AND AS THE LOOTING OF THE UNITED STATES TREASURY PROCEEDS APACE UNDER BARACK OBAMA AND THE democrat REGIME THAT HAS TAKEN CONTROL OF OUR GOVERNMENT HERE IN WHAT USED TO BE OUR AMERICA, WE HAVE ....

"Despite new bailout, banks likely need more money - Obama's rescue overhaul likely isn't large enough to solve banks' woes"

By STEVENSON JACOBS, Associated Press

Last updated: 5:36 p.m., Tuesday, February 10, 2009

WASHINGTON -- The banks are getting another dose of bailout money.

It's probably not enough.

That seems to be the consensus among investors and financial analysts after the Obama administration unveiled its highly anticipated bank bailout overhaul Tuesday.

Even with the new measures, experts warned that growing bank losses mean the administration will almost certainly need more money -- likely hundreds of billions or more -- to finally unlock the flow of credit and revive the economy.

"They will definitely have to go back for more money," said Christopher Whalen, managing director of Institutional Risk Analytics.

"There's doubt that this plan isn't enough."

The revamped bailout plan is sweeping in scope but light on specifics.

In announcing the plan, Treasury Secretary Timothy Geithner pledged to "fundamentally reshape" the bailout program to "get credit flowing again to businesses and families."

The plan relies on a complex approach, including more capital injections for banks and a fivefold increase in bailout funding to $100 billion.

An extra $100 billion in bailout funding could unlock up to $1 trillion in lending through the Fed's support program, known as the Term Asset-Backed Securities Loan Facility.

The administration also said it would create a public-private partnership to encourage investors to buy banks' toxic assets.

Wall Street was hardly convinced.

Stocks plunged as the plan was announced -- a move analysts viewed as investors' uneasiness over scant details of how the new steps could improve upon the Bush administration's stalled rescue effort, called the Troubled Asset Relief Program, or TARP.

Then there's the matter of size.

Banks have at least another $1 trillion in losses to come, experts believe, due to souring mortgage debt and other risky assets on their books.

Before banks can start lending, they have to offload these assets -- or take on huge sums of fresh capital to dilute their effect.

But less than half of the $700 billion government bailout is left for the Obama administration to spend.

That raises questions about how far the government plans to go to prop up ailing banks.

"The only way to do that is to spend more money, and you have to ask where it's going to come from," said Edward Yardeni, an independent market analyst.

He said $400 billion or more -- on top of the $700 billion bailout -- might be needed to offset future bank losses.

That would put taxpayers on the hook for more than $1 trillion.

"Presumably, it will all be financed by the government, because no one else wants to play that role," Yardeni said.

The revamped rescue package rolled out Tuesday raised more questions than answers.

The Fed said it would expand the size of a key lending program to as much as $1 trillion from $200 billion.

The program, which has yet to get off the ground, is designed to boost resources for consumer credit and small business loans.

The Fed said the program would be expanded to cover the troubled commercial real estate market and certain residential mortgages.

Implicit in the Treasury's plan is that the government would inject more capital into the banks as needed.

Geithner didn't say how much more money the government was prepared to pump into the banks.

But the language of the plan suggests that roughly $200 billion of the $350 billion in remaining bailout money would be available for capital injections for banks.

Getting more funds beyond that would require legislative approval.

Experts say that would be a tough prospect for the Obama administration, given the bruising battle to get Republican approval for an $800-billion-plus economic stimulus package.

Bert Ely, a banking analyst in Alexandria, Va., predicted the government would use the new bailout plan "to buy time" before going back to Congress and asking for more money later.

"They're trying to wait as long as possible before asking for additional TARP money because the political atmosphere is so poisoned right now," Ely said.

Asked at a news conference Monday night about the prospect of requesting more money, President Barack Obama didn't rule it out.

"We don't know yet whether we're going to need additional money or how much additional money we'll need until we've seen how successful we are at restoring a sense of confidence," Obama told reporters.

For many banks, speed is critical.

Even assets once considered good are starting to sour as the recession sends more Americans into unemployment and forces them to default on home loans, car loans and credit card debt.

In a report Monday, RBC Capital Markets predicted that up to 1,000 U.S. banks -- or roughly one in eight -- could fail over the next several years.

That's more than three times RBC's earlier estimate. Barry Ritholtz, a financial analyst and author of the forthcoming book "Bailout Nation," said the government must decide "if it wants to save banks or if it wants to save the banking system."

He has proposed nationalizing insolvent banks, wiping out their shareholders and sparing taxpayers from having to support the weakest institutions.

"Otherwise, you have to convince the taxpayer why they should foot the bill," Ritholtz said.

"And these dollar amounts are getting so huge that it's amazing."

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AP Business Writer Martin Crutsinger contributed to this report.

"Obama plan holds off on foreclosure rescue details - Obama pledges plan to combat foreclosures within weeks, but Geithner holds off on details"

By ALAN ZIBEL, Associated Press

Last updated: 5:56 p.m., Tuesday, February 10, 2009

WASHINGTON -- To those on the front lines of the housing crisis, the Obama administration's pledge to spend $50 billion to combat foreclosures was a welcome change in the government's approach.

But the actual plan won't be unveiled for at least a week and might not be enough to prevent the housing market's troubles from mushrooming further.

Housing counselors say the government's response to a huge surge in defaults and foreclosures over the past two years has been a failure.

They blame former President George W. Bush's administration for sticking with voluntary programs led by the mortgage industry and not committing public dollars to foreclosure prevention.

They are hoping President Barack Obama will have more success, especially as foreclosures continue to grow.

A Credit Suisse report published late last year forecast up to 10 million foreclosures by 2012, depending on the severity of the recession.

"The question is: Can we work to design a system where the banks recognize it's in their interest to avoid foreclosure?" Obama said Tuesday in Fort Myers, Fla., which has been devastated by foreclosures and sinking home prices.

Obama said he would announce his housing strategy in the coming weeks.

Meanwhile, home prices are not expected to hit bottom until year-end at the earliest.

A report published this month by Moody's Economy.com projected that home prices will plummet by at least 50 percent in more than 30 metro areas in California, Florida and Nevada by the time the housing bust ends.

More than 60 percent of all metro areas nationally are expected to see prices fall by 10 percent or more, the study found.

While Treasury Secretary Timothy Geithner's revised plan to stabilize the financial system offered few details about housing on Tuesday, consumer advocates said they were still confident that the forthcoming proposal would offer far-reaching help to borrowers.

"It's a tough problem," said Michael Calhoun, president of the Durham N.C.-based Center for Responsible Lending.

"They want to make sure to get it right."

Less patient was Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

He issued a statement criticizing the administration for taking too long to put together a housing plan.

Frank also said he fears that $50 billion in funding "understates the amount that we will need" and called on lenders to halt foreclosures as the government develops its plans.

The Obama administration is expected to back a push in Congress -- opposed by the mortgage industry -- to let bankruptcy judges alter the terms of primary home loans.

Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so.

The mortgage industry argues that this prohibition allows lenders to charge lower rates.

With limited resources, government aid should be targeted to the parts of the country that have been most severely crushed by the foreclosure crisis, said Deutsche Bank analyst Karen Weaver.

Of the $50 billion, she said, "It's not a huge amount of money."

The administration has several ways to spend money on foreclosure prevention.

It could follow a proposal by Sheila Bair, chairman of the Federal Deposit Insurance Corp., who has outlined a way for the government to give banks an incentive to reduce borrowers' payments.

Under that idea, the government would absorb some of the losses should the modified loans fail again.

Or, the government could direct federal dollars to loan modifications.

If a lender, for example, agreed to reduce a borrower's rate, the government could subsidize another interest rate drop.

But complicating matters, trillions of dollars in mortgages were divided up and sold as securities to investors around the world.

"As long as we wait for these investors to do the right thing or somehow play nice, then we're just going to see more and more homeowners enter foreclosure," said Michael van Zalingen, director of homeownership services at Neighborhood Housing Services of Chicago.

Still, consumer groups that felt shut out under the Bush administration say the Obama administration has welcomed their ideas.

John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group in Washington, was scheduled to meet Wednesday with Geithner and Obama's housing secretary, Shaun Donovan.

He has been pressing the administration to buy distressed loans in bulk so they can be refinanced at lower rates.

"The flavor has changed, and that's encouraging, but we need the meat on the bone here," Taylor said.

Meanwhile, with the recession worsening and layoffs mounting, time is running out for many borrowers.

Elliott Clark, 58, and his wife, Aquilla, 45, are almost four months behind on the mortgage on their three-bedroom house in Kansas City.

Clark lost his job at a warehouse last fall.

Because of a dispute with a prior employer, he says he was ruled ineligible for unemployment.

His family has had to rely on his military disability payments and his wife's paycheck from a cleaning service.

It's not enough to cover their $600-a-month mortgage.

They owe more than $3,400.

A local nonprofit has helped find them a house to rent if they lose their house.

But Clark says the family doesn't have money to move and is in danger of having his car repossessed.

"No matter what, I'm going to be stuck between a rock and a hard place, unless they say the banks can't foreclose on anyone for a while until things get better," he said.

"I keep praying."

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Associated Press Writer David Twiddy contributed to this report from Kansas City.

"$3 trillion! _ Senate, Fed, Treasury attack crisis - Senate, Fed, Obama administration team up for unprecedented $3 trillion attack on recession"

By DAVID ESPO, Associated Press

Last updated: 7:16 p.m., Tuesday, February 10, 2009

WASHINGTON -- On a single day filled with staggering sums, the Obama administration, Federal Reserve and Senate attacked the deepening economic crisis Tuesday with actions that could throw as much as $3 trillion more in government and private funds into the fight against frozen credit markets and rising joblessness.

"It's gone deep."

"It's gotten worse," President Barack Obama said of the recession at a campaign-style appearance in Ft. Myers, Fla., where unemployment has reached double digits.

"The situation we face could not be more serious."

If any more emphasis were needed, Wall Street investors sent stocks plunging, objecting that new rescue details from the government were too sparse despite the huge numbers.

The Dow Jones industrials dropped 382 points.

The president spoke shortly after Senate passage of an $838 billion emergency economic stimulus bill cleared the way for talks with the House on a final compromise.

In a display of urgency, White House chief of staff Rahm Emanuel traveled to the Capitol in mid-afternoon for meetings with Democratic leaders as well as moderate senators whose views -- and votes -- will be key to any compromise.

Separately, Treasury Secretary Timothy Geithner outlined plans for spending much of the $350 billion in financial bailout money recently cleared by Congress, and the Federal Reserve announced it would commit up to $1 trillion to make loans more widely available to consumers.

