regulators and ratings agencies, who failed to stop the growth of the subprime mortgage bubble before it got out of control.

And he said a swift resolution to the severe capital pressures the bond insurers are facing is necessary to stop a "tsunami" of problems in the financial markets.

Gov. Spitzer said he hoped a private effort by Wall Street banks to inject capital into some of the hardest-hit bond insurers could get done in the next three to five business days.

If not, regulators would have to resort to the "good bank, bad bank" split of the bond insurers, as proposed Tuesday by Berkshire Hathaway's Warren Buffett.

"The clock is ticking," Gov. Spitzer said.

"We will be forced to act."

Senator Jack Reed, D-R.I., directly asked Bernanke if the Fed is conducting a review of the regulatory lapses that allowed the current economic situation to develop.

Bernanke punted, saying that the central bank will issue a "principles-based" report in April to make sure any problems identified don't occur again.

Forcing bond insurers to hold exposure to credit derivatives while ceding good liabilities like municipal bond insurance would swamp their already over-leveraged capital bases, but save municipal bond investors, taxpayers and local governments from further losses, Spitzer said.

"Municipal investors cannot be allowed to suffer from problems caused by another sector of the market," he said.

Washington and Wall Street have bristled at the thought of a bail-out for the bond insurers, though they have also been wary of leaving the municipal bond market exposed to the capital-constrained bond insurers, who face losing their triple-A credit ratings--those who haven't lost them already, that is.

Without a triple-A rating to secure the insurance, municipalities would have a harder time raising money and would have to pay more to do so.

And investors are fleeing the sector in droves.

Auctions for some bonds are failing, jacking up the prices for many issuers.

As one example, the Port Authority of New York and New Jersey is now paying more than 20% after the failure of its auction this week.

Before that, it was paying 4%.

New York insurance regulator Eric Dinallo is set to testify this afternoon about his efforts to coordinate a Wall Street solution to the crisis in the bond insurers, including the good bank, bad bank idea, which most admit is the least palatable of the available options.

"There are billions of dollars at stake," Dinallo says in his written testimony.

"There is no agreement on--and indeed, no way to know with certainty--just how big the losses from the subprime market will be."

http://www.forbes.com/2008/02/14/washingto...artner=yahootix

THE NEW YORK POST

"HIS PUSHY PLAN TO BE IN DC FOR TRYST"

By DAPHNE RETTER Post Correspondent

March 12, 2008 -- WASHINGTON - Gov. Eliot Spitzer himself sought to testify before a congressional subcommittee that hadn't invited him to appear - possibly to give him an excuse to be away from home and see a hooker, officials revealed yesterday.

When Spitzer did show up before the panel on Feb. 14, the day after he'd been with a prostitute, Rep. Spencer Bachus (R-Alabama) said that the typically unflappable Spitzer "came unglued" under questioning during the hearing.

Bachus, a former prosecutor himself, added that Spitzer also seemed unprepared, making at least one statement that Bachus has since informed the committee was inaccurate.

Now, though, it all makes sense, Bachus said.

"I realize that he may have been a little sleep-deprived," Bachus said with a grin in an interview yesterday.

"When we haven't had a good night's sleep, we can all get a little cranky."

A recording of the hearing shows Spitzer angrily speaking over Bachus as he questioned the governor on New York's efforts to regulate bond insurance.

"Mr. Bachus, Mr. Bachus, you are involved in a finger-pointing exercise," a clearly agitated Spitzer said into the microphones.

At one point in the tense exchange, which was later played on cable news channels, Spitzer flouted the format of the hearing and instead demanded answers from Bachus.

The subcommittee had originally requested the appearance of New York State Insurance Superintendent Eric R. Dinallo as a representative of Spitzer's administration, but the governor requested his own invitation "within a day or two" of the meeting, according to committee aides.

http://www.nypost.com/seven/03122008/news/...ryst_101577.htm

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

March 12, 2008

"Dinallo In D.C. (This Time, Without Gov)"

Here's another one of those Department of Ironies items ...

NYS Insurance Superintendant Eric Dinallo is in Washington, DC today to deliver testimony to the House Committee on Financial Services.

Dinallo, a longtime Spitzer aide who dates back to the AG days and is widely credited with masterminding the use of the Martin Act, which enabled Spitzer to go after Wall Street, was also with Spitzer in Washington on the Feb. 13-14 trip during which he trysted with a high-priced prostitute.

Dinallo was reportedly the one requested to testify before a Congressional subcommittee on that trip, but Spitzer requested his own invitation at the last minute, enabling him to get away from home and set up a meeting with "Kristen."

During his testimony on Feb. 14, Spitzer, in his typical aggressive and accusatory style, blamed federal regulators and rating agencies for failing to stop the subprime mortgage crisis and warned of an impending "tsunami" in the financial markets.

The testimony Dinallo is scheduled to deliver today on the municipal bond market appears in full after the jump.

CONGRESSIONAL TESTIMONY BY NEW YORK INSURANCE SUPERINTENDENT ERIC DINALLO

March 12 Testimony to the Committee on Financial Services, United States House of Representatives, on The Municipal Bond Market and Bond Insurance

ALBANY, NY (03/12/2008; 0802)(readMedia)-- I would like to thank Chairman Frank, Ranking Member Bachus and the other members of the House Financial Services Committee for allowing me to testify today.

My name is Eric Dinallo and I am New York State Insurance Superintendent.

Today’s hearing is about conditions in the municipal bond market and the impact of the problems in the bond insurance industry on that market.

