Life in OUR America, The Livyjr Files Volume 7 Options

[Livyjr]

"BofA to exit mortgage wholesale business"

By IEVA M. AUGSTUMS, Associated Press

Last updated: 7:13 p.m., Thursday, October 25, 2007

CHARLOTTE, N.C. -- In addition to scaling back its investment banking operations, Bank of America Corp. is exiting the wholesale mortgage business and eliminating about 700 jobs, bank officials said Thursday.

The nation's second-largest bank will stop offering home mortgages through brokers at the end of the year to focus on direct-to-consumer lending through its banking centers and loan officers.

The move also eliminates the jobs in the bank's consumer real estate unit.

The bank shared details of the decision with The Associated Press before its public announcement scheduled for Friday.

The cuts are part of a 3,000-job reduction engineered by Chief Executive Ken Lewis after the nation's second-largest bank reported a huge decline in third-quarter earnings.

"When Ken talks about a top-to-bottom review in five days time, you can't make that happen."

"These cuts were in the works, and expect more," said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte.

"Don't underestimate the depth of Lewis' disappointment in earnings."

"This guy is pissed."

Bank of America confirmed on Thursday that its co-head of equities, Peter Forlenza, had left the bank.

Forlenza, who joined the bank in August 2002, left on his own accord, Bank of America spokeswoman Melissa Kitlowski said.

Forlenza is the latest in a string of top unit executives to leave amid a shake-up at the Charlotte-based bank.

Chris Hentemann, head of global structured products, left the company Friday.

On Wedensday, the company said Gene Taylor, head of the bank's global corporate and investment banking unit, will retire by 2008 after a 38-year career.

Bank of America employees involved in its wholesale mortgages business in several consumer real estate locations -- including Dallas, Richmond, Va., and Brea and Rancho Cordova, Calif. -- will have the opportunity to apply for open positions within the company, bank spokesman Terry Francisco said.

The bank started informing affected employees Thursday.

Bank of America's consumer real estate division employs about 13,000 people and it works with about 7,000 independent brokers.

"While we are extremely proud of our strong track record in the wholesale business, we believe our long-term opportunity lies in maximizing our more competitive retail channels," said Floyd Robinson, Bank of America's president of consumer real estate and insurance services in a statement.

A manifestation of that retail strategy, especially during a downturn in the U.S. mortgage market, has been the development and successful execution of its national "no-fee" mortgage program.

The nation's financial institutions have been squeezed as a credit-crunch and defaults in subprime loans have caused investors to become hesitant about taking risks.

Dozens of home lenders halted operations this year and are being slammed as housing prices continue to slide.

An increase in defaults have forced banks to tighten lending standards.

Bank of America's product, which was introduced in May, does away with the collection of borrower, lender and third-party fees that typically add a few thousand dollars to the price of buying a home.

That product has produced more than $50 billion in application volume in the past six months, according to the bank.

Such a product, Robinson said, has enabled Bank of America to "gain critical market share."

In the third-quarter, Bank of America's overall first mortgage-funded production increased 27 percent when compared with the same period last year.

Driving that overall increase was a 60 percent spike in funded mortgage originations through banking centers and a 26 percent increase in funded originations by mortgage loan officers, the company said.

"Ken says he likes the retail business, he likes getting to know customers, underwriting, and managing his risk," said Plath, the university professor.

"He just doesn't like the securitization and servicing sides of the business."

He may not like it, but he is willing to form an alliance and help it.

In August, Bank of America invested $2 billion in Countrywide Financial Corp. -- the biggest U.S. home lender -- when the Calabasas, Calif.-based company was running short of cash.

Countrywide is among the dozens of mortgage lenders that have battled a spike in mortgage defaults and foreclosures, especially in subprime loans -- those made to borrowers with weak credit.

Those specific problems haven't extended to Bank of America, which exited the subprime lending market in 2001 when Lewis took over as chief executive.

The bank called it a business that had "become unattractive from a risk-reward standpoint."

In recent months, Lewis has pushed his bank to improve its market share of prime mortgages, or those offered to borrowers with a solid credit history, and industry experts believe it's a market the bank has yet to fully tap.

As of Sept. 30, Bank of America held a residential mortgage portfolio of $274 billion and has a stated aim of doubling its current 5 percent share of the direct-to-consumer mortgages in the next three years.

As the nation's largest retail bank, Bank of America offers several ways for customers to apply for mortgages.

The bank has 10,000 personal bankers in nearly 6,000 banking centers across the U.S. and 2,200 mortgage loan officers serving 33 states and the District of Columbia, along with a phone channel known as LoanLine, and its Web site.

"We see a lot of opportunities in growing our retail business," Francisco said.

"By exiting wholesale mortgage we are putting our full focus in one area, not splitting it."

Bank of America shares fell 48 cents, or 1 percent, to $47 in trading Thursday.

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On the Net:

Bank of America Corp.: http://www.bankofamerica.com

[Livyjr]

"Metals rebound on strong China growth"

By LAUREN VILLAGRAN, Associated Press

Last updated: 4:03 p.m., Thursday, October 25, 2007

NEW YORK -- The industrial metals market rebounded Thursday as investors set aside concerns about sluggish U.S. economic growth and shifted their focus to China's increasing hunger for raw materials.

Commodities prices rose broadly, with gains in energy, precious metals and agricultural products.

Oil prices topped $90 a barrel for the second week in a row.

China said Thursday its economy grew a buoyant 11.5 percent in the third quarter, down slightly from the previous quarter's 11.9 percent growth.

Although the modest dip had some economists estimating that China's expansion has peaked, commodities analysts suggested the country's double-digit growth rate will continue to fuel strong demand for raw materials.

Chinese trade data for September confirmed as much: The country's imports of refined copper rose 17 percent from August, according to a Dow Jones Newswires report.

Imports of zinc concentrate, which smelters refine to make a steel coating, surged 41 percent.

China's lead exports slid to the lowest level in years due to a hefty export tax introduced in July.

"The overall figures apparently show no soft spot as far as Chinese demand trends are concerned, but what is happening in the U.S. seems to be of more obvious concern to the metals complex," wrote MF Global analyst Edward Meir in a report.

Copper for December delivery rose 3.35 cents to close at $3.486 a pound on the New York Mercantile Exchange.

Nickel rose 2.8 percent, and lead prices jumped 3 percent on the London Metal Exchange.

Copper, zinc, aluminum and tin prices also climbed.

The metals market suffered losses on Wednesday after the National Association of Realtors said sales of existing homes fell 8 percent in September, the largest decline posted by the trade group in records dating to 1999.

Commodities investors have seen their concerns over the health of the U.S. economy tempered by the U.S. dollar's continued weakness.

A declining greenback can feed demand for materials from copper to oil as foreign buyers get more for their money in the U.S. market.

The dollar fell against the euro, British pound and other major currencies.

The euro bought $1.4318 late Thursday, just shy of Monday's record $1.4348.

Economic news in the U.S. was mixed Thursday.

The Commerce Department reported orders for big-ticket manufactured goods unexpectedly fell 1.7 percent in September on top of a 5.3 percent drop in August.

It was the first back-to-back decline in more than a year; analysts had expected orders to increase.

The agency also reported new home sales rose 4.8 percent in September.

But last month's gain, spurred in part by temporary discounts, followed a sharp decline in August when sales fell to the slowest pace in more than 10 years.

Energy prices surged as a barrel of oil rose to a record $90.60 on the Nymex.

The advance was powered by news that OPEC may not opt for production increases when the cartel meets next month and concerns that a conflict between Lebannon and Israel could draw in big oil producers in the Middle East.

Lebanese troops fired on Israeli warplanes on Thursday.

The Energy Information Administration's Wednesday report on inventories, which showed large draws on crude, gasoline and distillate stockpiles, also supported higher energy prices.

Light, sweet crude gained $3.36 to settle at $90.46 a barrel on the Nymex, after climbing as high as $90.60.

Gasoline futures rose 8.83 cents to settle at $2.2358 a gallon, while heating oil finished down 6.64 cents at $2.4084 a gallon.

Precious metals also advanced as investors sought a haven from a falling dollar and rising oil prices.

December gold gained $5.40 to settle at $771 an ounce on the Nymex.

Silver futures jumped 31.5 cents to $13.905 an ounce.

Agriculture futures ended mixed.

December corn rose 9.75 cents to settle at $3.6625 a bushel, while January soybeans picked up 18.75 cents to $10.125 a bushel.

Wheat futures fell 9 cents to close at $8.02 a bushel.

[Livyjr]

AND ONCE AGAIN, FOR SOMETHING COMPLETELY DIFFERENT, WE HAVE ....

"Red-headed Neanderthals? DNA says yes: study"

25 October 2007

CHICAGO (AFP) - Some of our cave-dwelling Neanderthal relatives probably had red hair and fair complexions, much like modern-day humans of Celtic origin, according to a study released Thursday.

The finding comes from the first such analysis of DNA evidence taken from Neanderthal fossils recovered from El Sidron in northern Spain and Monti Lessini, Italy.

An analysis of the DNA revealed that the ancient hominids carried a mutation in the MC1R gene that codes for a protein involved in the production of melanin -- a substance that gives skin its color and also protects skin against ultraviolet light.

In modern humans, primarily of European descent, mutations in the MC1R gene are thought to be responsible for red hair and pale skin by dampening the activity of the protein.

The mutation observed in the Neanderthal genes was different from the one documented in humans, but when scientists inserted the Neanderthal gene into cells in a test tube, it seemed to have the same effect on melatonin production as the modern human genes, according to the study published in Science.

The genetic analysis doesn't seal the deal, but since the fossil record of Neanderthals does not include any samples of skin or hair, it is the best guide available, said Michael Hofreiter, a paleogeneticist at the Max Planck Institute for Evolutionary Anthropology Leipzig, Germany.

Hofreiter said the number of red-headed Neanderthals was probably pretty small, possibly just one percent of the population.

But it was unlikely to have been tied to just a few ethnic groups and therefore red-heads might have been seen in any part of Europe or Asia where the ancient hominid lived.

Neanderthals, whose ancestors diverged from that of modern humans about 300,000 years ago, colonized Europe and parts of Asia, dominating Europe until about 30,000 years ago.

The study suggests that the genes that confer pale skin and red hair evolved separately in humans and our closest extinct relatives.

[Livyjr]

"Stocks finish volatile week higher"

By LESLIE WINES, Associated Press

Last updated: 6:24 p.m., Friday, October 26, 2007

NEW YORK -- Wall Street closed an erratic week with strong gains on Friday as strong earnings from Microsoft Corp. and an optimistic outlook from Countrywide Financial Corp. outweighed investor concerns about the economy.

Housing market news over the week was glum; oil prices surged to record highs.

And though corporate earnings have so far been mixed, investors have been heartened by good news for individual companies.