Taken together, the events marked at least a political watershed if not an economic turning point -- the day the three-week old administration and its congressional allies assumed full control of the struggle against the worst economic crisis since the Great Depression.

The vote was 61-37 in the Senate to pass the stimulus, with moderate Republican Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania joining Democrats in support.

Even before the vote, Majority Leader Harry Reid and House Speaker Nancy Pelosi met with Obama at the White House to go over the task ahead.

The Democratic leaders have long pledged to have legislation on Obama's desk by mid-month, and Reid told reporters he hopes for at least a first cut at a deal within 24 hours.

"We need to get this done as fast as we can," he declared.

The political urgency bumped up against other obstacles, though.

The House measure includes roughly $70 billion more spending than the Senate's, but it lacks Senate-approved tax breaks totaling more than $100 billion for new car buyers, home purchasers and upper middle income families.

In a further obstacle, Collins and other Senate moderates -- in both parties -- signaled they will work to hold the cost of the final bill below $800 billion.

That's less than the $820 billion in spending and tax cuts combined in the bill that cleared the House as well as the $838 billion legislation the Senate wrote.

Additionally, Obama has campaigned particularly energetically to include funds for school construction in the bill.

At the insistence of Collins, the Senate measure omitted money for that purpose, and it wasn't clear whether she had eased her position on the presidential priority.

Whatever the cost of the final bill, it will add to the deficit, and that created another little-mentioned dilemma for the administration and Democrats.

Future spending bills on domestic programs or tax cuts will probably have a far more difficult time gaining the support necessary to pass without offsetting spending cuts or tax increases that would hold the deficit level.

Obama has campaigned energetically in recent days for passage of the stimulus bill, at the White House, on visits to other federal agencies, in his trip to Florida and a similar appearance Monday in a high-unemployment area of Indiana.

Reid depicted a president deeply involved in the compromise effort as well.

He said Obama had "certain set ideas as to what he thinks should be done," but declined to elaborate.

The president set the context for the unfolding events Monday night at his first presidential news conference, when he said, "With the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back into life."

Geithner outlined some of the details, although he and aides left numerous questions unanswered.

"We have to both jump-start job creation and private investment, and we must get credit flowing again to businesses and families," Geithner said at a news conference.

He pledged to "fundamentally reshape" the financial industry bailout that began last fall under the Bush administration, and he announced that at least $50 billion would be spent helping homeowners facing foreclosure.

He also said new steps would hold banks accountable for their use of bailout funds.

One element of the administration's approach calls for using as much as $100 billion in federal bailout funds to give banks, hedge funds or other investors the incentive to purchase so-called toxic assets carried on the books of other financial institutions.

The goal is to return struggling banks to health so they can resume making loans, and an administration fact sheet said the amount of government and private funds combined will be "on an initial scale of up to $500 billion, with the potential to expand up to $1 trillion."

Separately, the Federal Reserve announced it would commit up to $1 trillion to purchase bonds or other assets backed by consumer loans.

The Treasury will guarantee a portion of the Fed investment by putting up $100 billion, an increase from a $20 billion commitment that Bush administration had announced.

The goal of this program is to make it easier for consumers to buy cars or obtain student loans, small business loans or other types of credit that have dried up in recent months.

Separately, Geithner said $50 billion in bailout funds would be dedicated to an effort to prevent mortgage foreclosure of "owner-occupied middle class homes."

Few details were provided.

Obama said in Florida, "I'm going to be personally making an announcement in the next couple weeks what our overall housing strategy is going to be."

"... We've got to provide some direct relief to homeowners."

Additionally, the administration announced numerous steps designed to ease public anger at the Bush administration's handling of the bailout program.

In addition to a previously announced $500,000 limit on annual compensation for top executives at some companies receiving bailout funds, the steps include a restriction on dividend payments.

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Associated Press Writers Martin Crutsinger, Tom Raum, Jennifer Loven, Ann Sanner and Andrew Taylor contributed to this story.

"FBI may shift counterterror agents to anti-fraud"

By DEVLIN BARRETT, Associated Press Writer

Wed Feb 11, 6:05 pm ET

WASHINGTON – With thousands of fraud investigations under way, the FBI is considering shifting agents away from counterterrorism work to help sort through the wreckage of the financial meltdown.

FBI Deputy Director John Pistole told the Senate Judiciary Committee on Wednesday that the bureau may reassign some of the positions that were reallocated to anti-terrorism work after the Sept. 11, 2001, attacks.

Such a move would be a further sign of the government breaking with the Bush administration's priorities, which pledged to assign every available resource to averting another terrorist attack.

Pistole told Congress his investigators have 530 active corporate fraud investigations, and 38 of them involve some of the biggest names in corporate finance — cases directly related to the current crisis.

In addition, FBI investigators are tackling an even bigger mountain of mortgage fraud cases in which hundreds of millions of dollars may have been swindled from the system, he told lawmakers.

The FBI now has more than 1,800 open mortgage fraud investigations, more than double the number of such cases just two years ago.

There are so many mortgage fraud cases to investigate, he said, that the bureau is not focusing on individual purchasers, but industry professionals generating fraud schemes that could total as much as hundreds of millions of dollars.

"It is a matter of lawyers, brokers or real estate professionals that are systematically trying to defraud the system," Pistole said.

Agents have even seen some instances of organized crime getting involved in mortgage fraud, he said.

Also appearing before the committee was Neil Barofsky, the watchdog of the government's $700 billion Wall Street rescue package passed last year.

Senate Democrats are urging more spending to expand the ranks of the FBI's financial fraud investigators.

After the 2001 terror attacks, about 2,000 FBI agents were moved to counterterrorism work, and Pistole said they are considering moving some of them back to beef up anti-fraud efforts.

Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., urged the FBI and the Justice Department to put people who have committed mortgage fraud behind bars.

"Most people are honest," Leahy said.

"The ones who are not honest in this field are creating economic havoc and I want to make sure that we're able to go after them."

"I want to see people prosecuted ...."

"Frankly, I want to see them go to jail," he said.

Barofsky, who was appointed the inspector general of the ongoing financial bailout plan, suggested the best way to clean up mortgage fraud is to pursue licensed professionals in the industry, and make examples of them.

"They have the most to lose, they're the most likely to flip, and they make the best examples," said Barofsky, a former federal prosecutor in New York.

"A Big ($787 Billion) W for O"

February 14, 2009 10:37 AM

The passage of the $787 billion stimulus bill yesterday, however party-line the vote was in the House, and near-party-line in the Senate, is a big victory for President Obama.

It is arguably the biggest economic recovery legislation in history.

(I believe it amounts to roughly 5% of the GDP, whereas FDR's biggest was about 2% of the GDP at the time.)

Whether it works, of course, remains to be seen.

http://blogs.abcnews.com/politicalpunch/20...-787-billi.html

"GM Wins, Loses in Stimulus Pact While Homebuilders Get Less Aid"

Catherine Dodge, Ryan J. Donmoyer and John Hughes

Thu Feb 12, 12:00 am ET

Feb. 12 (Bloomberg) -- General Motors Corp. emerged as both a winner and loser in the $789 billion economic stimulus package that lawmakers agreed to after ironing out differences between competing House and Senate versions.

GM won a provision that will erase a tax liability of up to $10 billion that would have resulted from restructuring efforts, said Senator Debbie Stabenow, a Michigan Democrat.

Yet GM, Ford Motor Co. and other automakers failed to get the full tax write-offs for car buyers proposed in the Senate bill, which might have slowed the plunge in sales that has pushed GM to the brink of bankruptcy.

Homebuilders such as Centex Corp. didn’t fare as well as they would have under the $838 billion Senate measure adopted earlier this week.

President Barack Obama, who this week has been stumping for the plan in areas hard-hit by the economy, is counting on the package to help revive the economy.

The U.S has lost 3.6 million jobs since December 2007, and the nation’s unemployment rate has risen to 7.6 percent, its highest level since 1992.

"This is the biggest stimulus bill ever passed in the history of the country," said Pete Davis, president of Davis Capital Investment Ideas in Washington, which provides analysis of Congress to investors.

Public Works Spending

The effects will be widespread, with individuals getting a boost from tax breaks, state governments seeing additional funding and companies benefiting from road building and other infrastructure projects in the package, Davis said.

“The peak of the effects will probably occur in six to 12 months,” he said.

The package, which will be sent to the White House for Obama’s signature after final congressional approval in both chambers, amounts to the biggest burst of public works spending since the interstate highway system was started in the 1950s.

Congressional staffers were still working on the final draft of the legislation last night.

The House may vote on the plan as early as today.

A proposed $15,000 tax credit for homebuyers was reduced to $8,000, Democratic Senator Max Baucus said, a decrease that may hurt U.S. homebuilders such as Centex and D.R. Horton Inc.

GM’s tax liability would have been triggered by its plan to offer equity in exchange for debt and for health-care obligations to union workers.

GM, surviving with the help of $13.4 billion in pledged government loans, is making the changes in order to meet a U.S. requirement for the aid.

Senate Finance Committee Chairman Baucus said about 35 percent of the stimulus plan consisted of tax cuts and the remainder would be government spending.

Tax Break Eliminated

In a loss for big homebuilders and manufacturers, negotiators all but eliminated the biggest tax cut for businesses, a provision that would let companies convert losses into tax refunds, Baucus said.

Baucus said the measure, which would have let companies claim an estimated $67.5 billion in tax refunds this year and next, was sacrificed to help keep the final package under $800 billion.

The provision had been a top priority of business groups including the National Association of Manufacturers, whose members include Dow Chemical Co. and Conagra Foods Inc., and the U.S. Chamber of Commerce.

The change would have been a boon to homebuilders who enjoyed large profits until 2006 when the housing market began to implode.

Democratic Senator Barbara Mikulski of Maryland said her plan to aid the auto industry by letting car buyers take a tax write-off on their interest payments was reduced to $2 billion from the original $11 billion.

Dealers Lobbied

Car companies had been seeking the larger amount after U.S. auto sales fell 37 percent in January, the worst sales month since 1981.

The National Automobile Dealers Association, a trade group for 20,000 car dealers including Fort Lauderdale, Florida-based AutoNation, the country’s largest publicly traded auto retailer, asked its members to urge House Speaker Nancy Pelosi to support the Senate-passed tax deduction.

“While we’re pleased to see the stimulus includes an element designed to motivate auto consumers, we believe the unprecedented sales climate that all automakers are struggling with calls for as much of an incentive as possible,” said Wade Newton, a spokesman for the Washington-based Alliance of Automobile Manufacturers.