Your other witnesses who are directly involved in the market are better able to provide you with detailed and accurate information about the current state of the municipal bond market.

I believe that we can most contribute to today’s discussion by telling you what we have been doing to help that market by working to stabilize the bond insurance companies.

Bond insurers, also known as financial guaranty insurers or monolines, currently insure about half of outstanding municipal bonds.

The insurers, who generally have top triple-A credit ratings, promise to pay bondholders if the government or other entity that issued the bond is unable to pay.

That insurance provides the municipal bond with a top triple-A rating, which the bond itself would not have without the insurance.

Many states, municipalities and state and city authorities are willing to pay for this insurance because it increases the market for their bonds and lowers the net cost of borrowing.

Many institutional investors and retail investors have a much larger allocation to invest in triple-A rated bonds.

The lower financing cost more than makes up for the cost of the insurance, so the government issuer and the taxpayers who must repay the debt benefit from the insurance.

Investors also benefit.

While in theory investors should independently analyze the creditworthiness of issuers before they invest, practically it is difficult to study each of the thousands of small state and local government entities that issue debt.

By insuring thousands of issuers, the bond insurers take on the task of analysis and the risk of default for investors.

Gathering and analyzing information about issuers has a real cost.

By reducing those information costs, the insurers thus make investing in municipal bonds easier and less costly for investors.

The problems for the municipal bond market arose when the bond insurers’ credit rating was threatened by deterioration in the subprime mortgage market.

The bond insurers had also insured billions of dollars of subprime structured securities.

If the bond insurers were downgraded, then the municipal bonds they insured would lose their triple-A rating and would either have their own generally lower rating or in some cases no rating at all.

In fact, while the two biggest bond insurers have preserved their top ratings with the two major credit rating agencies, some other bond insurers have been downgraded.

While these downgrades and the threat of more had a serious impact on the municipal bond market, the general credit tightening put pressure on all debt securities.

It is important to understand that even restoring some confidence in the bond insurers’ credit ratings is not likely to resolve all of the current problems.

There has been a general tightening in the credit markets and a flight to safety.

In the auction rate market, investors now find that those securities are not as easy to exit as once believed.

But investors are choosing to exit the market for auction rate bonds, regardless of the insurer, for liquidity reasons, so improving the standing of the bond insurers is not likely to change the current situation in this market.

In the variable rate demand market, there is still demand for uninsured bonds or bonds not tied to weak bond insurers, but only time will tell how this market will react to the newly strengthened bond insurers.

Now, I would like to review what the New York State Insurance Department has done and is doing.

We are the primary regulator of most of the companies in this industry.

Wisconsin is the primary regulator for Ambac, but the company’s headquarters is around the corner from our office in New York City.

Maryland is the primary regulator for Assured Guaranty, but its main office is in mid-town Manhattan.

And we license both Ambac and Assured to do business in New York.

As insurance regulators, it is our responsibility to protect policyholders and ensure a healthy, competitive market for insurance products.

In the case of bond insurance, there are two main groups of policyholders.

There are the municipal governments who bought insurance for the bonds they issued and by extension the investors who bought those bonds.

Then there are the banks and investment banks who bought insurance for the structured securities, including mortgage-backed securities.

The best way to protect all the policyholders is to preserve the triple-A ratings of the bond insurers where that is possible.

So we have been facilitating additions to the capital strength of the bond insurers, not for their own sake, but to protect first policyholders and second the markets and broader economy.

This has been an extraordinarily challenging endeavor.

Every single bond insurer is in a different situation with different strengths and weaknesses.

Each has a different group of investors and owners, who have different views.

Each must deal with a different set of counterparties; that is banks, broker dealers and investment banks, each of which has a different level of exposure.

And there are different potential outside investors with differing types of offers.

The search for additional capital has been undertaken in a market for the securities of financial services companies in general and bond insurers in particular that has grown extraordinarily difficult.

Since mid-2007, as we saw the increasing problems in the subprime market and came to understand the impact on the bond insurers, we have been increasingly active and have, as of this date, made important progress, though there is more to be done.

Late last year, we developed a three-point plan for the industry.

First, bring in new capital and capacity.

Second, prepare to deal with any chronically distressed companies.

Third, develop new regulations that would seek to prevent a repeat of this problem.

Our primary focus has been on point one.

We have been working with all parties, the insurers, banks, financial advisors, private equity investors, rating agencies and federal officials, to support efforts to strengthen each individual bond insurer.

To date we have facilitated the addition of $7 billion of additional external capital into five different companies.

That includes $2.5 billion for MBIA, $1.5 billion for Ambac and the $1 billion that Wilbur Ross committed to Assured Guaranty.

In addition, we invited Berkshire Hathaway to open a new bond insurer in New York and licensed it in record time.

Berkshire has made a public commitment to add $1 billion in capital to support its new insurance company.

And we are working with the NAIC to help the company get licenses in all 50 states.

That additional capital provides three very important benefits.

Capital strength is the most effective way to protect the credit rating of the bonds insured by those companies, both the municipal bonds and the structured securities.

The entry of new, healthy guarantors ensures that, if some of the smaller bond insurers cannot be stabilized, healthy companies will be willing and able to take over at least their municipal bond portfolio.

This additional capital and market depth should help the municipal bond market stabilize over time.

Better-capitalized insurers and new entrants will guarantee a competitive market for bond insurance for those municipal issuers that want to purchase it.

Time and the market will determine the need for municipal bond insurance.