Friday's report from Countrywide that it expects to return to profitability soon, despite a big third-quarter loss, gave investors hope that the problems in the housing market are contained and that U.S. consumers still have spending power.

Thursday night's strong report from Microsoft inspired strong buying throughout the technology sector.

"The market is higher for just two reasons -- Countrywide and Microsoft," said Peter Boockvar, equity strategist at Miller Tabak.

"You take those two stocks out of the equation and there is no reason for the market to be higher."

"Microsoft single-handedly is driving the Nasdaq."

Mixed profit reports and data showing economic weakness has made investors uncertain whether the market is overvalued.

However, earnings will be pushed aside next week as the main focus of investor attention -- and taking it place will be the Federal Reserve's rate-setting meeting on Tuesday and Wednesday.

The Dow Jones industrial average rose 134.78, or 0.99 percent, to 13,806.70.

Broader stock indicators also gained.

The Standard & Poor's 500 index rose 20.88, or 1.38 percent, to 1,535.28, and the technology-dominated Nasdaq composite index advanced 53.33, or 1.94 percent, to 2,804.19.

For the week, the Dow rose 2.11 percent, the Nasdaq was up 2.90 percent, and the S&P 500 jumped 2.31 percent.

The gains were welcome after all three indexes posted losses in the previous week.

High oil prices didn't dampen investors' spirits either.

After spiking above $92 a barrel in Asian trading overnight, December crude futures rose $1.40 to settle at $91.86 a barrel on the New York Mercantile Exchange.

"Because oil prices are so high, our nation's oil bill has gone up."

"We're exporting dollars to pay for oil and our counterparties are reinvesting those dollars back in our markets -- the so-called petrodollars finding their way back," said Tom McManus, investment strategist with Banc of America Securities.

Even as stocks advanced, investors poured money into commodities markets as a hedge against a falling dollar, which hit another record low against the euro.

Gold futures rose $16.50 to close at $787.50 an ounce, the highest price since January 1980.

Energy, metals and agriculture futures all moved higher.

Treasury bonds turned lower as stocks barreled higher.

The yield on the 10-year Treasury note, which moves inversely to the price, rose to 4.39 percent from 4.38 percent late Thursday.

Friday's stock gains were fueled by company-specific news, according to Robert Pavlik, portfolio manager at Oaktree Asset Management.

"Trading today is sort of choppy, but stocks are moving up based on strong earnings from Microsoft," he said.

"You're also getting a pop from Countrywide's strong guidance going forward."

"All this is bring some attention back to the stock market.

Countrywide posted a wide loss of more than $1 billion in the third quarter, but the beleaguered mortgage lender, whose stock has plummeted due to rising subprime mortgage defaults, said it will be profitable in the fourth quarter and next year.

The shares jumped $4.23, or 32.36 percent, to $17.30.

Microsoft's reported that its profit jumped 23 percent, thanks to brisk sales of the new Halo 3 video game, Windows and Office.

Microsoft shares rose $3.04, or 9.50 percent, to end at $35.03.

Financial stocks were solidly higher Friday, but the sector continues to show signs of uneasiness following the summer's credit market problems.

The New York Times reported that after Merrill Lynch & Co. posted its sharp third-quarter loss Wednesday, the investment bank's chairman and chief executive floated the idea of a merger with Wachovia Corp.

Merrill shares rose $5.19, or 8.52 percent, to close at $66.09.

Advancing issues outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume fell to 3.51 billion shares traded from 4.07 billion on Thursday.

The Russell 2000 Index of smaller companies rose 15.28, or 1.90 percent, to 821.39.

Stock markets overseas advanced.

In Asian trading, Japan's Nikkei stock average rose 1.36 percent, and Hong Kong's Hang Seng index rose 1.84 percent.

In Europe, Britain's FTSE 100 rose 1.29 percent, Germany's DAX index rose 0.21 percent, and France's CAC-40 rose 0.60 percent.

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The Dow Jones industrial average ended the week up 284.68, or 2.11 percent, at 13,806.70.

The Standard & Poor's 500 index finished up 34.65, or 2.31 percent, at 1,535.28.

The Nasdaq composite index ended up 79.03, or 2.90 percent, at 2,804.19.

The Russell 2000 index finished the week up 22.60, or 2.83 percent, at 821.39.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 15,518.12, up 270.37 points, for the week.

A year ago, the index was at 13,943.81.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

[Livyjr]

"Countrywide loses $1.2B, sees turnaround"

By ALEX VEIGA, Associated Press

Last updated: 6:14 p.m., Friday, October 26, 2007

LOS ANGELES -- Countrywide Financial Corp. lost $1.2 billion in the third quarter, but its shares soared Friday after the nation's largest mortgage lender said it expects to be profitable this quarter and next year.

It was Countrywide's first quarterly loss in 25 years.

But the Calabasas, Calif.-based company said it will be profitable in the fourth quarter and in 2008, as it restructures its business to take advantage of the current market.

"We continue to be bullish about the longterm prospects of both Countrywide and our industry," Chairman and Chief Executive Angelo Mozilo said during a conference call with Wall Street analysts.

Shares jumped $4.23, or 32.4 percent, to close at $17.30 on Friday after rising as high as $17.51.

The stock is down 64 percent from its 52-week high of $45.26.

The loss for the third-quarter came as mortgage market woes forced Countrywide to set aside millions in loan-loss provisions and writedowns, and the lender originated fewer loans.

Countrywide's loss amounted to $2.85 per share for the July-September period in contrast to a profit of $647.6 million, or $1.03 per share, a year ago.

Analysts polled by Thomson Financial, on average, forecast a loss of $1.28 per share for the quarter.

Countrywide reported a revenue figure of negative $50 million in the third quarter because of the impact of impairments and charges, versus $2.82 billion during the same period a year ago.

Mozilo attributed the quarterly loss to "unprecedented disruptions" in the mortgage market and the ongoing national housing slump.

The executive sought to reassure investors, however, noting steps the company has taken to secure financing, tighten underwriting standards and shift its mortgage lending business into its banking subsidiary, Countrywide Bank.

Chris Brendler, an analyst with Stifel Nicolaus & Co. Inc., said he is not convinced the company will turn a profit next quarter.

"They seem to have taken some big write-downs, taken a lot pain this quarter, the pain going forward should be smaller," Brendler said.

"I still remain concerned about the potential for another credit write-down and just how profitable this business will be, even after they get past the credit headaches in the near term."

Mozilo also said he was cooperating with informal inquiry by the Securities and Exchange Commission into his sales of his Countrywide stock.

"At no time did I make any trading decisions based on any material non-public information, and I fully complied with all company policies," Mozilo said during the call.

"I am confident that this will demonstrate that I've complied with all protocols."

In its earnings report, the company said origination volume fell to $96 billion, from $118 billion as Countrywide shifted its product mix to more traditional loans.

Countrywide ramped up its loan-loss reserves to fight rising delinquencies and defaults, especially among subprime mortgages given to customers with poor credit history.

Countrywide reserved $934 million for bad loans in the third quarter, up from $38 million held during the same quarter last year.

The lender moved about $12 billion in nonconforming loans to its held-for-investment portfolio after having to take a write-down on them.

Some 4.41 percent of Countrywide's conventional first mortgage loans were delinquent as of Sept. 30, up from 2.57 percent in the year-ago quarter.

For prime home-equity loans, delinquencies inched up to 13.5 percent from 13.4 percent.

The number of subprime loans that were behind in payments soared to 29.08 percent from 18.32 percent in the year-ago period.

In the subprime loan category, 12.63 percent of the loans were behind in payments by 90 days or more, more than twice the year-ago rate.

The company noted the market for new loans, particularly loans that lenders can't sell to government-backed mortgage companies, declined substantially during the quarter as underwriting standards began to tighten industrywide following the subprime mortgage meltdown.

Earnings from the company's loan production unit also suffered because gain-on-sale margins the company had expected to rake in did not materialize.

Countrywide's loan servicing arm posted a pre-tax loss of $27 million compared to earnings of $123 million in the year-ago quarter, as the company took a $690 million impairment charge for home-equity and subprime loan residuals in anticipation of future credit losses.

Earnings in Countrywide's mortgage banking operations posted a pre-tax loss of $389 million, compared to pre-tax income of $378 million in the year-ago quarter as the company boosted its loan-loss reserves to compensate for future charge-offs.

Some Countrywide Bank customers rushed to withdraw funds from the bank during the quarter on fears their deposits might be in danger if the company went bankrupt.

But the company said a surge in deposits in September helped offset those withdrawals and the bank's consumer accounts grew by a net of 9 percent by quarter's end.

Countrywide's investment services arm posted a pretax loss of $344 million, compared to income of $141 million in the year-ago quarter.

Its insurance business generated pretax earnings of $150 million, up from $91 million in the third quarter last year.

Looking ahead, management said it expects the company's loan origination volume will be lower through the start of next year, unless the housing slump improves or interest rates fall further.

The company expects its earnings per share in the fourth quarter to range between 25 cents and 75 cents.

It also anticipates its return on equity for 2008 to range between 10 percent and 15 percent.

The lender has struggled this year as mortgage defaults and foreclosures have spiked, particularly among subprime loans to borrowers with poor credit.

To turn things around in recent weeks, Countrywide announced thousands of layoffs and borrowed billions of dollars, including $2 billion by selling a stake in the company to Bank of America Corp.

The company booked a charge of $57 million related to its plan to cut as many as 12,000 jobs.

Countrywide estimated it will have to take between $70 million to $90 million in additional charges, with the bulk of the charges expected to be booked in the fourth quarter.

For the first nine months of the year, the company posted a loss of $281.6 million versus a profit of $2.05 billion a year earlier.

Revenue fell 43 percent to $4.9 billion from $8.6 billion in the year-ago period.

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On the Net:

Countrywide Financial: http://my.countrywide.com/

[Livyjr]

"Connecticut subpoenas rating agencies"

By STEPHANIE REITZ, Associated Press

Last updated: 6:14 p.m., Friday, October 26, 2007

HARTFORD, Conn. -- Connecticut's attorney general said Friday that he has subpoenaed the nation's three largest debt-rating agencies as part of an investigation into possible anticompetitive practices.

Attorney General Richard Blumenthal confirmed that his office issued subpoenas Oct. 10 to Standard & Poor's, Moody's Investor Services and Fitch Ratings Service.

The investigation focuses on whether the credit-rating agencies are using their dominant position to unfairly raise prices or exclude competitors in violation of Connecticut's antitrust laws, he said.

"Assuring debt ratings are honest and untainted is vital to investors, companies and government," Blumenthal said.

Standard & Poor's referred questions to parent company McGraw-Hill Cos., which disclosed the subpoena in its third-quarter report filed with the Securities and Exchange Commission.