Lawmakers scaled back Obama’s proposed payroll tax credit to $400 for individuals and $800 for families rather than the original proposal of $500 and $1,000, Baucus said.

The plan includes an alternative minimum tax cut, he said.

On Obama’s Desk

“This represents the beginning of turning our economy around,” Senator Joseph Lieberman, an independent from Connecticut, said when the agreement was announced.

Obama had said he wanted a bill on his desk by the Feb. 16 Presidents’ Day holiday.

He thanked lawmakers yesterday, saying in a statement the move would provide tax relief to families and businesses, while investing in health care, energy and infrastructure.

“We did address” GM’s tax liability, Stabenow told reporters.

Conferees made changes so that the liability doesn’t apply to companies restructuring under the Treasury Department’s Troubled Asset Relief Program, she said.

The tax burden “has been eliminated,” Stabenow told reporters.

GM spokesman Greg Martin declined to comment.

House and Senate negotiators also agreed to provide $6.3 billion in grants to expand high-speed Internet access in rural areas, according to a Senate Commerce Committee aide.

The lawmakers haven’t made a final decision on whether to include the Senate bill’s broadband tax credits, the aide said.

To contact the reporter on this story: Catherine Dodge in Washington, at Cdodge1@bloomberg.net

"Judge holds Stevens prosecutors in contempt - Judge holds government attorneys in contempt in corruption case of former Sen. Ted Stevens"

By NEDRA PICKLER, Associated Press

Last updated: 6:25 p.m., Friday, February 13, 2009

WASHINGTON -- An angry federal judge held Justice Department attorneys in contempt Friday for failing to deliver documents to former Sen. Ted Stevens' legal team, a rare punishment for prosecutors in a case where corruption allegations have spread to the authorities who investigated him.

U.S. District Judge Emmet Sullivan said it was "outrageous" that government attorneys would ignore his Jan. 30 deadline for turning over documents.

Last month, Sullivan ordered the Justice Department to provide the agency's internal communications regarding a whistle-blower complaint brought by an FBI agent involved in the investigation into the former Alaska senator.

The agent, Chad Joy, objected to Justice Department tactics during the trial, including failure to turn over evidence and an "inappropriate relationship" between the lead agent on the case and the prosecution's star witness.

Stevens was convicted last October of lying on Senate disclosure documents about hundreds of thousands of dollars in gifts and home renovations from an Alaska businessman.

In November, Stevens lost his bid for re-election to the Senate seat he had held since 1968.

The contempt citation doesn't immediately change anything for Stevens, who remains a convicted felon and is awaiting sentencing.

It could help his appeal, however, since it bolsters his lawyers' argument that prosecutors repeatedly withheld evidence from them during the trial.

Sullivan said after the government turns over the documents he's demanded, he will hold further hearings to hear arguments about whether the case was so damaged that Stevens deserves to have his conviction thrown out and a new trial take place.

During Friday's hearing, Sullivan repeatedly asked three Justice Department attorneys sitting at the prosecution's table whether they had some reason not to turn over the documents he asked for.

They finally acknowledged they did not, and Sullivan exploded in anger.

"That was a court order," he bellowed.

"That wasn't a request."

"I didn't ask for them out of the kindness of your hearts."

"... Isn't the Department of Justice taking court orders seriously these days?"

He said he didn't want to get "sidetracked" by deciding a sanction immediately and would deal with their punishment later.

"That's outrageous for the Department of Justice -- the largest law firm on the planet," Sullivan said.

"That is not acceptable in this court."

Sullivan held all three lawyers in contempt.

Two are senior Justice Department attorneys; William Welch is chief of the public integrity section and his principal deputy is Brenda Morris.

The third was a new member to the prosecution team, trial attorney Kevin Driscoll.

As Sullivan called them out individually and wrote down their names, he demanded to know who else on their team was involved in withholding the information.

Patty Merkamp Stemler, chief of the Justice Department's appellate section, was sitting in the back of the courtroom but stood up and gave her name.

Sullivan ordered the government lawyers to give Stevens' attorneys the material by the end of the day, and Justice Department spokeswoman Laura Sweeney told the AP a few hours later that the prosecutors had done so.

"We will continue to litigate in court matters related to the jury's conviction of Senator Stevens," she said.

Judges rarely hold prosecutors in contempt.

The most notable recent case occurred in September 2007, when a North Carolina judge jailed prosecutor Mike Nifong for one day on a contempt charge for lying during the rape case against Duke lacrosse players.

But sanctioning federal prosecutors is even more unusual.

A Washington bankruptcy judge did so in 1987, ruling that the Justice Department unlawfully tried to put a financially troubled computer firm out of business.

In 1995, a federal judge in Texas held a prosecutor in contempt for refusing to provide him information that had been sealed by another judge.

In his complaint turned over to the court in December, Joy accused prosecutors of mishandling evidence, covering up information and trying to keep a subpoenaed witness from testifying.

He also said the lead FBI agent in charge of the investigation, Mary Beth Kepner, had an inappropriate relationship with witness Bill Allen, the Alaska millionaire at the center of the investigation.

Joy said he once saw Kepner entering Allen's hotel room alone.

Joy also said Kepner told him she wore a skirt during her appearance at the Stevens trial as a "surprise/present" for Allen.

Joy accused Kepner of developing close personal relationships with other witnesses -- inviting them to dine at her home, revealing details of FBI investigations and accepting gifts from them, including a job for her husband as a security guard at the Port of Anchorage, Alaska.

The Justice Department attorneys have given conflicting information about whether Joy has been given whistle-blower status to protect him from retaliation, which is why Sullivan demanded internal communications on the matter.

"Obama to outline plan to stem home foreclosures - Obama to outline plan to help struggling homeowners next week; major lenders halt foreclosures"

By ALAN ZIBEL, Associated Press

Last updated: 6:05 p.m., Friday, February 13, 2009

WASHINGTON -- The biggest players in the mortgage industry are halting home foreclosures while the Obama administration develops its plan to help struggling homeowners.

The White House said President Barack Obama on Wednesday will outline his much-anticipated plan to spend at least $50 billion to prevent foreclosures in a speech in Arizona, one of the states hardest hit by the foreclosure crisis.

"It's not intended to be measured by one day's market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected," White House press secretary Robert Gibbs said Friday without providing other details.

Treasury Secretary Timothy Geithner announced a revised effort to stabilize the financial system on Tuesday.

It contained outlines of a foreclosure-relief effort, but few details.

Though lenders have beefed up their efforts to aid borrowers over the past year, their action hasn't kept up with the worst housing recession in decades.

More than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, and analysts say that number could soar as high as 10 million in the coming years, depending on the severity of the recession.

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac, and major banks JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. said Friday they are halting foreclosures through March 6.

New York-based Citigroup Inc. said its halt will extend until the administration has completed the details of the loan modification program or March 12, whichever is earlier.

Citi's action expands on a similar effort that it started in November.

The banks' pledges apply to owner-occupied homes, not those owned by investors.

Fannie Mae said it was suspending all foreclosure sales and evictions for occupied properties, while Freddie Mac said its suspension would apply to properties with up to four units and noted that the ban would not apply to vacant properties.

Both Fannie and Freddie had suspended foreclosure sales during the winter holidays and halted evictions from foreclosed properties through the end of this month.

Together, they own or guarantee around half of U.S. home loans.

Obama's announcement next week is expected to include details about how the administration plans to prod the mortgage industry to do a better job of modifying the terms of home loans so borrowers have lower monthly payments.

Testifying before House lawmakers this week, Geithner said the government would provide incentives to "try to induce economically sensible restructuring of mortgages," but offered no specifics.

A Treasury spokeswoman declined further comment Friday.

A Democratic Senate aide said the plan is likely to include hefty payments designed to encourage the lending industry to lower mortgage rates or reduce the total principal amount owed by borrowers.

The idea has become attractive to Obama officials, the aide said Friday, because it is expected to be far less expensive than having the government buy up loans out of mortgage-linked securities.

It was unclear whether those government subsidies would be paid to companies that collect payments for mortgage investors up front, or whether they would stretch out over several years.

Howard Glaser, a mortgage industry consultant who served in the Clinton administration, said if 2 million borrowers' payments were lowered by $500 a month, it would cost the government and lenders $6 billion each per year -- assuming lenders match half the cost.

Unlike previous loan modification plans, borrowers would not have to be in default to qualify, according to people briefed on the plan.

Still, figuring out who would qualify would be a challenge, especially as foreclosures continue to soar.

More than 274,000 U.S. households received at least one foreclosure-related notice last month, according to RealtyTrac Inc., an Irvine, Calif.-based foreclosure listing service.

Fannie and Freddie have developed systems to analyze millions of loans and determine which ones need to be modified.

But to qualify for those programs, borrowers have to be at least three months behind on their home loans.

At the White House, Gibbs cautioned about the dangers of erroneous information leaking out about the foreclosure plan because he did not want "an unreasonable series of expectations based on leaks from God only knows where."

Still, the administration is widely expected to back a push in Congress -- but opposed by the mortgage industry -- to let bankruptcy judges alter the terms of primary home loans.

Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so.

The hope is that, rather than being dragged into bankruptcy court, lenders would prefer to modify loans.

The mortgage industry argues that this prohibition allows lenders to charge lower rates.

Protections from investor lawsuits also are likely to be included in the administration's plan, congressional aides said.

The top executives of Bank of America, and Citi announced their intention to halt foreclosures under questioning from House lawmakers on Wednesday.

Jamie Dimon, JPMorgan's chief executive, detailed his plans in a letter to Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, who released it on Friday.

"We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages," Dimon wrote.

Gibbs said he thought the banks' action was "consistent with what the president believes is at least part of something that would be likely seen in a housing policy that protects the American people."

Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month.

And earlier this week, John Reich, director of the Office of Thrift Supervision, urged the more than 800 thrift institutions nationwide to do the same.

--------

Associated Press Writers Ben Feller, Christopher S. Rugaber and Madlen Read contributed to this report.

"Regulators close banks in Nebraska, Florida - Regulators close failed banks in Nebraska, Florida, marking 11 US bank failures this year"

Associated Press

Last updated: 6:45 p.m., Friday, February 13, 2009

WASHINGTON -- Regulators on Friday closed Sherman County Bank in Nebraska and Riverside Bank of the Gulf Coast in Florida, marking eleven failures this year of federally insured banking companies.

The Federal Deposit Insurance Corp. was appointed receiver of the banks.

Sherman County Bank, located in Loup City, Neb., had $129.8 million in assets and $85.1 million in deposits as of Feb. 12.