Some governments have stated recently that they believe they no longer need bond insurance and have been issuing debt without it.

That may mean that the demand for bond insurance shrinks.

But we believe that a substantial number of municipal issuers, especially the smaller ones, will continue to need bond insurance.

And, it is our job to ensure that it continues to be available for those who benefit from it.

Stabilizing the bond insurers should provide time for others to deal with the much bigger problems caused by the general subprime issue, hopefully with less pain to the economy as a whole.

The condition of the bond insurers became a focus of the broader markets because, if they lost their top credit ratings, it would have had a broad impact on other financial institutions and thus on the economy.

Preserving the insurers’ ratings was absolutely necessary to avoid worse problems, but it is obviously not sufficient to solving the much larger issues caused by subprime mortgages and other financial market problems.

We certainly hope the federal government, other regulators and the financial community will make good use of the time provided by the efforts and capital provided so far.

As for point two of our three point plan, we have been studying what steps could be necessary if one of the bond insurers is unable to find the capital it needs to maintain its ratings and stabilize its business.

Of course, we hope such steps will not be necessary.

Finally, point three, we are working on rewriting the regulations for bond insurance to prevent companies from taking on inappropriate risk in the future, while not discouraging the financial creativity that is essential to maintaining our position as the world financial capital.

Because any legislative proposal will be complex and could have a substantial impact not only on the bond insurers, but also on the public and structured finance market generally, we are proceeding carefully.

We are consulting with the full range of interested parties, including the bond insurers and their industry organization, the three major credit rating agencies, issuers and underwriters of guaranteed instruments, and other government officials.

We have begun these meetings and have an aggressive schedule in the next few weeks to gain input in this effort.

We do not yet have a final product, but I can present some of the broad ideas and concepts we are carefully considering.

In general, we believe it is important that new regulations improve transparency so that risk can be accurately evaluated.

There is nothing inherently wrong with securitization.

Properly used, it can be a valuable tool for raising capital and spreading and therefore reducing risk.

But we must understand the risk of moral hazard and other agency problems when there are large-scale transfers of risk.

Clearly, there must be a way to ensure that the risks that are securitized are accurately reported through each stage of the process so that underwriters, credit rating agencies, bond insurers and investors all understand the actual risk and make decisions on that basis.

For example, there are securities known as CDO squareds.

A collateralized debt obligation groups a large number of mortgages, credit card or auto or student loan receivables and sells bonds supported by the stream of income from those thousands of debts.

These asset-backed securities are sold in tranches ranked by predictions of their likelihood of default.

Tranches with the first right to the payments from the underlying mortgages or loans are the highest quality and have the highest ratings; those with the last rights to payments have the lowest ratings.

The more secure tranches receive a higher credit rating, but a lower interest rate.

The less secure receive a lower credit rating and a higher rate.

The CDO squared bonds are made up of middle or mezzanine tranches of the CDO asset-backed securities and are also sold in tranches.

A CDO squared groups these tranches together on the theory that the risk that all of them will default is small and so by pooling a large amount of these riskier loans into a small tranche, that tranche can be highly rated.

At this point there have been two levels of tranching, and it becomes much more difficult to accurately determine the risk of these securities.

We are considering whether bond insurers should be prohibited from guaranteeing CDO squareds.

We want to ensure that the municipal bond market will not be affected by problems in the structured securities market in future, or vice versa for that matter.

These are two very different markets with different types of risk and different payment streams.

So it is not clear that it makes sense to combine them.

We are considering whether a bond insurer should at some point in the future have to select one type of business to conduct, either public finance or structured, but not both.

Once the company made that decision, for the market it would no longer serve, it would continue to service its current clients, but would not take on any new business.

So this would not “split” the companies with all the potential issues raised by that approach.

But it would have the same end result of having companies serving only one or the other market.

Other possibilities are to limit the amount of structured business that a bond insurer could do or to increase the amount of surplus and capital that a bond insurer must hold for its structured exposure.

In general, in regulating insurance we are moving towards risk-based requirements for capital.

So it will be important to study what that means when applied to this type of insurance.

The primary goal of insurance regulation is to ensure that the insurer maintains an adequate level of solvency and is able to honor policyholders’ claims.

The business model for the financial guaranty insurance companies, however, requires that they hold levels of capital that will allow them to maintain the triple-A rating necessary to write new business.

It has become clear that the loss of the triple-A rating essentially cripples the company’s ability to do business as a going concern and puts the insurer in a “run-off’ mode.

This can lead to a downward ratings spiral that can destroy the market value of the insurance policies that issuers have purchased.

We are now considering whether the sustainability of the business model should be the regulatory standard going forward.

While we will continue to regard claims paying ability as the benchmark, our goal for the future, for all insurers, is to do higher level risk-based examinations.

Financial guaranty insurance is a complicated business, which is largely based on modeling and underwriting of complex capital market instruments.

Total reliance on the rating agencies is not prudent.

Rather an independent analysis by regulators of risk positions taken by bond insurers is more appropriate.

It would also require greater transparency between the bond insurers and their regulator, by which I mean more information and oversight regarding the nature of the risks being insured.

We are looking at ways to improve reporting requirements, so we will better understand what the bond insurers we regulate are doing and can discuss this with them before problems arise.

We welcome any suggestions about how to improve our regulations.

I welcome your questions.

###

http://www.nydailynews.com/blogs/dailypoli...ime-withou.html

[Livyjr]

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

I'm glad you posted this, EB ...