"As stated in our 10Q filing, S&P received the subpoena on Oct. 16, and we are responding," said Frank Briamonte, a spokesman for McGraw-Hill.

Messages seeking comment were left with Fitch and Moody's.

Blumenthal said Friday his investigation is reviewing allegations that some companies rated an issuer's debt against its wishes, then ordered the issuer to pay for the service or face a possible poor rating.

His office also is reviewing whether some credit-rating agencies pressured issuers into exclusive contracts under threat of a downgrade, and whether contracts that offer a discount in return for exclusivity violate Connecticut's antitrust laws by locking out other debt raters.

Credit-rating company executives testified on Capitol Hill last month about the role their agencies played in the subprime mortgage industry's implosion last summer and whether they were affected by conflicts of interest.

Critics have said the rating agencies failed to warn investors of the risks associated with complex mortgage-backed securities, especially those with loans to borrowers with weak credit histories.

Many of those investments have plummeted in value this year.

Blumenthal said Connecticut's investigation is broader in scope than the rating agencies' actions in connection with subprime industry woes.

"The subprime loans certainly are a very significant element of the debt that is involved in our investigation that may be rated by these agencies, but certainly not the only reason for our investigation," Blumenthal said.

[Livyjr]

"Merrill Lynch CEO job on the line"

Associated Press

Last updated: 5:32 p.m., Friday, October 26, 2007

NEW YORK -- Merrill Lynch & Co. Chief Executive Stan O'Neal faced the potential loss of his job Friday over questions about his leadership of the world's largest brokerage -- and he may face a revolt led by former top executives calling for his ouster.

Shares of the company had their biggest jump in five years Friday as speculation swirled that O'Neal's job was on the line.

He lost the confidence of investors earlier in the week after Merrill posted a $2.24 billion third-quarter loss -- the biggest amount in its 93-year history.

In the face of reports that O'Neal angered Merrill Lynch's board by initiating merger talks with Wachovia Corp. without their knowledge, there is growing sentiment on Wall Street that his days are numbered.

"I wouldn't be surprised if we didn't get some kind of announcement this weekend, that either the board is standing behind O'Neal or that he's out," said Dick Bove, an analyst with Punk Ziegel & Co.

"And, if there's no announcement soon, then Merrill Lynch could become a snake pit similar to what happened at Morgan Stanley."

In 2005, dissident Morgan Stanley shareholders revolted against then-CEO Philip Purcell as the investment bank's business and shares were struggling.

It led to the dramatic return of John Mack, who was formerly the company's president.

Win Smith, whose father was among Merrill Lynch's founders, has renewed his criticism of Merrill's leadership in recent weeks.

He lost out to O'Neal for the top job, and is considered to be a potential replacement should he be fired.

He told the Associated Press in an interview the board has yet to reach out to him or other former executives, but that many of them stood by to help lead a search for a new CEO.

Smith added there is "growing anger about what's happened here.

"We're all getting tons of e-mails and phone calls from people in and outside the firm," he said, though he added "there is no organized effort yet."

There is also growing consensus on Wall Street that a replacement would need to be found outside of Merrill Lynch.

Among the two names most frequently talked about are NYSE Euronext CEO John Thain and BlackRock Inc. CEO Laurence Fink.

Thain has not been contacted by Merrill Lynch, according to a person close to him who was not authorized to speak publicly on the matter.

The former Goldman Sachs Group Inc. executive declined to comment through a spokesman.

Meanwhile, Fink is also said to be a strong candidate.

Last year, Merrill Lynch bought a 49.8 percent stake in BlackRock.

It was not clear if a new CEO would explore any further conversations with Wachovia.

The two companies have some shared history, though.

Merrill has advised Wachovia on four recent transactions, including its $25.2 billion acquisition of Golden West Financial Corp. in May.

If O'Neal were able to stay and orchestrate a takeover of the company, he would stand to cash in on a hefty golden parachute.

He would get $250 million if he was forced out via a change in control of the company, according to documents filed with the Securities and Exchange Commission.

"We're ... not sure that shareholders' and board members would be so eager to approve a merger that would provide Stan O'Neal with that kind of compensation," said Keefe Bruyette & Woods analyst Lauren Smith.

"That would be a very handsome payday for leading the firm down a very tenuous road."

[Livyjr]

"Home's story follows foreclosure process"

By JEFF KAROUB, Associated Press

Last updated: 5:53 p.m., Friday, October 26, 2007

ROCHESTER HILLS, Mich. -- At 14, Joan Cyman hauled wood and clutched a hammer with her father to build a deck on the back of their house.

It was one of many projects to turn the already attractive four-bedroom, three bathroom suburban house into a home.

She was 12 in 1976 when they left a rough neighborhood in Detroit to be among the first families on the cul-de-sac in the gleaming new subdivision.

"It was like a family home," she said.

"I felt like it was left to me and should have stayed there the rest of my life."

It didn't.

At 41, Cyman is 145 miles north in rural Roscommon County, trying to put her life back together after losing her home to foreclosure in 2006.

Now a long-vacant eyesore with a patchy, overgrown lawn and torn auction sign in front, the Rochester Hills residence has a buyer, a businessman whose sideline buying foreclosed homes has picked up as the housing market has tanked.

"It does present a lot of opportunities," said Mike Smitha, 52, a local investor who is waiting to close on the property.

"You have to look at it as a business."

"It's simple economics: Buy as cheaply as you can, maximize the money it's going to take to repair and sell it for as much as the market will bear."

The home was one of 700 seeking new life in a recent auction in Michigan, which had the fourth highest foreclosure rate in the nation in September, according to Irvine, Calif.-based RealtyTrac Inc.

Automotive industry cutbacks in the state have led to the nation's highest unemployment rate as well as a declining population.

When people fall on hard times, so too do their homes.

Cyman said money disputes with her husband, from whom she's separated and divorcing, made it difficult for her to make ends meet.

She fell behind on her mortgage payments, and her lender started the foreclosure process in September 2005 on a $228,650 mortgage she took out nine months earlier.

The colonial-style house at 949 Homestead Court has a purchase agreement for $136,500 -- a "deal of the century" for a home whose value, once repaired, would be $250,000, said real estate agent Ron Walraven.

The home that once impressed neighbors now is a handyman's special: Walraven estimates it needs about $40,000 to update an old kitchen, repair damage caused by basement flooding and perform other major projects.

Like so many other homeowners, Cyman took advantage of lower interest rates and better terms in the housing bubble in the early part of the decade.

In 2002, after the original $37,500 home mortgage established by her late father was paid off, she took out the first of three adjustable-rate mortgages to pay large bills.

Two others followed, and she said she was enticed by the lower rates she was being offered.

"I did (get) caught up -- everyone was doing it," she said.

"They'd call me and say, 'I can put you in a seven-year ARM.'"

"The payment would go down."

Yet her overall household debt rose.

Her salary would have covered the mortgage -- which she said was about $800 a month by the time of the final refinancing -- but hers was the only income coming in at the time.

Cyman said she tried to work with her lender, Wells Fargo & Co., on a plan to catch up on back payments.

She said the company was uncooperative and told her there was nothing it could do.

A Wells Fargo spokesman said he could not comment on Cyman's case, but the company said in a statement it works hard to keep customers in their homes and has expanded its efforts to help them.

Walraven and other industry observers say lenders overall have become more involved in preventing foreclosures as the number has skyrocketed.

"Eighteen months ago, their position was not to easily work it out like it was today -- especially in Detroit, where we have a glut of properties," Walraven said.

Dan Sugg, president of the Michigan Mortgage Lenders Association, said his industry recognizes the responsibility it shares in keeping homes out of foreclosure.

Among other things, he said, it's holding foreclosure-prevention workshops in the hardest-hit areas.

"The bottom line is (a) homeowner agreed to repayment of debt, signed the note and knew the terms of the mortgage."

" But we understand that situations change and that things can become more difficult."

"That's why the (loan) servicers are helping the homeowners through the situation."

For Cyman, whose father was a successful area business owner and mother a longtime member of the local school board, losing the house felt "emotional" and "degrading."

Tadeus Cyman died in 1989; his wife, Lorraine, in 1992.

"I just feel sorry for the neighbors next door that are dealing with that house right now," said Joan Cyman, now living in a small cottage she bought many years ago and running a technical help desk at a community college.

"I've heard it just looks terrible."

"They haven't done anything to it."

In August 2006, Walraven said he received a $200,000 cash offer for the home -- still not enough to cover what Cyman owed.

But that fell through when the prospective buyer had a family emergency.

After another year on the market, he said, the seller decided to include it in the auction of 700 Michigan homes put on in September by Texas-based auction firm Hudson & Marshall.

Smitha said the home caught his eye before but he thought it was too expensive for its condition.

When he saw it again in a Hudson & Marshall flyer and learned the firm was accepting electronic bids, he decided to "take a little stab."

"They called back and countered," he said.

"I turned them down and figured I'd never hear anything."

"About four or five days before the auction, they called me back and said, 'The lender decided to accept your offer.'"

Smitha has been involved in real estate for 30 years as a licensed broker and agent, and has been a builder for the past 12.

He said he has been an investor all along, but his pace has picked up during the past couple years as the market has declined.

"It presents some risks but on the other side of the coin in presents opportunities: The best time to buy is when everyone else thinks you shouldn't," he said.

"The best time to sell is when everyone else thinks you should buy."

Smitha is among the more than half of auction buyers who are investors, not owner occupants.

He awaits closing on it, then plans to fix it up and sell or lease it sometime next spring.

Still, he said he expects to spend more than $40,000 to repair and renovate it.

That's an even greater risk in a down market -- but he sees much the same upside that Tadeus and Lorraine Cyman saw 30 years ago, including a nice neighborhood, solid school district and ample living space.

"There are literally hundreds of these houses on the market in the Detroit area," he said.

"It's sad but obviously I didn't create the problem."

"Someone has to buy these and fix them up."

"Really, what people like me do, is return a house to the market in a livable condition that prior to that most people didn't want to walk through."

[Livyjr]

"Housing slump likely to worsen"

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:34 p.m., Friday, October 26, 2007

WASHINGTON -- The current housing slump, which began in late 2005, probably has another year to go before things turn around.

Before it is over, home prices -- which had soared during the boom years -- will probably have fallen by the largest amount of any downturn in the post World War II period.

The problems in housing have been a serious drag on the overall economy -- slashing more than a full percentage point off growth in some quarters.

And those adverse effects will get worse in coming months, many private economists believe, reflecting the fallout from the severe credit crunch that hit in August.

The betting is that the overall economy will be able to avoid a recession, but it will be a close call with the point of maximum danger still ahead.

"I think the housing market has got another year of very weak sales, falling construction and lower home prices."

"And all of that assumes that the economy holds together reasonably well and we don't have a recession," said Mark Zandi, chief economist at Moody's Economy.com.