Cape Coral, Fla.-based Riverside Bank had assets of $539 million and deposits of $424 million as of Dec. 31.

The FDIC said Sherman County Bank's deposits will be assumed by Heritage Bank, based in Wood River, Neb.

Sherman County's four branches, including those that operated under the name Howard County Bank, will reopen on Tuesday as branches of Heritage Bank.

TIB Bank of Naples, Fla., will assume all of the deposits of Riverside Bank.

Riverside's 13 branches will reopen Tuesday as TIB Bank branches.

"Fourth down: A brutal end to '08 for S&P companies - Awful earnings from late '08 suggest S&P 500 companies will have first quarterly loss ever"

By TIM PARADIS, Associated Press

Last updated: 4:25 p.m., Friday, February 13, 2009

NEW YORK -- The companies that make up the Standard & Poor's 500 are on track to post a collective quarterly loss for the first time -- a sign corporate America was battered even harder than expected by the economy.

The dismal earnings reports already handed in by three-quarters of the S&P companies are compelling Wall Street analysts to tone down expectations for this year and push back predictions for when the economy will recover.

"I don't know of very many people who believe that there is going to be much recovery at all in 2009," said Jennifer Ellison, a principal at investment firm Bingham, Osborn & Scarborough.

The deepest wounds are showing up on banks, weighed down by the bad debt on their books.

But the pain hardly stops there.

Among major industries, only consumer staples, utilities and health care have been able to maintain or add to profits.

"We know how bad the tail end of the third quarter got, and it really fell off a cliff through the fourth quarter," said Bill Stone, chief investment strategist at PNC Wealth Management.

Early last fall, when the economy was already deteriorating, most investors were hoping fourth-quarter earnings would only suffer a slide.

Instead, the financial meltdown in September triggered a crash.

Credit markets seized up, and companies couldn't borrow.

Businesses cut costs and eliminated jobs, and even those Americans fortunate enough to have jobs spent less money.

It added up to alarming numbers on corporate ledgers: Sales fell 9.8 percent in the October-to-December period, according to S&P.

On average, companies lost $10.44 a share.

When all the results are in, it'll be the sixth quarter in a row that results for S&P companies have come in worse than the year before.

A run that bad hasn't happened since 1951-52.

S&P figures go back to 1936.

Analysts are surveying the losses and cutting their forecasts for this year -- almost by the day, Stone said.

At some point, the expectations will be so meager that investors will greet even terrible numbers with relief -- simply because they weren't worse.

On a report card, even a "D" can look good against an "F."

"If you finally get the hurdle down low enough, maybe you can actually jump over it," Stone said.

"Maybe in this economy you should say trip over it."

Plus, companies find it appealing to pencil in as many write-offs as they can now so results look shinier in future quarters.

But for now, the losses are staggering.

North Carolina bank Wachovia lost $11 billion in the fourth quarter.

ConocoPhillips, the nation's No. 3 oil company, wrote off $33 billion in assets, partly because of the plunge in oil prices.

Ellison noted that analysts had forecast aggregate profits above $10 a share for the S&P 500 in the fourth quarter.

"That is off the charts," she said of the change in analyst expectations.

"Certainly in modern economic history, this has not occurred."

She expects analysts will have to bring down their expectations for coming quarters even further.

And analyst downgrades can lead to more investors unloading their stocks.

"They are getting slashed, and I think that's what the market is reacting to, but I still don't think they're low enough," she said.

"It's hard to find a reason why earnings would get better in the next quarter or two."

"Finance ministers sift options amid economic woes"

By COLLEEN BARRY and ARIEL DAVID, Associated Press Writers

14 FEBRUARY 2009

ROME – The Group of Seven finance ministers hashed out the final details Saturday of an agreement aimed at helping to mend the global economy as some of Europe's biggest economies reported their sharpest contractions in decades.

The meeting marks the international debut of U.S. Treasury Secretary Timothy Geithner, who conferred with Federal Reserve Chairman Ben Bernanke as the session began at the Italian Finance Ministry.

He smiled at cameras, but declined to respond, when asked if any progress was being made.

Geithner, who arrived in Rome after a week of widespread criticism for botching the rollout of the administration's new bank bailout plan, got a boost with Friday's passage of President Barack Obama's $787 billion plan to resuscitate the economy.

But new economic data out Friday in Europe showed the continent's recession deepening, lending urgency to the ministers' task.

The ministers from Britain, Canada, France, Germany, Italy, Japan and the United States, along with their central bankers, are looking for agreement on common approaches to the crisis, with the United States pushing for a bold approach to match its stimulus package.

The final communique is also expected to carry a strong warning against protectionism.

World Bank President Robert Zoellick, who is attending the meeting with other leaders of international financial organizations, told a meeting of the Italian banker's association Friday that any effort to keep bailout money at home would only worsen the global crisis, not resolve it.

"In this moment economic nationalism is neither economic nor nationalistic ... what might be politically correct might be economically incorrect," Zoellick said.

"The pull of national politics is very sharp but it's clear that the issues we are dealing with don't stop at national borders."

Grim new economic data on Friday showed Europe's recession deepening.

The German economy, Europe's engine, plunged by 2.1 percent in the fourth quarter compared to the previous quarter in the sharpest downturn since the country reunified in 1990, and fellow Group of Seven members Italy and France also reported sharp downturns of 1.8 percent and 1.2 percent.

German Finance Minister Peer Steinbrueck told reporters that the decline had been in line with his expectations.

British Chancellor of the Exchequer Alistair Darling was more blunt, calling the current troubles "the severest downturn in generations."

Officials from the leading industrial nations will discuss new financial markets rules, concerns about protectionist measures in stimulus plans, and the effect of the crisis on poorer countries.

But a major breakthrough would be a surprise, with the meeting coming before a broader, 20-country summit in April.

Geithner spent Friday in a series of one-on-one meetings with his counterparts from Britain, Canada, Italy, Germany and Japan — saving a meeting with the French finance minister for her visit to Washington next week.

Geithner also met with Russian Finance Minister Alexei Kudrin, who was joining the meeting.

The absence of the rising global economic stars China and India, among others, have created a growing consensus that the G-7 isn't the right forum to tackle some of the tough questions facing the world.

They will be present at the G-20 summit in April bringing together industrial and developing nations seeking to advance efforts to cope with the economic crisis and prevent a reoccurrence.
___

AP Economics Writer Marty Crutsinger contributed to this report.

AND FOR THE LATEST NEWS FROM THE OBAMA "WAR ON THE ECONOMY", WE HAVE ...

"The recovery plan: shock & awe for a shaken nation"

By NANCY BENAC and CALVIN WOODWARD, Associated Press Writers

Sat Feb 14, 9:44 am ET

WASHINGTON – America is bringing shock and awe to the home front, using dollars instead of bombs.

It's the military doctrine of lightning force — fast and brute, or as brute as the shaken country can manage — applied to the campaign for economic recovery.

With a record-busting stimulus plan, the U.S. is marshaling resources against economic catastrophe in ways not seen since Franklin Roosevelt put the New Deal in motion.

President Barack Obama is going with the best deal he could get.

The stimulus bill is a landmark legislative achievement for a new president who inherited economic spoilage along with the spoils of power.

Now the nation anxiously waits to see if it works.

Undermining federal balance sheets that were already deeply in the red, Obama and Congress settled on a nearly $800 billion plan that aims to spend more on the crisis at hand than the government has spent waging the Iraq war for six years.

The idea: fast cash, and lots of it, but with a strategic view to the future.

Some dollars will flow quickly into wallets — and right out again.

The stimulus plan will mean thousands of dollars in tax breaks for first-time home buyers and people buying new cars.

Lower- and middle-income taxpayers will get an extra $13 a week in their paychecks this year, and about $8 a week next year.

Unemployment checks will go up $25 a week, and keep coming longer.

Food stamp benefits for 30 million Americans will rise.

Short-term health insurance will become more affordable for many losing their jobs.

The success of the stimulus package may be measured less by visible achievements than by what does not happen — the home that is not foreclosed, the family that doesn't slip into poverty, the disease that does not go undiagnosed.

"The one thing we'll never know is what would have happened if we didn't do it," said Nigel Gault, chief U.S. economist for IHS Global Insight.

It's not FDR's deal and these aren't his times.

No federally subsidized artists will paint murals glorifying the muscle of American workers or the progress belching from smokestacks, as they did in Roosevelt's day.

No grand compact is to be formed between generations like the one that promised everyone a federal pension.

No institutions will rise to try something brand new.

"We're not reinventing government," said historian Kenneth C. Davis, author of the best-selling "Don't Know Much About" series.

"We're modifying things that exist."

Yet as the share of the economy taken up by federal spending rises to an anticipated 30 percent, the nation is grappling again with big questions about Washington's place in people's lives.

"The stakes are so high now, this is such a big bill, average Americans are following it," says Princeton historian Julian Zelizer.

"It's become a bill that is an argument about what government can or can't do."

"If there is no effect and in six months we are talking about the same economy or a worse economy, I think it would be a devastating blow to the president, Democrats, and to liberal claims about what government can do."

To critics such as Senate Republican leader Mitch McConnell, the package is the "Europeanization of America."

Others call it "Rooseveltian" or "generational theft" in reference to the debt passed on to the future.

They might envision murals glorifying little more than filled potholes, insulated windows, depreciated computers.

Obama said it's about more than that, and drew parallels with FDR in speaking Friday to the Business Council, formed by corporate leaders in the 1930s to advise Roosevelt's administration.

"We adapted, we changed," he said about those days — and these.

"President Roosevelt understood the new role of government in this new world, that while extraordinary actions on its part might be the source of recovery, no action on the part of government, no matter how extraordinary, would alone be the source of our prosperity."

In his radio address Saturday, Obama said he believed the country "will turn this crisis into opportunity and emerge from our painful present into a brighter future."

Democrats and just enough Republicans in Congress — three — saw the package as the best chance to tamp down the economic wildfires breaking out across the landscape.

Obama came into office saying he wished to be judged on his first 1,000 days instead of the usual benchmark of 100.

In some ways he will be judged on his first 10 or 20.

Not even Roosevelt, fast off the mark to deal with a bank crisis, was as fast as this in achieving something so sweeping, so early.

The enormity of the package left politicians grasping for concrete ways to convey its size.

Sen. John Thune, R-S.D., spoke of a stack of hundred-dollar bills 689 miles high, and of bills wrapped side-by-side that would encircle the Earth nearly 39 times.

House Republicans predicted that the package's costs — with interest on the necessary borrowing — could total more than a trillion dollars, enough money to buy about 1,000 boxes of Girl Scout cookies for every American.