Because one of those lingering questions left over from the MELT-DOWN of the Spitzer REGIME has to do with statements attributed to none other than "ex-DEPUTY SHERIFF OF WALL STREET" Eric "NIPS" Dinallo recently in the Financial Times of London, as follows:

"Dinallo defends monolines handling"

By Aline van Duyn, Francesco Guerrera and Ben White in New York

Published: February 21 2008 22:09 | Last updated: February 21 2008 22:09

Eric Dinallo, New York’s insurance regulator, has defended his handling of the bond insurer crisis, saying his decision to call in Wall Street’s top banks last month for talks was an effort to flag up problems and not the heavy-handed intervention portrayed by critics.

Mr Dinallo rebuffed criticism that he was focused on protecting municipal bond issuers at the expense of Wall Street institutions and investors.

Mr Dinallo has been attacked for putting pressure on Wall Street to commit up to $15bn and prevent rating downgrades of Ambac, MBIA and FGIC.

But Mr Dinallo said the liquidity injection was only one of the options discussed at the meeting, adding that his intention was to find a solution that would help all parties.

“The meeting was like Nixon going to China."

"I said at the end of the meeting ‘I am trying to get ahead of the curve and am taking a big risk here.'"

"'I hope you will reward the risk I am taking’."

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm.”

He said it was possible banks did not fully appreciate his experience, such as his three years at Morgan Stanley and at the insurance broker Willis, and associated him with his former role at the attorney-general’s office under Eliot Spitzer, governor of New York state.

“I expect people to be judged by their actions, not their reputations,” he said.

http://www.ft.com/cms/s/fa50d510-e0ab-11dc...00779fd2ac.html

The part that has me very curious, of course, is where "NIPS" says:

"'I hope you will reward the risk I am taking’."

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm.”

end quotes

I HOPE YOU WILL REWARD THIS RISK I AM TAKING ....

I have to say, I keep turning that phrase over and over and over ....

Especially in light of these revelations about Spitzer and his prostitutes ...

And I have to wonder ....

WHAT DOES ERIC "NIPS" DINALLO MEAN WHEN HE TALKS ABOUT REWARDING HIM FOR RISKS THAT HE IS TAKING?

IS HE ASKING FOR SOME KIND OF GRATUITY HERE?

OR WHAT?

And so ...

Posted by John Galt on March 12, 2008 3:22 PM

http://www.nydailynews.com/blogs/dailypoli...ime-withou.html

[Livyjr]

"Euro zone inflation rises 3.3 pct"

By AOIFE WHITE, Associated Press

Last updated: 10:23 a.m., Friday, March 14, 2008

BRUSSELS, Belgium -- Higher prices for fuel, heating, dairy products and bread pushed inflation in the euro currency zone to 3.3 percent in February, the highest level since the euro currency was launched in 2000, the Europoean Union said Friday.

Soaring inflation puts pressure on the European Central Bank and finance ministers of the 15 nations that use the euro to curb rising costs for basic goods.

Worried about tight credit conditions, the ECB has so far held off raising interest rates that would help cool inflation -- now well above its recommended guideline of just under 2 percent.

Instead, it has called on others to avoid a price spiral, telling unions and governments to avoid big pay increases.

On Friday, the EU statistics office Eurostat revised upward a first estimate of 3.2 percent for February, the same figure for January.

Separate Eurostat figures showed hourly labor costs in the euro area increasing above analyst expectations.

Labor costs in the final three months of 2007 rose 2.7 percent, just ahead of the 2.6 percent forecast by economists surveyed by Dow Jones Newswires.

Worse may lie ahead.

German steel workers recently won a 5.2 percent pay increase, and unions are angry at the ECB's call for wage moderation, saying they deserve some of the rewards of the recent economic boom that enriched companies -- even though growth is now slowing.

Price increases risk hurting the economy because they discourage shoppers from making bigger purchases over worries about shelling out more for grocery and gas pump bills.

Consumer confidence -- one of the main drivers of economic growth -- froze last month.

Inflation in the EU's largest economy, Germany, was 2.9 percent.

The Netherlands -- at 2 percent -- was the only country with a lower figure.

Inflation in France was 3.2 percent.

There were more rapid rises in some of the smaller euro nations.

Slovenia tops the scale at 6.4 percent, with Greece at 4.5 percent and Spain -- hit by a slowing housing market -- was at 4.4 percent.

Fast-growing eastern European states saw huge surges, a trend that will make it difficult for them to join the euro soon.

Latvia's inflation rate was a massive 16.5 percent, Bulgaria was 12.2 percent and Estonia 11.5 percent.

Eurostat had some comfort for shoppers, saying prices for telecoms, cars and clothes have fallen from a year ago.

[Livyjr]

"Lawyer for call girl says photos used without consent"

Associated Press

Last updated: 6:42 p.m., Friday, March 14, 2008

NEW YORK -- A lawyer for the call girl linked to the downfall of Gov. Eliot Spitzer says the 22-year-old has been thrust into the "public glare" without her consent.

Don D. Buchwald says some publications have used Spitzer's "political misfortunes" as an excuse to exploit Ashley Alexandra Dupre's persona for commercial reasons.

Newspapers and Web sites splashed photos of the woman, known as "Kristen" in court documents accusing Spitzer of paying more than $4,000 for prostitutes' services, in suggestive poses.

Buchwald says she did not consent to the use of her photos "in this manner" and the usage may be a violation of federal copyright laws.

He stopped short of saying they would sue media outlets, but noted she is not a public figure.

Spitzer resigned earlier this week amid the prostitution scandal.