The biggest worry is that mortgage financing problems will grow even more severe, with soaring defaults dumping more homes onto an already glutted market, driving prices down further.

In a new report, the Joint Economic Committee estimates there will be 1.3 million foreclosures from mid-2007 through 2009 in subprime mortgages, loans provided to borrowers with weak credit histories.

Those foreclosures will wipe out an estimated $71 billion in housing wealth directly and another $32 billion indirectly by lowering the values of neighboring homes, according to the report by the JEC's Democratic staff.

The report predicts that will end up costing states $917 million in lost property tax revenue through the end of 2009.

The states of California, New York, New Jersey and Florida are expected to be among the biggest losers.

"We are looking at a tsunami of subprime foreclosures that has been hitting subprime borrowers hard and is on track to hit prime borrowers and the economy as well by lowering property values and reducing local tax revenues," said Sen. Charles Schumer, D-N.Y., who has been lobbying the Bush administration to provide more assistance to help homeowners avoid defaulting on their mortgages.

JEC economists caution that their forecast is heavily dependent on how much home prices decline during the slump.

If the downturn turns out to be worse, it will mean even bigger price declines, more foreclosures and more dollar losses in both home values and property tax collections.

Home prices have declined close to 4 percent from their peak set in early 2006, according to the Standard & Poor's/Case-Schiller index.

David Wyss, chief economist at Standard & Poor's, believes that before the downturn is over, home prices will fall by 11 percent, according to this gauge.

That would far surpass a 6.5 percent drop in prices, according to the Case-Schiller measurement that occurred in the 1990-91 housing downturn, the only other time this measurement has shown falling prices.

Other economists using different price measurements are also forecasting declines.

The National Association of Realtors is predicting the median price of an existing home -- the point where half sell for more and half for less -- will fall by 1.5 percent this year, the first price decline on an annual basis on the group's records going back four decades.

Before the slump ends, Zandi said, he believes median existing home prices using the Realtors' measurement will fall 10.4 percent, making this the biggest downturn in terms of prices since the Great Depression of the 1930s, when home prices dropped by about one-third.

Economists stress that the price weakness must be viewed in the context of an unprecedented run-up in prices that occurred during a five-year boom in home sales, a period that some economists believe reflected a speculative bubble that pushed prices well past affordability levels in many parts of the country.

"We had a surge in investor demand, an explosion in the availability of credit and builders who became overly optimistic."

"All these things came together to whip the market into a frenzy, creating a huge bubble that is now bursting," Zandi said.

In terms of construction, Zandi said he was looking for building activity to drop by 54 percent from the high to the trough this time around.

That would compare with a 66 percent plunge in housing construction during the 1980s slump, a period when mortgage rates hit double-digit levels, and a 36 percent fall in construction during the 1990-91 housing downturn.

The current housing slump has definitely meant dark days in the industry.

The National Association of Home Builders saw its survey of builder confidence drop to an all-time low in October as builders faced a wave of cancellations of sales contracts brought on by the credit crunch, causing lenders to tighten lending standards.

The availability of certain mortgage products such as jumbo loans, loans of over $417,000, all but dried up for a time, a serious setback for high-cost areas of the country such as California.

David Seiders, the home builders' chief economist, said he believes housing will gradually stabilize in the next year with sales hitting a low-point in the first quarter and then starting to move higher, a development that will help clear out record-high inventories of unsold homes.

He said construction will not hit bottom until the spring and housing will remain a drag on the economy through the middle of next year, with prices likely to continue falling until the end of the year.

He predicted the Federal Reserve, which in September cut a key interest rate for the first time in four years, will keep cutting rates until Fed officials can be sure the housing downturn will not trigger a full-blown recession.

The Fed meets again next Tuesday and Wednesday.

"The key to turning this around will be keeping the economy's fundamentals strong," Seiders said.

"We believe job growth will remain solid, personal incomes will continue growing and interest rates will be well-behaved."

------

On the Net:

Joint Economic Committee: http://www.jec.senate.gov

[Livyjr]

"No end in sight for housing slump"

By Ron Scherer Fri Oct 26, 4:00 AM ET

New York - Home prices are now at 2005 levels.

And, even with the falling prices, the number of unsold homes is the highest since 1999 – as far back as the data goes – suggesting to economists that more price-cutting is ahead.

One of the major implications of the continuing slide in housing is the drag on the total economy.

With home sales now lower than many of the most pessimistic forecast, some economists worry that the economy could be closing the year in a weakened state.

In fact, Wall Street is now convinced that the Federal Reserve will reduce interest rates a second time this fall when the central bank convenes next week.

"Housing is clearly the big factor for the Fed," says Jeff Kleintop, chief investment strategist at LPL Financial Advisors in Boston.

"The Fed will clearly be looking at that drag [housing] on the economy and the financial consequences of the pullback."

This week, evidence accumulated detailing the housing slump.

Yesterday, for example, the Commerce Department revised lower new-home sales for August to the slowest pace in 11 years.

September sales rose 4.8 percent compared with the slow August pace.

But, new-home sales are still 23 percent below last September.

"Technically it looks like it improved but not when you look at the downward revisions which totaled 167,000 homes in June, July, and August," says Sam Bullard, an economist at Wachovia in Charlotte, N.C.

"There is so much inventory out there on the market, builders will have to put out discounts to help move this inventory off their books."

Wednesday, the National Association of Realtors (NAR), reported in September that existing home sales fell by 8 percent from August's level and are down 19 percent from a year ago.

Home prices fell 4.2 percent from a year ago, and inventories were equal to 10.5 months of sales.

"The market is glutted with houses," says Peter Morici, economics professor at the University of Maryland.

According to the NAR report, there were 4.4 million existing homes on the market.

The weakness is extending into the condo and coop markets where September sales fell 4.3 percent from August levels.

With weak sales and rising inventories, the median home price fell to $211,700.

This is down 4.2 percent from September 2006.

Part of the reason for the falling price is turmoil in the mortgage market, where it has become more difficult to obtain a loan that is higher than $417,000, the cut-off for a loan to qualify for Fannie Mae or Freddie Mac coverage.

Even in some well-to-do communities, immune to the price drop until recently, prices are under pressure.

That's the case in Madison, Conn., where the average sale price is down 11.2 percent from last year.

"There is downward pressure on prices, inventories have risen," says Brendan Grady, a regional vice president for Caldwell Banker.

However, Mr. Grady says the falling prices are attracting buyers to the upscale shore community.

Sales this year are up 22 percent.

Falling home prices may have a larger impact on low-income families, says Andrew Jakabovics, an associate director at the Center for American Progress.

"It's more likely that a low-income borrower has made a lower down payment, so when prices fall, they may have negative equity."

The implications for a buyer holding a house now worth less than when they bought it are significant.

"No one will refinance the house if it's under water [below purchase price]," says Mr. Jakabovics.

Mr. Morici says home owners with negative equity in their homes will find it difficult to buy another house.

"If you have to sell and there are not enough proceeds, you get a bill," he explains.

"You can't walk away from it without the lenders coming after you."

Earlier this year, many investment professionals had hoped the real estate and mortgage markets would be able hop out of trouble by year-end.

However, now there are doubts.

On Wednesday, Merrill Lynch shocked the markets with a $8.4 billion write down.

"We just don't know how deep in we are," says Morici.

On Wednesday, an on-line poll of real-estate finance professionals attending the upcoming Asset Backed Security (ABS) East Conference in Orlando, Fla., found still more pessimism.

Ninety-eight percent of the respondents see the problems in the subprime market now spreading to higher-rated mortgages, up from 85 percent in March.

The ABS conference is for professionals involved in the securitization industry – where the bulk of the financial crunch has taken place.

However, "The only thing stressing is home prices; that's not so bad," says Mark Adelson of Adelson & Jacobs, a consultant to the securitization business.

"The main-stream core of the mortgage business is Fannie Mae and Freddie Mac and that's fine."

"That is the part of the business that puts most Americans in their homes."

[Livyjr]

"Turkish incursion on hold for US visit"

By SUZAN FRASER, Associated Press Writer

26 October 2007

ANKARA, Turkey - Turkey will wait until the prime minister visits Washington in November before deciding on a cross-border offensive into northern Iraq, the country's top military commander said Friday.

Prime Minister Recep Tayyip Erdogan meets President Bush in Washington on Nov. 5.

"The armed forces will carry out a cross-border offensive when assigned," private NTV quoted Gen. Yasar Buyukanit as saying.

"Prime Minister Erdogan's visit to the United States is very important, we will wait for his return."

Turkey's Deputy Prime Minister Cemil Cicek said the government demanded the extradition of Kurdish rebel leaders based in Iraq's north.

Amid talks with a visiting Iraqi delegation, Turkish war planes and helicopters reportedly bombed separatist hideouts within the country's borders.

Despite repeated Turkish demands for more action from both the United States and Iraq, U.S. Maj. Gen. Benjamin Mixon said he plans to do "absolutely nothing" to counter Kurdish rebels operating from the region.

The top American military commander in northern Iraq said it is not the U.S. military's responsibility to act.

Mixon also said that he has sent no additional American troops to the area and he is not tracking hiding places or logistics activities of the rebels from the Kurdistan Workers' Party, known by its Kurdish acronym PKK.

He also has not seen Kurdish authorities move against the rebels either, Mixon told Pentagon reporters by videoconference from a U.S. base near Tikrit in northern Iraq.

"I have not seen any overt action (by Kurdish authorities) ..."

"But those are the types of activities that are managed and coordinated at higher levels than my own," he said.

Iraqi spokesman Mohammed al-Askari said the visiting delegation proposed reinforcing existing outposts near the Turkish border and setting up new ones to improve border security and opening them to inspection.

The delegation also suggested that Turkey, Iraq and the United States discuss not only political but military measures against the rebels.

The delegation also said Iraq would find and hand over eight missing Turkish soldiers — allegedly held by Kurdish rebels as hostages — if they were in Iraq, al-Askari said.

But comments from a spokesman for the autonomous Kurdish government in northern Iraq underscored the difficulty of taking action against the rebels.

"I do not know how we are supposed to arrest people who are unknown to us and who might be situated in the mountainous area near the border or they might be in Turkey itself," said the spokesman, Jamal Abdullah.

"Kurdistan's government is not part of the dispute between PKK and Turkey."

CNN-Turk television, citing unnamed Iraqi officials, said Turkey asked for the extradition of 153 PKK members.

The station also said Iraqi officials claimed they could hand over at least 18 PKK members.

The state-run Anatolia news agency reported that Turkish aircraft attacked suspected rebel positions that were detected during reconnaissance flights.

There were no reports of guerrilla casualties.