It was enough to prompt comic Jon Stewart to riff that if you sewed the $100 bills together, "you would make a blanket for Jupiter."

The stimulus wasn't just about throwing cash at the economy, though.

The package is filled with billions for some of the same goals that Obama preached about on the presidential campaign trail — renewable energy and green jobs, computerized medical records, broadband Internet service for underserved areas.

"There are seeds in this bill for long-term change," says Zelizer.

"There are things that can develop out of the research that can change our lives."

Obama sounded a drumbeat of warnings about the consequences of failing to act.

But Americans didn't need their president to tell them how grim the economic situation was — and could become.

Forty percent of Americans already have been affected by some sort of job problem in the past year, be it unemployment, underemployment, layoffs, reductions in pay or hours, or job losses by members of their households, according to a poll released Friday by the Pew Research Center.

Fifty-six percent expect things to be worse or about the same a year from now — and they've got solid grounds for their pessimism.

The country could well suffer a net loss of 2 million to 3 million or more jobs this year, economists believe.

And the unemployment rate, now 7.6 percent, could top 9 percent by spring of 2010.

The stimulus pull-together was a colossal game of winners and losers shaped and reshaped by the latest set of hands on the package.

The fortunes of people, schools, towns and other varied interests rose and fell in blinks of time.

Ready to buy another home?

Poof — you just lost $15,000 that legislators had considered providing.

Buying a first home?

You're still in luck — the government plans to give you an $8,000 credit if you buy by the end of November.

A new car?

You'll be able to deduct the thousands in sales taxes from your income tax but not — as was initially proposed — your loan interest as well.

One day, the government proposed to pay 65 percent of the cost of health coverage for a year for jobless people who lose their workplace insurance.

Days later, it was down to half.

Ultimately, the subsidy zigzagged back up to 65 percent, but it expires before the end of the year.

Obama declared an end to pork-barrel politics, but legislators still managed to look out for favorite projects.

Senate Majority Leader Harry Reid, D-Nev., was quick to point out that a big chunk of the $8 billion set aside to construct high-speed rail lines could go to a proposed Los Angeles-to-Las Vegas route.

Sen. Arlen Specter, R-Pa., helped make sure $10 billion was set aside for the National Institutes of Health, a priority of his.

Long after the dust has settled from the horse trading, the government will be seen to have moved with unaccustomed speed on policies normally subjected to years of deliberation and gridlock.

Deficit hawks found their wings clipped as both parties reached for the treasury.

Democrats mainly wished to spend; Republicans, mainly to cut taxes.

After last November, guess who got their way?

Democratic House Speaker Nancy Pelosi said flatly:

"We won the election; we wrote the bill."

The debate was both large and small.

Negotiators considered the proper role of government — and how fast a business can depreciate its equipment.

Entering the 1930s, Americans mainly saw the national government as the entity that fought wars, ran post offices and enforced a ban on liquor.

Federal spending was only 3.4 percent of the economy.

That more than tripled during the New Deal, topping 10 percent, because of the explosion of public works and other labor programs, rural modernization, bank support, and farm and industrial aid.

"It was a transformation of society in a way that hadn't been done since the end of the Civil War and the end of slavery," Davis said.

The government became the entity that guaranteed a minimum wage, controlled farm production, supported artists, set workplace standards, insured deposits in regulated banks and cast the first national safety net for the elderly and handicapped under Social Security.

"The whole scope of what Roosevelt was trying to do is different but the intent is clearly the same: relief and recovery during a time of economic stress," said John Halpin, senior fellow at the Center for American Progress.

The package won by Obama offers "very important but more subterranean changes in the way the economy works," he said.

Federal spending as a share of the economy shot above 40 percent during World War II and has hovered around 20 percent most of the years since.

That share was already projected to approach 25 percent before Obama's stimulus plan.

To be sure, there's still considerable disagreement about how much the New Deal helped to end a depression finally crushed by the humming factories of World War II.

Even FDR's transformation of the federal government was not universally recognized at the time for what it was.

It may be years before the full measure of Obama's efforts are taken, too.

In 1936, The Economist magazine pronounced the New Deal a "striking success" in improving conditions that existed when FDR took office three years earlier.

But what of the legacy?

What legacy?

"If the criterion be Utopian, the achievements of the New Deal appear to be small," the editors sniffed.

"The great problems of the country are hardly touched."
___

Associated Press writer Alan Fram contributed to this report.

AND THE HOO-HAH CONTINUES ...

"Burris confirms request for Blagojevich donation"

By JOHN O'CONNOR, Associated Press Writer

Sat Feb 14, 11:46 pm ET AP

SPRINGFIELD, Ill. – Raising fresh questions about his appointment to Congress, Sen. Roland Burris admitted in a document released Saturday that former Gov. Rod Blagojevich's brother asked him for campaign fundraising help before the governor named Burris as Illinois' junior senator.

The disclosure reflects a major omission from Burris' testimony in January when an Illinois House impeachment committee specifically asked if he had ever spoken to Robert Blagojevich or other aides to the now-deposed governor about the Senate seat vacated by Barack Obama.

State Rep. Jim Durkin, the impeachment committee's ranking Republican, told The Associated Press that he and House Republican Leader Tom Cross will ask Sunday for an outside investigation into whether Burris perjured himself.

Senate Majority Leader Harry Reid of Nevada also said he was reviewing the disclosure, the latest twist for Senate Democrats in Washington who only consented to seat Burris on the condition that there were no "pay to play" promises exchanged in the appointment.

Burris said he voluntarily gave the committee a Feb. 4 affidavit disclosing the contact with Robert Blagojevich because "there were several facts that I was not given the opportunity to make during my testimony to the impeachment committee."

The affidavit, released by Burris' office after it was first reported by the Chicago Sun-Times, said Robert Blagojevich called him three times — once in October and twice after the November election — to seek his fundraising assistance.

Robert Blagojevich's attorney said his client believes one of the conversations was recorded by the FBI.

Burris, a Democrat like the former governor, said he told Robert Blagojevich he would not raise money because it would look like he was trying to win favor from the governor for his appointment.

But he said he did ask the governor's brother "what was going on with the selection of a successor" to Obama in the Senate and "he said he had heard my name mentioned in the discussions."

It's the second time Burris has changed his story.

In an unsolicited affidavit to the impeachment committee on Jan. 6, Burris said he had only one limited conversation with the governor before accepting the Senate appointment.

Then, appearing before the committee Jan. 8, he said he told former Blagojevich aide-turned-lobbyist Lon Monk last summer that he was interested in the post.

The governor appointed Burris, a former state attorney general, to the Senate seat on Dec. 30, three weeks after federal agents arrested Blagojevich on a complaint alleging he had tried to trade the appointment for campaign cash or a high-paying job.

The state House impeached Blagojevich and the state Senate removed him from office on Jan. 29.

Reid and Dick Durbin of Illinois, among other Senate Democrats, initially said they would not seat anyone appointed by Blagojevich but eventually relented after accepting Burris' impeachment committee testimony under oath that there were no promises exchanged for his appointment.

A spokesman for Durbin said the senator was overseas and had not seen the affidavit or compared it to the testimony.

The White House had no comment.

State House impeachment committee chairwoman Barbara Flynn Currie, a Democrat, said she saw the affidavit earlier this week but did not have time to share it with all committee members until now.

She said she was planning committee action but that seeking an outside investigation was premature at this point.

The affidavit discloses for the first time that Burris believes he likely told former Blagojevich advisers Doug Scofield and John Wyma of his interest in the post at a fundraiser in June and later asked about it when he spoke to Blagojevich chief of staff John Harris, who was arrested with Blagojevich on Dec. 9.

Scofield, Wyma and Harris were among the Blagojevich associates Burris was asked about in his Jan. 8 testimony by Durkin.

In response, Burris said he had spoken only to Monk.

"This wasn't a couple of questions that I can understand someone may forget, it goes way beyond that," Durkin said Saturday.

"To say that he wasn't given the opportunity to explain himself is a load of B.S."

Durkin said he doesn't trust majority Democrats in the General Assembly to conduct a fair investigation into whether Burris perjured himself.

But he said he doesn't know yet who should conduct the inquiry.

A log of Harris' calls released to the AP by the governor's office indicates Burris called Harris four times in November — the last time on Nov. 26, when the log indicates the two spoke.

Burris' affidavit says he had called Harris to recommend his nephew for a state job and during the conversation asked about the Senate seat.

A spokeswoman for Burris said he would not make himself available for interviews Saturday.

Robert Blagojevich's lawyer, Michael Ettinger, said his client contacted Burris in October to ask him to host a fundraiser for his brother because Burris had contributed in the past, but Burris said he didn't want to commit before the election.

Ettinger said the subject of the Senate seat wasn't raised.

Ettinger said Robert Blagojevich remembers only one other conversation in November from the governor's campaign office, which the FBI had wiretapped at the time.

He said his client confirmed Burris' account that he declined the fundraiser because of the potential conflict.

But he also told Ettinger no one on his brother's staff had ever mentioned Burris as being interested in the seat.

A publicist for the former governor released a statement saying Blagojevich "acted ethically and honestly and believes Sen. Burris did too."

In explaining his incomplete testimony, Burris said in the affidavit he recalled mentioning Monk "but was then asked another question and did not mention anyone else."

His lawyer, Timothy Wright III, said in a cover letter Burris answered "truthfully and to the best of his recollection," but that the "fluid nature" of the questioning and a review of the transcript showed Burris that he "was unable to fully respond to several matters."
___

Associated Press writers Mike Robinson and Carla K. Johnson in Chicago, and Philip Elliott in Washington contributed to this report.

"Is the U.S. repeating Soviet mistakes in Afghanistan?"

By Jonathan S. Landay, McClatchy Newspapers

Sat Feb 14, 4:26 pm ET

KABUL, Afghanistan — Twenty years to the day after the last Soviet soldier left Afghanistan, Dastagir Arizad ticked off grievances against President Hamid Karzai and the United States that are disturbingly reminiscent of Moscow's humiliating defeat.

"Day by day, we see the Karzai government failing."

"The Americans are also failing," said Arizad, 40, as he huddled against the cold in the stall where he sells ropes and plastic hoses.

"People are not feeling safe."

"Their lives are not secure."

"Their daughters are not safe."

"Their land is not secure."

"The Karzai government is corrupt."

"The problems we are having are made by the Americans."

"The Americans should review their policies," he said Saturday.

"They should not support the people who are in power."