Lt. Gov. David Paterson is taking his place Monday.

[Livyjr]

"Atlanta braces for another severe storm"

By DORIE TURNER, Associated Press Writer

15 March 2008

ATLANTA - Crews hadn't even had time to assess the damage from a possible tornado that ripped through downtown, smashing skyscraper windows, sucking furniture out of hotel rooms, crumbling part of an apartment building and rattling a packed sports arena, before they braced for another storm on Saturday.

An even larger system than the one that hit Friday night was forecast to move through northern Georgia starting at daybreak, bringing heavy rains and high winds to the area, said Vaughn Smith, a National Weather Service meteorologist in Peachtree City.

Crews were expected to be in downtown Atlanta then to determine whether Friday's damage was caused by a tornado, he said.

At an early morning news conference, Mayor Shirley Franklin called the storm "what we now know was a tornado."

But weather service officials continued to say only that a "possible tornado" hit around 9:40 p.m., accompanied by a storm packing 60 mph winds.

At least 27 people were hurt, though no injuries were believed to be life-threatening.

Streets around the Georgia Dome, Phillips Arena, the CNN Center and Centennial Olympic Park were littered with broken glass, downed power lines, crumbled bricks, insulation and even the occasional office chair.

Billboards collapsed onto parked cars.

Stunned fans from the arenas and hotel guests wandered through the debris in disbelief.

"It was crazy."

"There was a lot of windows breaking and stuff falling," said Terrence Evans, a valet who was about to park a car at the Omni Hotel when the apparent twister hit.

A tornado warning had been issued for downtown a few minutes before.

There was no announcement of the approaching storm for the 18,000 fans inside the Georgia Dome for the Southeastern Conference basketball tournament.

The first sign was a rumbling from above and the rippling of the Fiberglas fabric roof.

Catwalks swayed and insulation rained down on players during overtime of the Mississippi State-Alabama game, sending fans fleeing toward the exits and the teams to their locker rooms.

"I thought it was a tornado or a terrorist attack," said Mississippi State guard Ben Hansbrough, whose team won 69-67 after an hourlong delay under a roof with at least two visible tears.

A later game between Georgia and Kentucky was postponed.

SEC officials said the tournament's remaining games would be played at Georgia Tech.

"Ironically, the guy behind me got a phone call saying there was a tornado warning," fan Lisa Lynn said.

"And in two seconds, we heard the noise and things started to shake."

"It was creepy."

A half-mile away, the sign of the Phillips Arena parking garage was left mangled by the storm, but basketball fans inside the arena noticed little disruption during a game between the Atlanta Hawks and Los Angeles Clippers.

Most of the damage from the storm was concentrated in downtown Atlanta.

Power was knocked out to about 19,000 customers.

Authorities blocked off roads around the CNN Center, where heavy debris filled the streets.

A chair from the building's lobby sat in the middle of the street, flanked by cars crushed by fallen debris.

Atlanta Fire Department Capt. Bill May said the department was working "multiple incidents" and that part of a loft apartment building collapsed, but he did not know if there were any injuries.

The loft apartment building, built in an old cotton mill — had severe damage to one corner, and appeared to have major roof damage.

Fire officials said it "pancaked," and they were uncertain whether all the occupants had escaped.

Darlys Walker, property manager for the lofts, told WSB-TV there was one minor injury.

Taylor Morris, 29, who lives near the lofts, said he and his girlfriend took shelter in the bathroom when the storm passed over in a matter of 15 to 20 seconds.

"The whole house was shaking," he said.

"We didn't know what was going on."

He said shingles and a sheet of plywood were ripped from his roof and tossed into a neighbor's tree.

May said at least 27 people were transported to hospitals.

Grady Memorial Hospital, the city's large public hospital where many of the injured were taken, had broken windows but was operating as usual.

Kendra Gerlach, spokeswoman for Atlanta Medical Center, said late Friday the hospital was treating about five patients in the emergency department.

She said each patient suffered minor injuries with only cuts, scraps and bruises.

May said a vacant building also collapsed, with no apparent injuries.

Weiss said state officials and the American Red Cross were setting up a shelter at a senior center to house more than 100 people displaced by the storm.

Officials were unsure of the extent of the damage, he said, but said it "seems to be a little more widespread than it initially appeared."

The Fulton County Emergency Management Agency will comb downtown at sunrise to survey damage, Weiss said.

"One thing that concerns is greatly is we have more bad weather moving in," he said.

All downtown events scheduled for Saturday were canceled, including a St. Patrick's Day parade, WXIA-TV reported.

On its Web site, CNN said its headquarters building sustained ceiling damage, allowing water to pour into the atrium, and windows shattered in the CNN.com newsroom and the company's library.

In East Atlanta, downed trees, debris and power lines were strewn in the street, which was eerily quiet in the wake of the pounding hail, sheets of rain, flashes of lightning and growling thunder.

Melody and Brad Sorrells were at home with their two children when the storm hit.

The family was in their living room when Melody Sorrells said she heard the huge pine in their front yard crash into their house.

"I saw it falling and we ran into the back bedrooms in the closet," she said, while turning to look at the trunk blocking the front door.

"I feel sick."

The family escaped out of the back of the house.

Brad Sorrells said the winds sounded like a roaring train.

"It was a tornado," he said, with arms folded.

According to the National Oceanic and Atmospheric Association, the most recent tornado to hit a major city's downtown was on Aug. 12, 2004, in Jacksonville, Fla.