Cicek reiterated Turkey's determination to carry out an offensive if the U.S.-backed Iraqi government and Iraqi Kurdish administration, which Turkey accuses of turning a blind eye to activities of the Kurdish rebels in the territory, do not crack down on the rebel group.

"We will use our right stemming from international laws until the end," Cicek said.

He said Turkey's struggles with the PKK go beyond the rebel group's estimated 3,000 to 3,500 members.

"Today, the PKK is a group that receives the most support, logistical aid, weapons and propaganda support from several countries," he said, without naming any countries.

Cicek, talking about past military incursions, also said the main rebel base was deep inside Iraq on Mount Qandil and was hard to target in a ground offensive.

Kurdish attacks have claimed 42 lives in Turkey this month alone.

If the U.S. and Iraq do not act soon, Turkey has threatened to send troops across the border, saying it will not be deterred by Washington's fears of destabilizing a relatively secure region on Iraq.
___

Associated Press Writer Selcan Hacaoglu in Ankara and Kim Gamel in Baghdad contributed to this report.

[Livyjr]

"US to order diplomats to serve in Iraq"

By MATTHEW LEE, Associated Press Writer

27 October 2007

WASHINGTON - In the largest call-up of U.S. diplomats since the Vietnam War, the State Department is planning to order some of its personnel to serve at the American Embassy in Iraq because of a lack of volunteers.

Those designated "prime candidates" — from 200 to 300 diplomats — will be notified Monday that they have been selected for one-year postings to fill the 40 to 50 vacancies expected next year.

They will have 10 days to accept or reject the position.

If not enough say yes, some will be ordered to go to Iraq and face dismissal if they refuse, Harry Thomas, director general of the Foreign Service, said Friday.

"Starting Nov. 12, our assignments panel will assign people to Iraq," Thomas told reporters in a conference call.

"Under our system, we have all taken an oath to serve our country, we have all signed (up for) worldwide availability."

"If someone decides ... they do not want to go, we will then consider appropriate action," he said.

"We have many options, including dismissal from the Foreign Service."

Only those with compelling reasons, such as a medical condition or extreme personal hardship, will be exempt from disciplinary action, Thomas said.

He said the process of deciding who will go to Iraq should be complete by Thanksgiving.

Diplomats who are forced into service in Iraq will receive the same extra hardship pay, vacation time and choice of future assignments as those who have volunteered since Secretary of State Condoleezza Rice this past summer ordered Baghdad positions to be filled before all others around the world.

About 200 Foreign Service officers work in Iraq.

It is certain to be unpopular due to serious security concerns in Iraq and uncertainty over the status of the private contractors who protect U.S. diplomats there, particularly after a deadly Sept. 16 shooting in which guards from Blackwater USA protecting an embassy convoy were accused of killing 17 Iraqi civilians.

The union that represents U.S. diplomats, the American Foreign Service Association, has expressed deep concerns in the past about a possible move what are known as "directed assignments."

But officials with the union could not be reached for comment late Friday.

The move to directed assignments is rare but not unprecedented.

In 1969, an entire class of entry-level diplomats was sent to Vietnam, and on a smaller scale, diplomats were required to work at various embassies in West Africa in the 1970s and 1980s.

More than 1,200 of the department's 11,500 Foreign Service officers have served in Iraq since 2003, but the generous incentives have not persuaded enough diplomats to volunteer for duty in Baghdad or with the State Department's provincial reconstruction teams.

When she ordered that Baghdad be given staffing priority, Rice had warned that unless more volunteers could be found, the department would have to implement directed assignments.

"It is my fervent hope that we will continue to see sufficient numbers ... volunteering for Iraq service, but we must be prepared to meet our requirements in any eventuality," she said in an unclassified cable sent to all diplomatic missions abroad on June 19.

That directive followed an earlier offer for any diplomats wanting to learn Arabic to leave their current post immediately for two years of language training before being posted to Iraq and an appeal from the U.S. ambassador in Baghdad, Ryan Crocker, for the urgency of the Iraq operation to be made clear to all diplomats.

Crocker has repeatedly appealed to the State Department headquarters for more and better trained personnel to staff the embassy.

The embassy operation had been due to move into a vast new compound last month, but the move has been indefinitely delayed due to logistical and construction problems.

Iraq is an extremely dangerous hardship post with near daily insurgent mortar attacks on the fortified Green Zone where the embassy is located.

The U.S. military has quietly but repeatedly complained that its forces and other Defense Department personnel have been pressed into service in jobs that should have been filled by State Department personnel.

In particular, Defense Department employees and service members were forced to fill spots on provincial reconstruction teams for months because the State Department could not get personnel there.

Military officials have complained that other federal agencies — including State, Commerce and Agriculture — aren't moving quickly enough to fill critical needs in Iraq.

Those agencies, they argue, have the expertise to help Iraqi business people and farmers get back to their jobs and improve the economy.
___

Associated Press writer Lolita C. Baldor contributed to this report.

[Livyjr]

"Mortgage industry facing more troubles"

By STEPHEN BERNARD, Associated Press

Last updated: 6:02 a.m., Saturday, October 27, 2007

NEW YORK -- In all phases of the mortgage industry this week, from the people who make the loans to the people who insure them, the news was bad -- and most of them expect it to get worse.

Things have gotten so tough, title insurer Stewart Information Services Corp. said it could not cut costs fast enough in August and September to keep up with the plummeting market.

The company has already made "significant reductions" in its work force in October.

Its insurance reimburses a homeowner or a lender if there is an error in the deed transferring property.

The market turned quickly for mortgage insurer MGIC Investment Corp. as well, as the rising delinquencies forced the company to pay out more in claims in the third quarter.

MGIC said it expects to lose money through 2008 because it estimates it will pay billions in claims.

MGIC Investment already posted a loss of $372.5 million in the third quarter.

And Countrywide Financial Corp., the nation's largest mortgage lender, said it lost $1.2 billion over the summer, as the amount of money it set aside to cover losses from loans gone bad skyrocketed.

Angelo Mozilo, the chairman and chief executive of Countrywide, said the changes in the mortgage market over the summer were "unprecedented," and the company is eliminating nearly all but the safest loans from its product menu.

It is also in the midst of cutting 12,000 jobs.

For potential mortgage borrowers, the comments paint a sobering picture of the difficulty in getting a new home loan in the coming months.

"If your credit scores are low, your access to mortgage money has all but vanished," said Dan Green, a certified mortgage planning specialist and author of TheMortgageReports.com.

Strong credit scores are the main factor driving mortgage lending today, but borrowers also need proof of employment and money in the bank to obtain a loan.

Traditional prime mortgages are still readily available, but the supply of other mortgage types is severely constricted, Green said.

Nearly one in five subprime borrowers was at least two months' payments behind in July, while one in 20 alt-A borrowers fell in the same category, according First American LoanPerformance.

Subprime loans are made to people with poor credit history, while alt-A loans are mostly made to people with limited documentation.

With the market in a nosedive, mortgage originators are likely to continue to play it safe for the foreseeable future as they try to avoid losing more money.

That means fewer people will qualify for loans.

The tightening of underwriting standards will play a role in the steady drop in mortgage originations in 2008.

The trade group Mortgage Bankers Association projects a 31 percent decline in mortgage origination volume between 2006 and 2008.

[Livyjr]

"JC Flowers in talks to buy Northern Rock"

By JANE WARDELL, Associated Press

Last updated: 1:22 a.m., Saturday, October 27, 2007

LONDON -- U.S. private equity firm J.C. Flowers & Co. said Friday that it is in talks with Northern Rock PLC about a possible takeover bid and named a proposed management team for the troubled British mortgage lender.

The disclosure comes as concerns grow about the level of losses being sustained by Northern Rock, which appealed for emergency loans and suffered a rare bank run last month due to problems arising from the global credit crunch.

Flowers, which faces competing interest from Richard Branson's Virgin Group for Northern Rock, said it intended to install Paul Myners, the former chairman of the retailer Marks & Spencer PLC, as chairman if it buys the lender.

Myners, who has a string of other executive and non-executive positions, is head of a panel implementing the British government's plans for a national pension savings program.

He would be joined by Richard Pym, who retired in July as chief executive of Alliance & Leicester PLC, as executive deputy chairman, and Hugh Scott-Barrett, the former chief financial officer of Dutch bank ABN Amro Holdings NV, to fill the same role at Northern Rock.

Flowers did not put a value on its potential deal.

Northern Rock shares rose 1.7 percent to 190.7 pence ($3.91) on Friday, giving the bank a market valuation of around 805 million pounds ($1.7 billion).

The stock has dropped about 70 percent since Sept. 13, the day before Northern Rock revealed it had sought emergency Bank of England funding.

There is little consensus among analysts about a fair price for the mortgage lender, with valuations ranging from about 180 pence to 350 pence ($3.69 to $7.18).

The mortgage lender ran into trouble last month because of its heavy reliance on short-term money markets for funding.

Its subsequent profit warning and appeal to the Bank of England for an emergency loan led to the first run on a British bank for almost a century.

The rush was only stemmed days later when the government stepped in to guarantee deposits of Northern Rock savers.

Analysts said an inspection of the Bank of England's accounts showed that Northern Rock's borrowing is likely to have exceeded 20 billion pounds ($41.1 billion).

That figure appears in the "other assets" category of the central bank's accounts, which includes any funds the bank issues as "lender of last resort."

"As well as losing wholesale funding, Northern Rock has suffered a larger withdrawal by retail customers than the guesses of several billion pounds circulating in the market," said Simon Ward, an economist at investment management firm New Star.

British Treasury chief Alistair Darling has warned Northern Rock that it has only "a matter of weeks and months" to sort out its future.

The existing loan facility from the central bank comes to an end in February, and while Darling said that was not a "drop dead date" for the bank, he told lawmakers on Thursday that it could not carry on indefinitely.

The mortgage lender effectively has three months to agree to a deal with a buyer, during with the government will allow the bank to draw credit against all its assets.

Northern Rock is still also in discussions with a consortium led by Virgin Group, which submitted a nonbinding indication of interest to the bank earlier this month.

Virgin proposed an equity injection that would see the struggling mortgage lender kept intact and rebranded as Virgin Money.

Other possible bidders which have figured in speculation are Apollo Management LP, Blackstone Group, Lone Star and Cerberus Capital Management LP.

Analysts said a private equity bid would require bank backing for ongoing balance-sheet funding for Northern Rock, and the price paid for the equity will be mainly contingent on this funding cost.

Flowers has the advantage of 3 billion euros ($4.28 billion) it is due to receive from the sale of Dutch merchant bank NIBC Holding NV to Iceland's Kaupthing Bank.

That deal is expected to close by the end of December.

However, Flowers is also still embroiled in attempting to back out of a deal to buy U.S. student lender Sallie Mae for $25 billion.