As Arizad spoke, Pres. Barack Obama's special envoy, Richard Holbrooke , was holding his first talks with Karzai in the presidential palace nearby amid mounting U.S.-Afghan tensions fueled by mutual recriminations over the growing Taliban insurgency.

Some Afghan experts are worried that the United States and its NATO allies are making some of the same mistakes that helped the Taliban's forerunners defeat the Soviet Union after a decade-long occupation that bled the Kremlin treasury, demoralized Moscow's military and contributed to the Soviet Union's collapse.

Among the mistakes, these experts said, are relying too heavily on military force, inflicting too many civilian casualties, concentrating too much power in Kabul and tolerating pervasive government corruption.

Violence and ethnic tensions will worsen, they warned, absent a rapid correction in U.S.-led strategy that improves coordination between military operations and stepped up reconstruction, job-training and local good governance programs.

"We have not justified democracy."

"We have not justified human rights."

"We have not justified liberalism," said Azziz Royesh, a political activist, educator and former anti-Soviet guerrilla.

"Afghans don't like the Taliban."

"But we haven't shown them a better option."

"I see a time when again there could be thousands of unorganized insurgencies around the country," he cautioned.

"The foreigners are the ones who will be targeted."

"If we don't bring change here, these kinds of incidents will add to the Taliban insurgency."

A public opinion survey released earlier this month underscored the concerns.

The poll, commissioned by ABC News and the BBC, found that while 90 percent of Afghans oppose the Taliban, less than half view the U.S. favorably, down from 67 percent last year.

Twenty-five percent also said they believed that attacks on foreign troops can be justified, up from 17 percent in 2007.

Adm. Mike Mullen , the chairman of the Joint Chiefs of Staff, conceded in a Washington Post opinion article Saturday that the U.S., which is planning to almost double the 32,000-strong U.S. force in Afghanistan over the next 18 months, will lose the war if it can't win Afghans' trust.

"We can send more troops."

"We can kill or capture all the Taliban and al Qaida leaders we can find — and we should."

"We can clear out havens and shut down the narcotics trade."

"But until we prove capable, with the help of our allies and Afghan partners, of safeguarding the population, we will never know a peaceful, prosperous Afghanistan," Mullen wrote.

"Lose the people's trust, and we lose the war."

A senior official of the NATO -led International Security Assistance Force, who requested anonymity in order to speak more candidly, said that many allied governments would find it harder to keep troops in Afghanistan "if we don't see some sort of rise in (Afghans') perception of how things are going . . . within the next 12 months."

Some Western officials and many Afghans appear to be hoping that Obama, who last week criticized Karzai for being "very detached," will abandon the Bush administration's unqualified support for the Afghan leader in hopes that he won't run for re-election or is defeated in an Aug. 20 vote.

Soviet leaders, however, believed in 1986 that a change in Afghan leadership would stem that decade's Islamist insurgency.

They were wrong.

Of course, there are major differences between the brutal 10-year Soviet occupation that ended on Feb. 14, 1989 — the date it's marked on the Afghan calendar — and the U.S.-led effort to prevent Afghanistan from reverting to a Taliban -ruled sanctuary for al Qaida.

Moscow invaded to save a dictatorial regime that ignited a rebellion when it tried to force communism on a tribal society that remains rooted in conservative Islam and centuries-old tribal law.

Some 1 million Afghans died and more than 5 million fled the country as Soviet and Afghan troops fought U.S.-backed guerrillas based in Pakistan.

The 2001 U.S.-led intervention came after the former Taliban regime refused to surrender Osama bin Laden following the Sept. 11, 2001 attacks.

More than 40 nations have deployed a total of 70,000 troops and are spending billions on schools, clinics and roads, while the United Nations is helping to prepare for Afghanistan's second-ever presidential election.

The effort, however, faces grave uncertainties because the Bush administration, fixated on Iraq , never committed enough troops or developed a comprehensive counter-insurgency strategy for Afghanistan.

Previously secret Soviet documents made public in English for the first time on Saturday reveal that Obama is facing some of the same problems that compelled former Soviet leader Mikhail Gorbachev to order a withdrawal from Afghanistan.

The documents, posted on the George Washington University's National Security Archive Web site, show that Gorbachev decided in 1985 to end the Soviet occupation after realizing that Moscow couldn't win a military victory, a point that Obama and senior U.S. commanders repeatedly stress.

Soviet leaders also saw that Afghanistan's ruling communists had failed to earn legitimacy, become self-reliant or improve most Afghans' lives, problems that also afflict Karzai's U.S.-backed government.

"After seven years in Afghanistan, there is not one square kilometer left untouched by a boot of a Soviet soldier."

"But as soon as they leave a place, the enemy returns and restores it all back the way it used to be," the late Soviet Army chief Sergei Akhromeyev is quoted as saying in notes from a Nov. 13, 1986, Politburo meeting.

Moreover, the documents indicate, Soviet troops were unable to stop U.S.-backed guerrillas infiltrating from sanctuaries in Pakistan, and they fueled support for the insurgents by killing civilians, factors that are aiding the Taliban today.

"Very little is left of the friendly feelings toward the Soviet people, which existed for decades."

"Very many people have died, and not all of them were bandits (guerrillas)."

"Not a single problem was solved in favor of the peasants," then-Soviet Foreign Minister Eduard Shevardnadze reported to the Politburo on Jan. 21, 1987, according to minutes of the meeting.

"In essence, (we) waged war against the peasants."

Posted on Tuesday, January 27, 2009

"Gates testimony shows why Afghanistan is no cake walk"

By Nancy A. Youssef | McClatchy Newspapers

WASHINGTON — Defense Secretary Robert Gates on Tuesday outlined a complicated and at times contradictory set of goals for the U.S. presence in Afghanistan, in a Capitol Hill appearance that highlighted the challenges the administration faces in devising a new U.S. strategy there.

Giving his first congressional testimony under his new boss, President Barack Obama, Gates called the Afghan army and police the "exit ticket for all of us," yet he conceded that the Afghan government is too poor to support those forces long term.

He called for a more unified command structure, implying direct U.S. command, and at the same time called on NATO countries to do become more assertive.

He also said the U.S. needs more modest goals in Afghanistan even as it commits 30,000 more troops to tackle Afghanistan's complex drug trafficking network.

Gates, the sole holdover in the new cabinet, appeared before both the House and Senate armed services committees.

With violence subsiding in Iraq, and Obama having campaigned for early troop withdrawal, the U.S. military is shifting its training and equipment toward Afghanistan.

The U.S. plans to double its troop presence in Afghanistan to roughly 60,000 troops as early as the summer.

Many of those troops will move toward southern Afghanistan, the heart of the opium poppy trade.

While the military has stressed that Afghanistan is not Iraq, lawmakers made frequent comparisons of the two wars, asking Gates what lessons, equipment and tactics from Iraq could be applied to Afghanistan.

Calling Afghanistan America's "greatest military challenge," Gates said the U.S. no longer could maintain the broad goal of nation building, as it did under the Bush administration.

Instead, the goal must be for Afghanistan to no longer be a place where terrorists can plot attacks on the U.S.

To do that, U.S. and NATO forces must train Afghan security forces so they can take the lead, Gates said.

He conceded, however, that maintaining those forces could cost as much as $4 billion in a country whose economy earns only $800 million a year.

Gates, wearing a brace after surgery on Friday to repair a torn tendon in his left arm, also called on NATO to provide more training, money to support the Afghan forces and more "caveat-free forces," a reference to the limits individual countries place on the deployment of their troops.

He also said, however, that the overall military operation in Afghanistan needs more streamlined leadership and that a 40-member coalition made it harder for the U.S. to set the course there.

Gates also said he's concerned about civilian causalities, but he didn't back away from using airstrikes, which are some of the most common causes of civilian deaths.

He stressed that if the U.S. is seen as an occupying force, rather than one supporting the Afghan forces, "we will set ourselves up for failure."

Yet Gates also spelled out the U.S. push into southern Afghanistan, saying it must stop the Taliban from profiting from an expanding drug trafficking network.

He also endorsed offering poppy farmers alternative crops, such as wheat.

"The Afghan people must believe this is their war and we are there to help them."

"If they think we are there for our own purposes, then we will go the way of every other foreign army that has been in Afghanistan," Gates said.

On Iraq, Gates said that the timetable for the withdrawal of U.S. forces hinges how the four Iraqi elections go in 2009, saying that if the violence subsides, the U.S. could withdrawal quicker.

On Saturday, the Iraqis will hold the first of those elections.

Obama is scheduled to meet with the Joint Chiefs at the Pentagon on Wednesday to discuss his strategy in Afghanistan.

"Axelrod: Effects of stimulus will be seen soon - Senior Obama adviser says positive impact of economic stimulus package will be quickly evident"

Associated Press

Last updated: 8:45 a.m., Sunday, February 15, 2009

WASHINGTON -- President Barack Obama's senior White House adviser says Americans will soon see positive effects of the massive economic stimulus plan passed last week by Congress.

Speaking on "Fox News Sunday," David Axelrod said signs that the $787 billion economic stimulus program is working will be obvious as work begins on infrastructure and other programs that are ready to begin around the country.

Yet, Axelrod warns, it's going to take time for the effects to register in employment statistics and the economy is likely to get even worse before it begins to rebound.

He says he expects the rise of unemployment to be slowed by the bill's passage and implementation.

"Gibbs: Stimulus points toward recovery - Gibbs: Stimulus points toward recovery but says economy still not at bottom"

Associated Press

Last updated: 10:05 a.m., Sunday, February 15, 2009

WASHINGTON -- White House spokesman Robert Gibbs says he thinks "it's safe to say" the economy hasn't bottomed out yet.

But he predicts the $787 billion stimulus measure that the president plans to sign on Tuesday will put the country on the road to recovery.

Gibbs says the bill, which President Barack Obama plans to sign on Tuesday, will be a big step forward in improving the economic situation and putting people back to work.

Gibbs says Obama is focused on pushing the money out of Washington and into the economy quickly.

He says Obama reached out in unprecedented way to Republicans in Congress and will continue to seek bipartisan support despite winning almost no opposition backing for the massive stimulus measure.

Gibbs spoke on CNN's "State of the Union."

"Illinois GOP leader calls on Sen. Burris to resign - Illinois GOP leader calls on new Sen. Burris to resign after questions arise on his testimony"

By RUPA SHENOY, Associated Press

Last updated: 7:25 p.m., Sunday, February 15, 2009

CHICAGO -- Just as Illinois was moving past the agony and embarrassment of former Gov. Rod Blagojevich's ousting, the fellow Democrat whom Blagojevich appointed to the U.S. Senate was hearing calls for his own resignation Sunday amid allegations he lied to legislators.