Downtown tornadoes have also struck Fort Worth, Texas; Salt Lake City, Little Rock, Ark.; and Nashville, Tenn., in the past decade.

If confirmed, the tornado would be the first in recorded history to hit downtown Atlanta, said Smith, the meteorologist.

The last tornado to strike inside the city was in 1975, and it hit the governor's mansion north of downtown, he said.
___

Associated Press writers Errin Haines and John Amis and AP Sports Writer Paul Newberry contributed to this report.

[Livyjr]

"US tones down praise for Musharraf"

By FOSTER KLUG, Associated Press

Last updated: 7:23 a.m., Saturday, March 15, 2008

WASHINGTON -- Just months ago, the United States publicly championed Pakistani President Pervez Musharraf as an "indispensable" ally.

Now, officials barely mention the man the Bush administration once promoted as essential to holding together a nuclear-armed country deemed crucial to the U.S.-led fight against extremists in South Asia.

The new tone comes as the United States works to gain the favor of Pakistani opposition forces that won big in last month's parliamentary elections and as Musharraf's grip on power weakens.

The newly empowered politicians are promising to reinstate fired judges who had questioned the legality of Musharraf's continuing in office.

The United States says it still intends to work with the former army chief, whom Pakistani lawmakers elected to a five-year presidential term in October.

But the Bush administration appears to be shifting from making support for Musharraf the core of its Pakistan policy, which many U.S. lawmakers and Pakistani opposition leaders have long wanted.

Robert Hathaway, director of the Woodrow Wilson Center's Asia program, said Bush officials will not abandon Musharraf, "but clearly they have to, in rather dramatic fashion, alter what had been their previous practice of putting all of the American eggs in a Musharraf basket."

Pakistan's "new realities," Hathaway said, "dictate that they deal with Islamabad on a much broader basis if they wish to have any sort of influence in Pakistan."

In Feb. 18 parliamentary elections, the parties of slain opposition leader Benazir Bhutto and another former prime minister, Nawaz Sharif, finished first and second.

The Pakistan Muslim League-Q, a party loyal to Musharraf, lost heavily.

The turnaround for Musharraf, who seized power in a 1999 coup, followed months of angry criticism at his crackdown late last year on the opposition, judiciary and media.

In November, he declared a state of emergency and purged the Supreme Court before it could rule on the disputed legality of his presidential re-election.

Richard Boucher, assistant secretary of state for South Asia, said this week that the United States was reaching out to the opposition.

"We have talked to all the parties, telling them all, 'We will work with whoever emerges as the leadership,'" he said.

The U.S. does not seem as eager to promote Musharraf as it once was.

Deputy Secretary of State John Negroponte told lawmakers late last month that "Pakistan has been indispensable" to the fight against extremists, a marked change from his comments in November that Musharraf himself was the indispensable key to the effort.

This week, State Department spokesman Sean McCormack avoided taking a position on the possible restoration of the judges.

Asked if the United States was reaching out to politicians to express opposition to bringing back the judges, McCormack said, "No."

"We're not in the business of interpreting their laws or their constitution for them," he told reporters.

"We don't have a vote in this, nor should we."

The United States does, however, have a stake in Pakistan's success as a moderate Islamic state.

Washington has pumped about $10 billion in aid into Pakistan since Musharraf sided with the United States in the drive to topple the Taliban in neighboring Afghanistan and hunt down terrorists after the Sept. 11, 2001, terrorist attacks.

Farhana Ali, an analyst at the Rand Corp. think tank, said there is a "hesitancy within the administration to completely let go of Musharraf."

She added that the Bush administration acknowledges "that we need Pakistan's support."

"Therefore, it's wise for us to accept whoever is going to take the throne."

[Livyjr]

THE JEWISH DAILY FORWARD

"Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal"

Opinion By Alan Dershowitz

Wed. Mar 12, 2008

When Eliot Spitzer was my research assistant in the 1980s, he was a young man of great brilliance, high integrity, conservative demeanor and enormous promise.

It pains me deeply to see him brought down so far, and so quickly, by private sexual misconduct.

But forcing him to resign constitutes an abuse of the political and criminal processes, an abuse that would only be compounded by using vague criminal statutes to prosecute him for federal crimes for which no one is prosecuted.

There is another issue that is potentially quite troubling in this case.

The story about how Spitzer’s alleged crimes were discovered does not ring true.

As a criminal defense lawyer, I have dealt with many money laundering and other bank-related cases.

The financial transactions that allegedly gave rise to the federal government’s interest in Spitzer do not generally result in a criminal investigation.

I strongly suspect that we will learn more about how the feds came to focus on Spitzer’s financial transactions.

The money laundering statute is so vague and open-ended that it can be used selectively to target political and economic opponents.

On this issue, stay tuned.

We have not heard the last of it.

Alan Dershowitz is a professor of law at Harvard University.

http://www.forward.com/articles/12885/

"Holding Spitzer to account - Bank that held campaign funds also tipped off IRS"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published: Saturday, March 15, 2008

ALBANY -- The Long Island bank that reported Gov. Eliot Spitzer's suspicious payments to the IRS is the repository for the Spitzer 2010 campaign and holds $3 million the governor collected for his political operations.

Officials at North Fork Bank in Melville and the Spitzer campaign would not discuss the matter.

Jonathan Rosen, a spokesman for the campaign, referred questions to the campaign's lawyer, Kenneth Gross, who did not return a call.

Rosen would not say why the bank became the primary repository and funds were moved there from JP Morgan Chase Manhattan Bank sometime during Spitzer's gubernatorial campaign.