Sallie Mae, formally known as SLM Corp., sued an investor group headed by Flowers to force them to complete the deal at the original price or pay a $900 million breakup fee, and the dispute is currently before a court in the United States.

------

On the Net:

http://www.northernrock.co.uk

[Livyjr]

Stop, hey what's that sound

Buffalo Springfield

There's something happening here
What it is aint exactly clear
There's a man with a gun over there
Telling me I got to beware

I think it's time we stop, children
What's that sound
Everybody look what's goin down

There's battle lines being drawn
Nobody's right if everybody's wrong
Young people speakin their minds
Getting so much resistance from behind

It's time we stop,
Hey what's that sound
Everybody look what's going down

What a field day for the heat
A thousand people in the street
Singin songs and carrying signs
Mostly say hurray for our side

It's time we stop,
Hey what's that sound
Everybody look what's goin down

Paranoia strikes deep
Into your life it will creep
It starts when you're always afraid
Step out of line the man come and take you away

You better stop
Hey what's that sound
Everybody look what's going down

"Thousands call for swift end to Iraq war"

By JASON DEAREN, Associated Press Writer

28 October 2007

SAN FRANCISCO - Thousands of people called for a swift end to the war in Iraq as they marched through downtown on Saturday, chanting and carrying signs that read:

"Wall Street Gets Rich, Iraqis and GIs Die" or "Drop Tuition Not Bombs."

The streets were filled with thousands as labor union members, anti-war activists, clergy and others rallied near City Hall before marching to Dolores Park.

As part of the demonstration, protesters fell on Market Street as part of a "die in" to commemorate the thousands of American soldiers and Iraqi citizens who have died since the conflict began in March 2003.

The protest was the largest in a series of war protests taking place in New York, Los Angeles and other U.S. cities, organizers said.

No official head count was available.

Organizers of the event estimated about 30,000 people participated in San Francisco.

It appeared that more than 10,000 people attended the march.

"I got the sense that many people were at a demonstration for the first time," said Sarah Sloan, one of the event's organizers.

"That's something that's really changed."

"People have realized the right thing to do is to take to the streets."

In the shadow of the National Constitution Center and Independence Hall in Philadelphia, a few hundred protesters ranging from grade school-aged children to senior citizens called on President Bush to end funding for the war and bring troops home.

Marchers who braved severe wet weather during the walk of more than 30 blocks were met by people lining the sidewalks and clutching a long yellow ribbon over the final blocks before Independence Mall.

There, the rally opened with songs and prayers by descendants of Lenape Indians.

"Our signs are limp from the rain and the ground is soggy, but out spirits are high," said Bal Pinguel, of the American Friends Service Committee, one of the national sponsors of the event.

"The high price we are paying is the more than 3,800 troops who have been killed in the war in Iraq."

Vince Robbins, 51, of Mount Holly, N.J., said there needed to be more rallies and more outrage.

"Where's the outcry?"

"Where's the horror that almost 4,000 Americans have died in a foreign country that we invaded?" Robbins said.

"I'm almost as angry at the American people as I am the president."

"I think Americans have become apathetic and placid about the whole thing."

In New York, among the thousands marching down Broadway was a man carrying cardboard peace doves.

Some others dressed as prisoners, wearing the bright orange garb of Guantanamo Bay inmates and pushing a person in a cage.

Chicago police said about 5,000 people marched through city streets to protest the war.

Police spokeswoman JoAnn Taylor said three protesters were arrested before the march started.

They face charges including resisting arrest, failure to obey a police officer, criminal damage to property and aggravated battery to a police officer.

In Seattle, thousands of marchers were led by a small group of Iraq war veterans.

At Occidental Park, where the protesters rallied after the march, the American Friends Service Committee displayed scores of combat boots, one pair for each U.S. solider killed in Iraq.
___

Associated Press writer Bob Lentz in Philadelphia contributed to this report.

[Livyjr]

"Myanmar junta denounces US as 'bully'"

28 October 2007

YANGON, Myanmar - Myanmar's military government stepped up its propaganda campaign against the United States on Sunday, accusing Washington of inciting last month's pro-democracy demonstrations in hopes of installing a puppet government.

Demonstrations that began Aug. 19 over high prices for fuel and consumer goods grew into a broad-based movement for democratic reform that attracted tens of thousands of people in Yangon, the country's biggest city.

Troops crushed the protests by shooting at demonstrators on Sept. 26-27 and arresting almost 3,000 protesters, including Buddhist monks.

The government said 10 people were killed, but dissident groups put the toll at up to 200 and say thousands more people were arrested.

"Recent protests in the country were created by the loudmouthed bully, using the exiled dissidents and traitors together with communists, internal and external anti-government destructionists," said a commentary Sunday in the Myanmar-language Myanma Ahlin daily.

Myanmar state-media commonly uses the phrase "loudmouthed bully" without naming the nation it is referring to, but in a context that clearly points to the United States.

The author, who called himself Maung Pwint Lin — roughly meaning Mr. Frankly Speaking — said the U.S. had tried to revive the mass uprisings of 1988 in Myanmar in connivance with "exiled dissidents and internal axe-handles" in order to install a puppet government.

The commentary said the majority of people in Myanmar opposed the protests, but a gullible minority came out on the streets, instigated by foreign broadcasters such as the BBC and the U.S.-government funded Voice of America and Radio Free Asia.

The crackdown has ignited worldwide anger, and international demands have grown for the junta to release 62-year-old pro-democracy leader Aung San Suu Kyi, a Nobel peace laureate, who is under house arrest.

Te propaganda campaign includes billboard signs saying, "Those who rely on America are axe-handles."

Axe-handle is jargon used by the junta to mean traitors or puppets.

Junta commentaries in the past have referred to the U.S. as "a super power nation," but articles in the state-run media have recently begun naming the U.S. and accusing it of instigating unrest.

Sunday's commentary said that although the United Nations and the international community wanted the U.S. and its allies to withdraw from Afghanistan and Iraq, the "neocolonialists" refused to leave these countries even after they had installed puppet governments.

[Livyjr]

"Senators Say Mukasey's Words on Torture Raise Doubts"

Lorraine Woellert

28 October 2007

Oct. 28 (Bloomberg) -- Two Republican senators said Attorney General nominee Michael B. Mukasey's refusal to define so-called waterboarding as torture raised doubts about whether he should become the nation's top law enforcement official.

Senators John McCain and Lindsey Graham criticized Mukasey for not ruling out use of waterboarding, which simulates drowning, by U.S. operatives during interrogations.

"Anyone who says they don't know if waterboarding is torture or not has no experience in the conduct of warfare and national security,'' McCain, a former prisoner of war in Vietnam who is seeking his party's presidential nomination, said on ABC's "This Week'' program.

Graham, a former Air Force lawyer and a member the Judiciary Committee that is considering Mukasey's nomination, echoed McCain's remarks.

Mukasey was asked specifically about the legality of waterboarding and he "talked around it'' at his Judiciary Committee confirmation hearing, the South Carolina senator said on CBS's "Face the Nation'' program.

"If he does not believe that waterboarding is illegal, that really puts doubts in my mind.''

Both senators stopped short of saying they would vote against Mukasey's confirmation and demanded more information.

"I want to know his answer,'' McCain, of Arizona, said.

"Obviously, you judge a candidate for office or a nominee for office on the entire record, but this is a very important issue to me.''

Al-Qaeda Operatives

The U.S. has been criticized for some of the tactics used to get information from suspected terrorists.

Waterboarding became an issue two years ago after news reports said the Central Intelligence Agency used it to interrogate al-Qaeda operatives captured overseas.

During the procedure, a prisoner is strapped down and has water poured over his face to simulate drowning.

President George W. Bush has said the U.S. doesn't engage in torture, though the administration has refused to say whether waterboarding was ever used.

Senator Christopher Dodd, a candidate for the Democratic presidential nomination, announced today he would vote against Mukasey's confirmation.

Dodd, of Connecticut, said that he opposes Mukasey because of the nominee's testimony that the president of the United States is not necessarily bound by federal law.

"That would have to depend,'' Mukasey said in response to a question.

Mukasey's answer "disqualifies him from being the chief attorney for the United States,'' Dodd said in a written statement.

Dodd said Mukasey, if confirmed, would run the Justice Department as a "political wing of the White House.''

Other Senate Democrats said last week that they might not support Mukasey's confirmation because of his reply about waterboarding in interrogations.

He told the Judiciary Committee that he was "unfamiliar with what's involved in the technique'' and wouldn't say whether he viewed it as unconstitutional.

Mukasey, 66, was nominated by Bush's nominee to succeed Alberto Gonzales.

Senate Majority Leader Harry Reid of Nevada, who originally praised Mukasey after the nomination was announced last month, said after Mukasey's Oct. 17 hearing that his support for the nominee is in doubt.

Reid and Dick Durbin of Illinois, the Senate's No. 2 Democrat, said they want Mukasey to clarify his position on torture.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

[Livyjr]

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

After looking at the set of photographs which accompanied the AP story in yesterday's on-line TU entitled "Feds strike ID deal over NY licenses" by DEVLIN BARRETT, Associated Press, last updated 5:12 p.m., Saturday, October 27, 2007, Spitzer looked anything but defeated ....

And in fact, I would say that Spitzer looked in that set of photographs like THE MASTER OF THE UNIVERSE ....

A "WORLD LEADER" in his own right, thanks to Chertoff's CAPITULATION to Spitzer yesterday on the specific issue of Spitzer making New York State into a harborage and safe haven for foreign nationals entering the United States of America illegally ....

Which CAPITULATION by Chertoff now sets New York State out from the other states of the former union as being a separate "NATION-STATE" on the world stage in its own right on a direct par with such other nation-states as Mexico, Mynmar, Sri Lanka, Indonesia, Thailand, China, South Korea, Germany, France and Saipan in the Mariana Islands ...

Eliot Spitzer has in fact scored a WORLD-CLASS COUP here ....

He has publicly won the right from the federal government of American President George W. Bush to advertise and make New York State into a safe haven for foreign nationals entering the soil of the United States of America illegally ....

AND THERE IS NOTHING AT ALL THAT MICHAEL CHERTOFF AND THE VAUNTED HOMELAND SECURITY OF THE UNITED STATES OF AMERICA CAN DO ABOUT IT!

ELIOT SPITZER HAS MADE FEDERAL IMMIGRATION LAW INOPERATIVE HERE IN NEW YORK WITH RESPECT TO HARBORING ILLEGAL ALIENS IN THE USA, JUST AS HE ADVERTISED TO ALL THE CANDID WORLD THAT HE WOULD ....