Freshman Sen. Roland Burris released an affidavit on Saturday that contradicts his statements last month to a House committee investigating Blagojevich's impeachment.

"I can't believe anything that comes out of Mr. Burris at this point," Rep. Jim Durkin, the impeachment committee's ranking Republican, said at a news conference Sunday.

"I think it would be in the best interest of the state if he resigned because I don't think the state can stand this anymore."

But an adamant and sometimes emotional Burris told reporters in Chicago later Sunday that he hadn't done anything wrong and never misled anyone.

"I've always conducted myself with honor and integrity," he said.

"At no time did I ever make any inconsistent statement."

Gov. Pat Quinn, who advanced to the governor's mansion after Blagojevich was ousted over corruption allegations last month, also called on Burris to explain the contradiction.

"My opinion is that he owes the people of Illinois a complete explanation," Quinn said, according to spokesman Bob Reed.

Durkin and House Republican Leader Tom Cross also want an investigation of Burris for possible perjury.

It's not clear what action state legislators could now take against Burris, said Dawn Clark Netsch, a Northwestern University law professor and former Illinois Comptroller.

"I'm not aware that anything quite like this has happened in any state before," she said.

Based on federal law, the state Senate could argue that Burris was a temporary appointment, then pass a bill calling for a special election to name a permanent senator, Netsch said.

But Quinn's hands may be tied.

"I don't see anything that the current governor could do, except to ask for legislation to ask for a special election," Netsch said.

Saturday's disclosure by Burris reflects a major omission from his testimony in January when an Illinois House impeachment committee specifically asked if he had ever spoken to Robert Blagojevich or other aides to the now-deposed governor about the seat vacated by President Barack Obama.

U.S. Senate Majority Leader Harry Reid said Saturday he was reviewing the disclosure, the latest twist for Democrats who only consented to seat Burris on the belief that there was no chance of "pay for play" politics surrounding his appointment.

But Burris explained Sunday that he voluntarily gave the committee a Feb. 4 affidavit disclosing the contact with Robert Blagojevich because questioning during his January testimony abruptly changed course and he never got a chance to answer a direct question about Blagojevich's brother.

The affidavit, released Saturday by Burris' office after it was first reported by the Chicago Sun-Times, said Robert Blagojevich called him three times -- once in October and twice after the November election -- to seek his fundraising assistance.

Robert Blagojevich's attorney said his client believes one of the conversations was recorded by the FBI.

Burris said Saturday he told Robert Blagojevich he would not raise money because it would look like he was trying to win favor from the governor for his appointment.

But he said he did ask the governor's brother "what was going on with the selection of a successor" to Obama in the Senate and "he said he had heard my name mentioned in the discussions."

On Sunday, Burris added: "I did not donate one single dollar nor did I raise any money or promise favors of any kind to the governor."

"Obama to appoint panel for auto recovery - Obama has auto recovery, stimulus bill, foreclosure plan on the agenda"

By STEVEN R. HURST, Associated Press

Last updated: 3:25 a.m., Monday, February 16, 2009

WASHINGTON -- It will take more than one "car czar" to help get the embattled U.S. auto industry back on track, President Barack Obama has decided.

Instead, his administration is establishing a presidential task force to direct the restructuring of General Motors Corp. and Chrysler LLC, a senior administration official said Sunday night.

Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will oversee the across-the-government panel, the official said, speaking on the condition of anonymity because no announcement has been made.

GM and Chrysler are expected to submit restructuring plans to the government by Tuesday, the deadline for showing how they can repay billions in loans and become viable in spite of a huge drop in auto sales.

The auto industry task force is just one element of Obama's plan to revive the flailing economy.

On Tuesday he's flying to Denver to sign the $787 billion stimulus bill into law, taking his economic message to the American people, who are giving him high marks for handling the crisis.

Obama will also be tackling the home mortgage foreclosure crisis.

The direct appeals for public support follow scant GOP backing in Congress for his agenda and increasing partisan bickering.

Passage of the stimulus measure -- unprecedented in its cost -- was a major victory for Obama as he struggles to lift the country from a financial nosedive unseen since the Great Depression of the 1930s.

"I think it's safe to say that things have not yet bottomed out," press secretary Robert Gibbs said Sunday.

"They are probably going to get worse before they improve."

"But this is a big step forward toward making that improvement and putting people back to work."

The symbolism of the stimulus signing is obvious for Colorado, where a growing green-energy industry will draw major benefits from the plan.

And Obama seems likely to continue selling that recovery by traveling around the country.

"He is determined to keep in touch with the American people who sent him here to do this job," senior adviser David Axelrod said.

With the stimulus victory in hand, Obama planned to shift to the housing crisis with an announcement Wednesday in Phoenix.

Obama was expected to offer help to homeowners on the brink of foreclosure.

Details have not been disclosed, but the nature of the crisis suggested mortgage loans would have to be revalued downward along with interest rates.

------

Associated Press writer Philip Elliott contributed to this report from Chicago.

------

On the Net:

White House: http://www.whitehouse.gov

"Burris: Feds' questions didn't prompt admissions - Burris: Feds' questions didn't prompt new admissions about contacts with Blagojevich's brother"

By DON BABWIN, Associated Press

Last updated: 1:55 p.m., Monday, February 16, 2009

CHICAGO -- Sen. Roland Burris insisted Monday that a newly released affidavit outlining contacts with ousted Gov. Rod Blagojevich's brother and other advisers was voluntary and not the result of contact from federal agents investigating the former governor.

"It was done because we promised the (impeachment) committee we would supplement information in case we missed anything," Burris said Monday before embarking on trip to talk with constituents.

"End of story."

Burris released an affidavit over the weekend in which he admitted Blagojevich's brother asked him for campaign fundraising help before Blagojevich appointed Burris to the Senate.

The disclosure is at odds with Burris' testimony in January, when the Illinois House impeachment committee specifically asked whether he had ever spoken to Robert Blagojevich or other aides to the now-deposed governor about the Senate seat vacated by President Barack Obama.

The discrepancy could mean Burris perjured himself.

But the Democratic senator insisted Monday that the Feb. 4 affidavit was merely a promised supplement, not a contradiction, to his testimony before the committee and was not requested as part of the federal corruption investigation of Blagojevich's administration.

"There was no change of any of our testimony," Burris, 71, said.

"We followed up as we promised the impeachment committee."

"... The information that's being reported in terms of that this was done because of a fed statement is absolutely, positively not true."

Blagojevich appointed Burris to the Senate Dec. 30, three weeks after the governor was arrested on a federal complaint that he tried to trade the Senate post for campaign cash or a high-paying job.

The House impeached him and the Senate removed him from office Jan. 29.

The affidavit's release prompted state Republican leaders to call for Burris' resignation and a perjury investigation while members of his own party, including Blagojevich successor Gov. Pat Quinn, say they would like a full explanation from Burris.

According to the affidavit, Robert Blagojevich called Burris three times -- once in October and twice after the November election -- to seek his fundraising assistance.

The disclosure reflects a major omission from Burris' testimony in January.

Burris said he never got a chance to answer a direct question about Blagojevich's brother, and submitted the Feb. 4 affidavit to clarify.

However, transcripts of Burris' impeachment committee testimony show he had opportunities to provide a full response to Illinois legislators.

In one instance, when asked directly about speaking to Robert Blagojevich and other associates of the former governor, Burris consulted with his attorney before responding.

Robert Blagojevich's attorney has said that his client believes one of the conversations was recorded by the FBI.

Burris said Sunday that he told Robert Blagojevich he would not raise money because it would look like he was trying to win favor from the governor for his appointment.

"I did not donate one single dollar nor did I raise any money or promise favors of any kind to the governor," he said.

But he said he did ask the governor's brother "what was going on with the selection of a successor" to Obama in the Senate and "he said he had heard my name mentioned in the discussions."

------

Associated Press writer Rupa Shenoy contributed to this report.

"Regulators close banks in Neb., Fla., Ill., Ore. - Regulators close banks in Nebraska, Florida, Illinois, Oregon; 13 US bank failures this year"

By MARCY GORDON and SARA LEPRO, Associated Press

Last updated: 9:05 p.m., Friday, February 13, 2009

WASHINGTON -- Regulators on Friday closed banks based in Nebraska, Florida, Illinois and Oregon, marking 13 failures this year of federally insured institutions.

The Federal Deposit Insurance Corp. was appointed receiver of the banks.

Sherman County Bank, located in Loup City, Neb., had $129.8 million in assets and $85.1 million in deposits as of Feb. 12.

Cape Coral, Fla.-based Riverside Bank of the Gulf Coast had assets of $539 million and deposits of $424 million as of Dec. 31.

Corn Belt Bank and Trust Co. of Pittsfield, Ill., had total assets of $271.8 million and deposits of $234.4 million as of Dec. 31.

Pinnacle Bank of Beaverton, Ore. had total assets of $73 million and deposits of $64 million as of Dec. 31.

Twenty-five U.S. banks failed last year, far more than in the previous five years combined.

There were just three bank failures in 2007.

It's expected that many more banks won't survive this year amid rising unemployment, falling home prices and tighter credit.

Heritage Bank, based in Wood River, Neb., will pay the FDIC about $5.1 million to assume Sherman County Bank's deposits.

Due to the Presidents Day holiday on Monday, Sherman County's four branches, including those that operated under the name Howard County Bank, will reopen on Tuesday as branches of Heritage Bank.

The bank also agreed to buy $21.8 million of Sherman County Bank's assets.

The FDIC will retain the remaining assets for later disposition.

TIB Bank of Naples, Fla., will assume all of the deposits of Riverside Bank, except for $142.6 million in brokered deposits.

TIB Bank agreed to pay the FDIC a premium of 1.3 percent on the deposits.

The FDIC will pay the brokers directly for the amount of their funds.

Customers who placed money with brokers should contact them directly for more information about the status of their accounts, the FDIC said.

TIB Bank also agreed to buy $125 million of Riverside's assets.

The FDIC will retain the remaining assets for later disposition.

Riverside's nine branches will reopen Tuesday as TIB Bank branches.

The Carlinville National Bank of Carlinville, Ill., will assume all of the deposits of Corn Belt Bank and Trust, whose two branches will reopen on Tuesday as Carlinville National Bank branches.

Carlinville Bank and Trust, which will not assume $92 million in Corn Belt brokered deposits, will pay the FDIC a premium of 1.75 percent.

The FDIC will pay the brokers directly for the amount of the insured funds.

Carlinville National Bank will also assume $60.7 million in assets.