He would not say if Spitzer tapped the campaign account for personal expenses.

Expenditure reports do not identify funds going to sex-for-hire enterprises or affiliates.

Spitzer's campaign fundraising manager, Cynthia R. Darrison, was the senior vice president of private banking at North Fork Bancorp. Inc., a unit of Capital One.

Spitzer and his father, a wealthy real estate owner, also had personal accounts at the bank, according to published reports and financial disclosure documents.

Darrison could not be reached at her bank office.

She started working at the bank after Spitzer became governor.

Federal investigators have been scrutinizing Spitzer's withdrawals from an account at North Fork, reportedly to pay for prostitutes hired from Emperor's Club VIP.

Principals of the alleged pricey call girl service were arrested March 6 after a federal probe, and sources have identified Spitzer as an unnamed client referred to in court papers.

The criminal investigation stemmed at least partly from an IRS examination into Spitzer's use of the bank, triggered by suspicious activity with his accounts, according to published reports and an affidavit from the U.S. Attorney's New York City office.

The bank reportedly notified the IRS about such transactions in one of the governor's accounts.

Darrison, on the board of the Citizens Budget Commission, which often criticized Spitzer's budgeting, apparently still works at the bank.

North Fork's former chief executive officer, John Kanas, has been a very generous contributor to Spitzer and other politicians, including former Gov. George Pataki.

Kanas, still associated with the bank in an advisory role, did not return a message left with his secretary.

"If any of these campaign funds were used for this stuff, that is a crime," said Sen. Hugh Farley, R-Niskayuna, the chairman of the Senate banking committee, also a recipient of contributions from Kanas.

Rosen on Wednesday said the campaign had not been subpoenaed, but Thursday and Friday he would not comment when asked.

The New York Times reported Friday that investigators are looking at whether Spitzer used campaign donations to pay prostitutes.

"That would certainly make our case for reforming uses of campaign finances," said Barbara Bartoletti, legislative director for the League of Women Voters.

"This would be one more very perfect storm for dealing with lapses in use of campaign finance dollars."

"It goes well beyond pool covers and tickets to sporting events."

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

[Livyjr]

"More rate cuts from Fed expected Tuesday"

By JEANNINE AVERSA, Associated Press

Last updated: 4:22 p.m., Saturday, March 15, 2008

WASHINGTON -- Desperate to aid an economy in crisis, the Federal Reserve is ready to deliver yet another big interest rate cut.

How big?

One-half of a percentage point, some economists say.

Investors and others hope for even more, a three-quarters cut or perhaps a full point, given the turmoil on Wall Street.

It will be a close call, Fed watchers say.

The speculation ends Tuesday afternoon after Fed Chairman Ben Bernanke and central bank policymakers have met.

Whatever the decision, for a growing number of analysts, one more rate reduction will not be the lifeline that pulls the country back from the brink of the first recession since 2001.

Experts in this camp believe the economy is shrinking now because of the fallout from the housing and credit debacles.

Businesses are shedding jobs, Wall Street is convulsing, energy prices are skyrocketing and people are reluctant to spend.

Yet these economists say lower interest rates should help cushion the blows of a recession.

"Many consumers, businesses and investors are simply running scared right now," economic consultant Carl Tannenbaum said.

The rate-cutting began in September with the goal of shoring up the economy and reviving spending.

The Fed's key rate has fallen from 5.25 percent to 3 percent.

The pace picked up measurably in January when, during an eight-day period, the Fed slashed the rate by 1.25 percentage points.

It was the biggest one-month reduction in a quarter-century.

In response, commercial banks have lowered prime lending rates by corresponding amounts.

The prime rate, now at a nearly three-year low of 6 percent, applies to certain credit cards, home equity lines of credit and other loans.

A cut ordered by the Fed on Tuesday would further drop the prime rate.

Even with the Fed's aggressive moves, economic and financial conditions keep deteriorating.

The Fed in recent days has taken extraordinary steps to help banks and Wall Street investment firms survive the stresses of the credit crisis.

Financial institutions have racked up multibillion-dollar losses when mortgage-backed investments soured with the collapse of the housing market.

On Friday, the Fed used a Depression-era procedure to aid troubled Bear Stearns Cos.

The investment bank, which faced a possible collapse, received a rescue package from the Fed and JPMorgan Chase & Co.

Bear Stearns, which had made a fortune in mortgage-backed securities, has taken $2.75 billion in write-downs since last year.

Consultations about the situation continued through the weekend among representatives from the Fed, Treasury Department, financial institutions and others.

President Bush planned to meet on Monday with his advisory panel on financial markets, whose members include Bernanke and Treasury Secretary Henry Paulson.

The panel on Thursday recommended stricter regulation of mortgage lenders as part of a broad effort to prevent a repeat of a credit crisis threatening to drive the country into recession.

The Fed this past week also said it would pour as much as $200 billion into big Wall Street banks and investment houses and allow them to put up risky home-loan packages as collateral.

This maneuver was intended to bring sorely needed relief in the market for mortgage securities.

The Fed also has offered as much as $200 billion in short-term loans to banks and large financial institutions.

Some economists believe these actions minimize the need for an interest rate cut of 0.75 percent, or more, on Tuesday.

"I saw it as a bit of a substitute for the super-sized rate cut that the financial markets are expecting," said Stuart Hoffman, chief economist at PNC Financial Services Group.

Hoffman is predicting a half-point cut.

Battling an ailing economy is the Fed's No. 1 focus now.