AND THANKS TO THE MIRACLE OF THE INTERNET, THE ENTIRE CANDID WORLD GOT TO SEE PHOTOS OF SPITZER, THE DOMINANT ONE, THE MASTER OF HIMSELF AND THE SITUATION, NEXT TO A COWED, WEAK, HUMBLE AND SUBMISSIVE MICHAEL CHERTOFF, BALD PATE SWEATING, WITH HIS HANDS IN THE AIR IN SURRENDER TO SPITZER, IN THE PAGES OF THE ELECTRONIC ALBANY TIMES UNION JUST YESTERDAY ....

And so ....

Talk about a picture being worth a thousand words ....

Those pictures spoke volumes to all the candid world about the true relationship between the ASCENDENT WORLD LEADER Eliot Spitzer, and the DECLINING FORTUNES of present-President George W. Bush, who is more and more weak and powerless with each passing day, as he is on his way out the door of the White House in Washington, headed to the political obscurity which awaits him as a failed and incompetent world leader ...

Who had Michael Chertoff make a very public admission to the candid world on behalf of Bush that Bush's HOMELAND SECURITY DEPARTMENT under Chertoff is ABSOLUTELY WORTHLESS to us here in America, because its DIRECTOR, Chertoff, has admitted that he is powerless against the onslaught of illegal immigrants coming into this country ....

SO SURRENDER!

PUT YOUR HANDS IN THE AIR, MICHEAL, LIKE YOU DID YESTERDAY, AND SURRENDER!

And since you did yesterday, today, you should follow that up by resigning ....

IF YOU CAN'T STOP ELIOT SPITZER FROM HARBORING FOREIGN NATIONALS IN THE USA ILLEGALLY, THEN YOU ARE WORTHLESS TO US HERE IN AMERICA ....

SO WE DON'T NEED YOU ...

And so ...

Posted by: John Galt | October 28, 2007 6:21 PM[/size]

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

D. Alien Smuggling Felonies under Immigration and Nationality Act Section 274(a)

Immigration and Nationality Act (INA) section 274 (Bringing in and Harboring Illegal Aliens) encompasses a range of crimes associated with illegal immigration under the rubric of "alien smuggling."

The four major crimes under section 274(a) of INA ('bringing in,' transporting, harboring, and 'inducing' illegal aliens) are described separately below.

Together they form a comprehensive definition of the federal crime of alien smuggling that prosecutors and police can use to attack the economic basis of illegal alien settlement in local jurisdictions, as well as related support activities, from the conspiracy and preparation stages in the sending country to illegal operations within the United States.

It is well established that "any person" is subject to criminal liability for section 274 felonies and that the term is to be construed broadly.

Section 274 clearly reaches public officials and government employees.

The courts have rejected claims that section 274 felonies apply only to professional smugglers or operators of sweatshops.

The crime typically thought of as alien smuggling, "bringing" illegal aliens to the United States, makes it a felony for any person to (i) knowingly bring to or attempt to bring (ii) an alien, regardless of immigration status, (iii) to the United States "in any manner whatsoever" (iv) at any place other than a designated port of entry.

A separate misdemeanor offense criminalizes bringing or attempting to bring an alien to the United States "knowing or in reckless disregard of the fact that an alien has not received prior official authorization to come to enter or reside in the United States" regardless of where or how the alien entered U.S. territory.

First, section 274(a)(1)(A)(iii) of INA makes it a felony for any person to (i) "conceal, harbor, or shelter from detection" (ii) any alien (iii) in any place, including any building or means of transportation, (iv) knowing or in reckless disregard of the fact that the alien has come to, entered, or remained in the U.S. in violation of law."

"Harboring" includes any conduct that tends to substantially help an alien to remain in the United States unlawfully.

There is no requirement that the felonious conduct be part of a process of smuggling aliens into United States or directly connected with an alien's illegal entry.

Providing housing for illegal aliens, assistance in obtaining employment, coaching aliens to claim legal status or to use a false name, and attempts to prevent detection by the authorities have all been held to constitute harboring.

The government does not need to show intent to evade federal immigration enforcement officials, but only that the defendant's conduct "tended directly or substantially to facilitate an alien's remaining in the United States in violation of law."

Taking actions that "facilitate" an alien's employment have been held to constitute acting "in reckless disregard" of a worker's illegal status.

Criminal liability for harboring or sheltering could arise from acceptance of a Mexican matricula consular - which, presented without proper immigration documents, is prima facie evidence of illegal alien status - by a local government agency that, for example, provided housing or utility assistance, made referrals to a public or private job assistance program, or detained matricula presenters for violation of city ordinances and released them without verifying their immigration status with the U.S. Immigration and Customs Enforcement.

Second, section 274(a)(1)(A)(ii) of INA makes it a felony for any person to (i) transport, move, or attempt to move (ii) an alien (iii) within the U.S. (iv) by means of transportation or otherwise (v) knowingly or recklessly disregarding the fact that the alien has come to, entered, or remains in violation of law and (vi) "in furtherance of such violation."

Intent to further the alien's presence in the U.S. is a required element, but may be established by indirect evidence.

An offer of employment plus voluntary transportation, or payment for transportation plus lodging or other arrangements, assistance in loading aliens into vehicles driven by other defendants, or providing one leg of an illegal alien's travel within the U.S. will satisfy the furtherance element.

Third, section 274(a)(1)(A)(iv) of INA makes it a felony for any person to (i) encourage or induce(ii) an alien (iii) to come to, enter or reside in the U.S. (iv) knowing or recklessly disregarding the fact that the alien's entry or residence is in violation of law.

This statute is intended to criminalize a broad range of activities that assist illegal aliens in the United States.

"Encourage" means to knowingly instigate, help, or advise.

"Induce" means to knowingly bring on or about, to effect, cause, or influence an act or course of conduct.

"Encouraging" includes actions that permit illegal aliens "to be more confident that they could continue to reside with impunity in the United States," or actions that offer illegal aliens "a chance to stand equally with all other American citizens."

To prove that an official or employee of a Georgia state or local government "encouraged or induced" illegal Mexican aliens, all that a prosecuting party needs to establish is that such persons knowingly helped or advised the aliens.

U.S. v. He, 245 F.3d 954, at 957-59 (7th Cir. 2001).

Specific actions found to constitute encouraging include counseling illegal aliens to continue working in the U.S. or assisting them to complete applications with false statements or obvious errors or omissions.

The fact that the illegal alien may be a refugee fleeing persecution is not a defense to this felony, since U.S. law and the United Nations Protocol on Refugees both require that an alien claiming asylum must report to immigration authorities "without delay" upon entry to the U.S.

Fourth, it is a felony to conspire to commit any of the bringing in, harboring, sheltering, transporting, or encouraging felonies under section 274(a)(1)(A) of INA.

Indictments for section 274(a) of INA smuggling crimes can include conspiracy as a separate offense.

The three elements of criminal conspiracy are (i) an agreement by two or more persons to engage in illegal activity, (ii) an overt act by at least one person taken in furtherance of the agreement, and (iii) intent to commit the illegal activity.

Even if the conspiracy fails to achieve its aim, it is often punished separately and as severely as the single offender crime, because a group having some illegal purpose is more dangerous than an individual who has the same purpose.

The distinction between principals and accessories in alien smuggling crimes has been eliminated by the section 274(a)(1) of INA aiding and abetting statute.

Aiding and abetting an alien smuggling offense may apply to conduct before or after the alien has entered the U.S.

The statute allows conviction for an alien smuggling felony even if not all of the elements of the alien smuggling crime are proven.

Indictments for both an alien smuggling crime and for aiding and abetting that crime are permissible.

Defendants convicted of aiding and abetting or conspiracy to commit section 274(a)(1) of INA alien smuggling felonies are subject to the same fines and prison sentences imposed for the primary offenses.

Persons indicted for section 274(a) of INA criminal alien smuggling offenses may also be indicted under the generic federal aiding and abetting 124 or accessory after the fact statutes.

Generic aiding and abetting is not a lesser-included offense for a conviction under section 274(a)of INA, but is implicit in all alien smuggling indictments.

No policy or humanitarian argument has been identified by the courts that would negate the criminal mens rea of reckless disregard for the fact that aliens are present in the United States in violation of law.

Neither sanctuary nor humanitarian concern is a valid defense to either civil or criminal violations of the Immigration and Nationality Act.

It is illegal for non-profit, religious, or civic organizations to knowingly assist in the commission of an alien smuggling felony, regardless of claims that their members' convictions may require them to assist aliens.

The First Amendment does not protect actions that aid illegal aliens to remain in the United States.

Illegal aliens are not a suspect class entitled to Fourteenth Amendment-based strict scrutiny of any discriminatory classification based on that status, nor are they defined by an immutable characteristic, since their status is the product of conscious unlawful action.

Identity is not a constitutionally protected privacy right, and an illegal alien has no expectation of privacy from another person's knowledge of his or her immigration status.

University of the District of Columbia Law Review, Fall, 2004

8 D.C. L. Rev. 83 (32098 words)

IN THE AFTERMATH OF SEPTEMBER 11: DEFENDING CIVIL LIBERTIES IN THE NATION’S CAPITAL: The Treatment of Immigrants: THE CHIMERA AND THE COP: LOCAL ENFORCEMENT OF FEDERAL IMMIGRATION LAW

Michael M. Hethmon, Staff Attorney, Federation for American Immigration Reform (FAIR). J.D., University of Maryland School of Law, M.I.M., Thunderbird Graduate School of International Management, B.A., UCLA.

Posted by: John Galt | October 25, 2007 5:09 PM

http://www.nydailynews.com/blogs/dailypoli...he_day_132.html

"Chertoff consulted on license plan - Gov. Spitzer said conversations with his old friend, the U.S. Homeland Security chief, spurred proposal"

By MICHAEL GORMLEY, Associated Press

First published: Monday, October 29, 2007

ALBANY -- Gov. Eliot Spitzer said Sunday that his new plan to make it easier for illegal immigrants to get driver's licenses while creating one of the most secure licenses in the nation is the result of conversations with an old friend, U.S. Homeland Security Secretary Michael Chertoff.

"There is enormous support from those who understand these are the objectives and these have been the objectives," Spitzer told The Associated Press.

"There is also opposition from fringe on the other side who simply don't want to give the immigrant community any rights."

Early reaction to the new plan found that it didn't satisfy Spitzer's critics and it may have angered immigrant advocates who supported Spitzer's original plan.

New York will create three types of driver's licenses: a traditional state license; an "enhanced driver's license" that will be as secure as a passport; and a license that meets new federal standards of the Real ID Act -- a national and secure identification that would make it much harder for terrorists to get licenses.

But the license will be marked that it is not proof of legal residency in the United States, and it could lead police and officials to suspect the holder may be an illegal immigrant.

"It's about time that Gov. Spitzer is understanding of the fact that giving licenses without the requirement of a Social Security number is flawed," said Republican state Sen. Martin Golden of Brooklyn.