Yet galloping prices for oil and gasoline can complicate the job.

High energy prices are a double-edged sword.

They threaten to restrain economic growth because people have less money to spend elsewhere and they can aggravate inflation by forcing companies to boost prices.

Crude oil prices top $110 a barrel.

Gasoline surged to a record national average of $3.28 a gallon.

At a few stations in California and Hawaii, the pump price has hit $4 a gallon.

At a congressional appearance in late February, Bernanke was asked how the economy's woes stack up against what the country faced in 2001.

"I think there are some similarities," he said.

"But, I guess as a Russian novelist once said, unhappy families are all unhappy in their own way, and every period of financial and economic stress has unique characteristics."

The Fed's rate cuts have added to the downward pressure on the value of the dollar, which recently plunged to a record low against the euro and has fallen sharply against the Japanese yen.

The drooping dollar is stoking fears that inflation might take off.

The weaker dollar could raise the cost of imported goods entering the U.S. and lead American companies to raise prices as foreign-made products become more expensive.

To Hoffman, that is a case for going with the half-point rate reduction.

Other analysts believe the situation is so dire that the Fed must cut deeper.

Brian Bethune and Nigel Gault, economists at Global Insight, are among those predicting a three-quarter point reduction.

Given the turmoil on Wall Street, there even is a chance of a 1 percentage point cut, they said.

Dangerous cracks, meanwhile, are deepening in the job market.

Employers did away with 63,000 jobs in February, the most in five years.

It was the second month in a row in which nervous employers got rid of jobs.

With the economy faltering, economists predicted the unemployment rate -- now at 4.8 percent -- would climb to 5.5 percent by year's end.

Even after Tuesday's expected rate cut, economists predict the Fed's key rate will head even lower, probably to 2 percent or even lower by the spring or early summer.

The rate reductions and the government's economic aid plan of tax rebates and breaks should help economic growth in the second half of this year, analysts said.

"It we can make it through the first part of this year and then recover, that would be a remarkable achievement," Tannenbaum said.

[Livyjr]

"Fed takes rare path to aid Bear Stearns"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:02 p.m., Friday, March 14, 2008

WASHINGTON -- The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis.

The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was "doing a good job under tough circumstances."

Delivering a speech on the economy in New York, Bush voiced confidence in the Fed's actions to aggressively cut interest rates and the Fed announcement last week that it would supply up to $200 billion in loans to cash-strapped financial institutions.

"It was a strong action by the Fed and they did so because some financial institutions that borrowed money to buy securities in the housing industry must now repair their balance sheets before they can make further loans," Bush said.

"Today's actions are fasting moving, but the chairman of the Federal Reserve and the secretary of the treasury are on top of them and will take the appropriate steps to promote stability in our markets."

"Avoid overcorrecting economy, Bush warns"

By TERENCE HUNT, Associated Press

Last updated: 2:12 p.m., Saturday, March 15, 2008

WASHINGTON -- President Bush on Saturday said the government must guard against going too far in trying to fix the troubled economy, cautioning that "one of the worst things you can do is overcorrect."

Democrats said Bush was relying on inaction to solve the problem.

Bush, in his weekly radio address, said the recently passed program of tax rebates for families and businesses should begin to lift the economy in the second quarter of the year and have an even stronger impact in the third quarter.

But he urged caution about doing more, particularly about the crisis in the housing market where prices are tumbling and home foreclosures have soared to an all-time high.

"If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help," the president said.

The economy has surpassed the Iraq war as the No. 1 concern among voters in this presidential election year amid big job losses, soaring fuel costs, a credit crisis and turmoil on Wall Street.

"In the long run, we can be confident that our economy will continue to grow, but in the short run, it is clear that growth has slowed," Bush said.

He was spending the weekend at the Camp David presidential retreat in Maryland's Catoctin Mountains after delivering a speech in New York about the economy and helping raise $1.4 million for the national Republican Party.

Democrats said they would try to strengthen the economy with measures dealing with housing, energy efficiency and renewable energy.

"The president continues to convince himself that inaction is the cure-all for the economic problems hurting hardworking Americans," Senate Majority Leader Harry Reid said in a written statement.

"But Democrats know that wait-and-see is not a responsible strategy for an economy that is teetering on the brink of recession."

"Wages and home values are down," Reid said, "but prices for everything from health care to tuition to energy are up."

"Just this week, oil and gas prices reached record highs while the value of the dollar reached historic lows."

"I hope the president, who has been slow to acknowledge this problem, joins us in recognizing how urgently we need a solution."

Bush said he opposed several measures pending on Capitol Hill to deal with the housing crisis.

They included proposals to allocate $400 billion to purchase foreclosed-upon and now-abandoned homes, to change the bankruptcy code to allow judges to adjust mortgage rates and to artificially prop up home prices.

"Many young couples trying to buy their first home have been priced out of the market because of inflated prices," the president said.

"The market now is in the process of correcting itself, and delaying that correction would only prolong the problem."

Bush said his administration has offered steps offering flexibility for refinancing to homeowners with good credit histories yet are having trouble paying their mortgage.

He cited other measures which he said would streamline the process for refinancing and modify many mortgages.

He said there were steps Congress could take, as well.

"As we take decisive action, we will keep this in mind: When you are steering a car in a rough patch, one of the worst things you can do is overcorrect," the president said.

"That often results in losing control and can end up with the car in a ditch," Bush said.

"Steering through a rough patch requires a steady hand on the wheel and your eyes up on the horizon."

"And that's exactly what we're going to do."