But he said the Senate's Republican majority will still seek to alter Spitzer's plan to make sure illegal immigrants can't get any version of the license.

Spitzer said he has known Chertoff for more than 10 years, going back to Spitzer's life as a prosecutor and before, when Chertoff's wife went to Harvard Law School with Spitzer.

Spitzer said long, collegial conversations with Chertoff over several weeks led to the change in policy.

[Livyjr]

"10 tribal sheiks kidnapped in Baghdad"

By KIM GAMEL, Associated Press

Last updated: 7:13 p.m., Sunday, October 28, 2007

BAGHDAD -- Gunmen in Baghdad snatched 10 Sunni and Shiite tribal sheiks from their cars Sunday as they were heading home to Diyala province after talks with the government on fighting al-Qaida, and at least one was later found shot to death.

The bold daylight kidnapping came as the top U.S. commander in Iraq said the threat from the terror network has been "significantly reduced" in the capital.

A suicide car bomber, meanwhile, struck a busy commercial area in the oil-rich, northern city of Kirkuk, killing at least eight people and wounding 26, police said.

A new general assumed control of the region north of Baghdad, acknowledging that violence remains high but expressing confidence that the military has al-Qaida on the run there as well.

The two cars carrying the sheiks -- seven Sunnis and three Shiites -- were ambushed in Baghdad's predominantly Shiite neighborhood of Shaab at about 3:30 p.m., police officials said.

The sheiks were returning to Diyala province after attending a meeting with the Shiite-dominated government's adviser for tribal affairs to discuss coordinating efforts against al-Qaida in Iraq, police and a relative said.

Police found the bullet-riddled body of one of the Sunni sheiks, Mishaan Hilan, about 50 yards away from where the ambush took place, an officer said, adding that the victim was identified after his cell phone was found on him.

A relative of one of the abducted Shiite sheiks blamed Sunni extremists and said the attackers picked a Shiite neighborhood to "create strife between Shiite and Sunni tribes that have united against al-Qaida in the area."

But, Jassim Zeidan al-Anbaqi said, "this will not happen."

The well-planned attack was the latest to target anti-al-Qaida tribal leaders and other officials in an apparent bid to intimidate them from joining the U.S.-sponsored grass roots strategy that the military says has contributed to a recent drop in violence.

Gen. David Petraeus, the top U.S. commander in Iraq, said Sunday that the threat from al-Qaida in several former strongholds in Baghdad has been "significantly reduced" but the group remains "a very dangerous and very lethal enemy."

He singled out success in what had been some of the most volatile Sunni neighborhoods in Baghdad, including Ghazaliyah, Amariyah, Azamiyah and Dora.

"Having said that ... al-Qaida remains a very dangerous and very lethal enemy of Iraq," he said.

"We must maintain contact with them and not allow them to establish sanctuaries or re-establish sanctuaries in places where they were before."

Petraeus said the reduced threat from al-Qaida had given way to nonsectarian crimes -- kidnapping, corruption in the oil industry and extortion.

"As the terrible extremist threat of al-Qaida has been reduced somewhat, there is in some Iraqi neighborhoods actually a focus on crime and on extortion that has been ongoing and kidnapping cells and what is almost a mafia-like presence in certain areas," he said.

Petraeus made his comments after a transition ceremony as the 1st Armored Division, which is based in Wiesbaden, Germany, assumed command of northern Iraq from the Hawaii-based 25th Infantry Division at Camp Speicher, a U.S. base near Saddam Hussein's hometown of Tikrit, 80 miles north of Baghdad.

The new commander for the region, Maj. Gen. Mark Hertling, said the number of attacks so far in October had dropped by more than 300 from last month, although he did not provide more specific figures.

"The levels are still high in some of the northern provinces," he said.

"But while they're still high ... they have been decreasing significantly."

"We are in, I believe, a pursuit operation with al-Qaida," he said, adding that attacks were more focused on local civilians and Iraqi security forces.

"They are targeting the concerned local citizens, the police stations and some of the gathering places of sheiks ... specifically to try and deter the Iraqi people from moving forward."

In all, at least 35 people were killed or found dead across the nation, including the decomposing bodies of 12 Shiites found near the Diyala provincial capital of Baqouba, an army officer said.

An explosives-laden car also exploded near a market in Baghdad's northern Shiite district of Kazimiyah, killing at least two civilians and wounding 10, according to local police

The suicide bombing in Kirkuk, 80 miles north of Baghdad, struck a mainly Kurdish area in the city, which has seen a rise in ethnic tensions as Iraq's Kurds try to strengthen their presence there as a prelude to annexing it to their nearby self-rule region.

The city's Arab and Turkomen residents dispute the Kurdish claim.

Several cars and nearby stores and restaurants were set on fire and black smoke rose from the area as panicked people ran over bloodstained sidewalks.

On a separate subject, Petraeus offered some personal reflection on the plight of Sultan Hashim al-Tai, a Saddam Hussein-era defense minister who faces the death penalty after his conviction for his role in the so-called Anfal campaign that killed tens of thousands of Kurds.

The executions of al-Tai -- along with Saddam's cousin "Chemical Ali" al-Majid and Hussein Rashid Mohammed, former deputy operations director for the Iraqi military -- have been delayed as Iraqi politicians and legal experts wrangle over the refusal of President Jalal Talabani, himself a Kurd, to sign the order.

Al-Tai, a Sunni Arab from the northern city of Mosul, negotiated the cease-fire than ended the 1991 Gulf War, when a U.S.-led coalition drove Iraqi forces from Kuwait.

He also surrendered to U.S. forces in September 2003 after weeks of negotiations.

His defense lawyers claimed the Americans had promised al-Tai "protection and good treatment" before he turned himself in.

Petraeus, who was then commander of the 101st Airborne division that oversaw the surrender, denied reports that he had promised al-Tai immunity.

"We were very hot on his heels," he said.

"So we put the word out to his family through interlocutors that ... I would receive his surrender in an honorable manner and convey him to the central authorities and that's basically what we did."

"And I did treat him honorably."

Petraeus said they brought al-Tai's family to visit him and he said he personally flew al-Tai in his helicopter to Mosul and spent about an hour with him as they waited for a C-130 transport plane to fly him to Baghdad.

"I actually visited him there one time."

"Another time we took his some family members and an imam to see him," he recalled.

"But the bottom line is that if the appropriate Iraqi process is followed then we will respect that process."

------

Associated Press writer Sameer N. Yacoub contributed to this story.

[Livyjr]

"Army to review Iraq contracts for fraud"

By RICHARD LARDNER, Associated Press

Last updated: 1:22 a.m., Saturday, October 27, 2007

WASHINGTON -- A team of specially trained investigators will hunker down in an Army office north of Detroit on Monday to begin poring over hundreds of Iraq war contracts in search for rigged awards.

This team of 10 auditors, criminal investigators and acquisition experts are starting with a sampling of the roughly 6,000 contracts worth $2.8 billion issued by an Army office in Kuwait that service officials have identified as a hub of corruption.

The office, located at Camp Arifjan, buys gear and supplies to support U.S. troops as they move in and out of Iraq.

The pace of that operation has exploded since the beginning of the Iraq war in March 2003.

Based on what the team finds, the probe may expand and the number of Army military and civilian employees accused of accepting bribes and kickbacks could grow, U.S. officials told The Associated Press.

Nearly two dozen have been charged so far.

Signs of trouble include contracts continually awarded to vendors without the usual competition and awards that were competed but went to the bidder with the highest price rather than the lowest.

A mismatch between the original product to be purchased and what was actually delivered is another red flag.

"Is there anything in there that might indicate to us that there might be some potential fraudulent activity?" Jeffrey Parsons, director of contracting at Army Materiel Command, said in an AP interview.

"If there are patterns that we start to identify, then we're going to do further review."

Contracts with significant problems will be forwarded to the Army Audit Agency and the Army Criminal Investigation Command.

If there's credible evidence of wrongdoing, the FBI and prosecutors from the U.S. Justice Department are called in.

In Warren, Mich., home to a large Army acquisition center, the contracting review team will examine 314 of the Kuwait contracts, each worth more than $25,000 and issued between 2003 and 2006.

In Kuwait, a separate team of 10 at Camp Arifjan is already going through 339 contracts of lesser value and awarded during the same time period, according to Army Materiel Command at Fort Belvoir, Va.

Both reviews are to be finished before the end of the year.

A probe of 2007 contracts out of Kuwait has been completed; investigators found numerous problems with the office, including inadequate staffing and oversight, high staff turnover, and poor record-keeping.

In the midst of those shortcomings came billions of dollars in war funding, creating an environment ripe for misconduct and malfeasance.

The teams in Michigan and Kuwait will go through paper records and also use data-mining tools to electronically search data stored on computers.

"Do we have contractors with different names but the same address?" Parsons said.

"That would cause some suspicion."

Tips from individuals familiar with the contracts are another tool for finding flawed awards, he said.

The contract review process isn't foolproof, however.

If a contracting officer and a vendor are determined to break the rules for personal gain, it can be difficult to pinpoint corruption, according to Parsons, who also is serving as senior adviser to a contracting task force recently established by Army Secretary Pete Geren.

"You can have a contract file that is pristine -- all the documentation is there," Parsons said.

"Just going through the contract files doesn't necessarily give you 100 percent assurance that something else might not have been going on."

The efforts in Michigan and at Camp Arifjan are parts of a broader inquiry being conducted by the task force, which was formed by Geren following a spike in the number of criminal cases related to the acquisition of gear and supplies for U.S. troops.

Many of the cases stemmed from fraudulent or mismanaged contracts issued by the Kuwait office, prompting Geren to call for a detailed probe of the work done there.

The Army Criminal Investigation Command has 83 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, according to spokesman Chris Grey.

Grey said 23 individuals have been charged with contract fraud and more than $15 million in bribes has changed hands.

One of the largest cases involves Army Maj. John Cockerham, who is accused of bribery, conspiracy, money laundering and obstruction.

Prosecutors allege Cockerham, along with his wife and sister, took at least $9.6 million in bribes in 2004 and 2005 while Cockerham was a contract officer stationed in Kuwait.

From the 6,000 Kuwait contracts flowed 18,000 transactions - numerous orders could be placed on a single contract - for items such as bottled water, laundry services, barracks, food, transportation, and warehouse services.

In 2005, Lt. Gens. Steven Whitcomb and John Vines, then both top Army commanders in Iraq, became so concerned over allegations of corrupt contracting that the Criminal Investigation Command established field offices in Iraq and Kuwait.

Deceiving the checks and balances in the federal procurement system takes careful planning, Frank Anderson, president of the Defense Acquisition University at Fort Belvoir, said in a separate interview.

"You had some smart bad apples," said Anderson, who leads the organization that trains the military's acquisition officials.

"It had to be someone who understood the business well enough to figure out how to get around the system."