Spokane, Wash.-based Washington Trust Bank will assume the deposits of Pinnacle Bank.

Pinnacle's sole branch will reopen as a Washington Trust Bank branch on Tuesday.

In addition to assuming all of the deposits, including those from brokers, Washington Trust also agreed to buy $72 million in assets at a discount of $7.6 million.

Washington Trust also entered into a loss-sharing agreement with the FDIC, whereby the bank will share in the losses on about $66 million in assets covered under the agreement.

Pinnacle is the first bank in Oregon to fail since 1991.

The FDIC estimated that the cost to the federal deposit insurance fund from the resolution of these failed banks will be about $341.6 million.

Regular deposit accounts are insured up to $250,000.

The FDIC estimates that through 2013, there will be more than $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July.

The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion.

That is the lowest level since 2003.

An FDIC official asked Congress last week to more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion, as a way to reassure the public that the government stands firmly behind insured bank deposits.

The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's $700 billion financial rescue plan.

Under the program, which is meant to unfreeze the credit markets, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.

Earlier this week, Treasury Secretary Timothy Geithner revealed plans to beef up the government's efforts to spur lending and remove toxic assets from banks' books.

Investors, however, were disappointed by the lack of details on how the programs would be implemented.

The government has already pumped nearly $200 billion directly into banks of all sizes through preferred stock purchases.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 -- a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

"Trump Entertainment files for Chapter 11"

17 FEBRUARY 2009

(Reuters) – Trump Entertainment Resorts Inc, Donald Trump's casino group, filed for Chapter 11 bankruptcy protection on Tuesday, court documents show.

The casino operator had assets of about $2.1 billion and total debts of about $1.74 billion on December 31, 2008, it said in its filing with the U.S. Bankruptcy Court for the District of New Jersey.

Nine affiliates of the casino operator including Trump Plaza Associates, Trump Plaza Associates, Trump Marina Associates and Trump Taj Mahal Associates simultaneously sought protection, according to the filing.

The company missed a $53.1 million bond interest payment due on December 1 as a sharp downturn in consumer spending hit casino revenues.

Donald Trump said on Friday that he had decided to resign from the board of the company due to disagreements with bondholders who wanted the casino group to file for bankruptcy.

(Reporting by Ajay Kamalakaran in Bangalore; editing by Simon Jessop)

"Fallen oil prices a chink in Sarah Palin's armor - Sarah Palin faces first major challenge in governor's office with Alaska's sickly oil revenues"

By RACHEL D'ORO, Associated Press

Last updated: 6:35 a.m., Tuesday, February 17, 2009

ANCHORAGE, Alaska -- Alaska Gov. Sarah Palin's first two years in office have been called a time of milk and honey, when the resource-rich state was flush with wealth from record oil prices.

The second half of her term isn't looking so rosy as Palin faces her first major financial challenge as governor.

The rapid decline of oil prices has left the state in a looming budget crisis and a late-entrant in the national recession.

And that could have political repercussions for the former Republican vice presidential hopeful, who has signaled an interest in a 2012 presidential run but must stay visible in the Lower 48 to be successful.

"Given these bad times, she's going to have a much more difficult time traveling outside Alaska," said Larry Sabato, director of the University of Virginia's Center for Politics.

"When times are good, people will let their governor roam."

"In bad times, citizens expect their governor to stay home and work on solving the problems."

Oil accounts for as much as 90 percent of state revenues.

So the plunge of North Slope crude from an all-time high of $144.59 per barrel last July threatens to give the state an estimated budget shortfall of up to $1.5 billion in the fiscal year that ends June 30.

Palin bills herself as a fiscal conservative, and has called for reducing state spending by $268 million in this budget year, but lawmakers and others say these aren't reductions at all and do nothing to curtail spending.

For example, the bulk of that sum -- $200 million -- is unspent tax credits for companies investing in oil and gas development that are being returned to the treasury.

Palin also is seeking approval from lawmakers to tap budget reserves to fill the deficit.

She also has implemented a state hiring freeze that exempts public safety employees, but other departments are lining up to ask for waivers.

It's a long way from Palin's early tenure -- particularly last year when the state's treasury was bloated with surplus money from the skyrocketing oil prices.

From that bounty the hugely popular governor got the state to give $1,200 to most Alaskans in a one-time fuel relief payout that totaled about $740 million.

That payout was on top of a record $2,069 dividend from the state's oil royalty investment program, which distributes checks annually.

"The first two years of her term, upon reflection and looking over your shoulder, are going to be looked back at fondly," said Sen. Kim Elton, a Juneau Democrat who is rumored to be up for a post in President Barack Obama's Interior department.

"The coming two years for Sarah Palin I think will be difficult."

"You test the mettle of people in hard times."

"That applies to all elected officials," he added.

Palin, who has not said if she will run for re-election as governor in 2010, said that dealing with the oil wealth was actually her first significant challenge.

It meant reining in government spending sprees and making "sure that we were living within our means and putting money aside for a rainier day."

The state has socked away $1 billion in an education fund for the next school year and education officials say another $1 billion is expected go into the fund this year for future use.

More billions went into state savings as well, Palin said.

"We're more prepared than other states because of the prudence there," Palin said recently.

"We crossed that first hurdle."

The state currently has $6.6 billion in its constitutional budget reserve fund that it could tap into.

A few billion dollars more also is available from other pockets, said Juneau economist Gregg Erickson, a longtime Alaska budget watcher.

Given Alaska's robust reserves, the state is well-prepared to weather the next two years, Erickson said.

As to how long reserves will last after that, there are too many factors involved to say for sure.

"It depends on how much you draw from other places, how fast the budget increases and declines, the earnings rates on reserves that you have," Erickson said.

"And of course, it depends on how high or low oil prices are."

Bear Ketzler, an Interior Alaska resident, has a hard time envisioning Palin running for a second term as governor if the economy stays sour.

"She's kind of been moved up a couple notches and I could see her leaving the state and getting her profile up even higher on the national political level," said Ketzler, city manager of the Yukon River village of Tanana.

"But I think for her to be electable in four years, Obama would really have to screw up."

sorry livyjr

Obama isn't going to really screw up

I'm not hoping he does, graham ....

Do you think that I want Sarah Palin for president?

And so ...

DEFLATION IS GOOD FOR US COMMON CITIZENS ON FIXED INCOMES ....

"Fed's Bullard warns of deflation - Federal Reserve Bank of St. Louis President James Bullard warns of deflation risk"

By JEANNINE AVERSA, Associated Press

Last updated: 1:25 p.m., Tuesday, February 17, 2009

WASHINGTON -- With the economy spinning deeper into recession, the country might suffer a dangerous bout of falling prices, or deflation, a Federal Reserve official warned Tuesday.

"I think we face some risk -- at this point only a risk -- of sustained deflation," James Bullard, president of the Federal Reserve Bank of St. Louis, said in a speech to the New York Association for Business Economics.

A government report, released last month, showed that consumer prices tumbled in December, and inflation last year logged its smallest advance since the early 1950s, fanning new fears that the country may face a dangerous bout of deflation.

Falling prices sound like a gift at first -- at least to consumers.

But a widespread and prolonged decline can wreak more havoc on the economy, dragging down Americans' wages, and clobbering already-stricken home and stock prices.

Dropping prices already are hurting businesses' profits, forcing them to slice capital investments and lay off workers.

"Ongoing deflation in the United States might be particularly pernicious," Bullard said.

To fend off any deflationary threat, the Fed is expected to hold its key interest rate at a record low for the rest of this year.

America's last serious case of deflation was during the Great Depression in the 1930s.

Japan was gripped with a period of deflation during the 1990s, and it took a decade for that country to overcome those problems.

"In some ways, our current environment parallels the Japanese experience after 1990," Bullard said.

"The Japanese banking system encountered difficulties with 'troubled assets' and the intermediation system broke down."

"That is an experience that neither we, nor the rest of the world's economies, want to repeat."

"Burris tried to raise funds for Blagojevich"

17 FEBRUARY 2009

SPRINGFIELD, Ill. – U.S. Sen. Roland Burris now acknowledges attempting to raise money for ousted Gov. Rod Blagojevich — an explosive twist in his ever-changing story on how he landed a coveted Senate appointment from the man accused of trying to sell the seat.

Burris made the admission to reporters on Monday, after releasing an affidavit over the weekend saying he had more contact with Blagojevich aides about the Senate seat than he had described under oath to the state House panel that recommended Blagojevich's impeachment.

The Democrat also said in the affidavit, but not before the panel, that the governor's brother asked him for fundraising help.

Though Burris insists he never raised money for Blagojevich while the governor was considering whom to appoint to the seat President Barack Obama vacated, the revelation that he had attempted to do so is likely to increase calls for Burris' resignation and an investigation into whether he committed perjury before the panel.

Illinois Democrats have forwarded documents related to Burris' testimony to a county prosecutor for review.

Burris would not answer questions Tuesday in Peoria about his attempts to raise funds for Blagojevich, but said he didn't do anything wrong and encouraged officials to look into the matter.

"I welcome the opportunity to go before any and all investigative bodies, including those referred by Illinois Attorney General Lisa Madigan and the Senate ethics committee to answer any questions they have," he told reporters Tuesday.

After an event Monday night in Peoria, Burris told reporters that he had reached out to friends after Blagojevich's brother, Robert, called him before President Barack Obama's election asking him to raise $10,000 or $15,000 for the governor.

"So some time shortly after Obama was elected, the brother called," Burris said, according to a transcript posted on the Chicago Tribune's Web site.

"And now in the meantime, I'd talked to some people about trying to see if we could put a fundraiser on."

"Nobody was — they said, 'We aren't giving money to the governor.'"

"And I said, 'OK, you know, I can't tell them what to do with their money.'"

Burris said he left open the possibility that he and his business partner could go to others for money.

He reiterated that he never did end up donating to the governor or holding a fundraiser, and said that he told Robert Blagojevich in a later conversation that he couldn't raise money because he was interested in the Senate seat.

Burris, however, had already discussed the Senate seat with aides to the governor, including Robert Blagojevich, before the November election.

Burris is in the midst of a previously scheduled tour of northern and central Illinois cities as he tries to get his Senate legs by hearing constituents' concerns.

Lawmakers of both parties have said Burris should resign after he admitted over the weekend that he had talked to several aides of the governor before getting the Senate post.

During his testimony before the panel, he said he remembered talking only to one aide about the seat and did not say he was hit up for campaign donations.

The new affidavit submitted to the impeachment panel indicated contact not only with Robert Blagojevich, but with Blagojevich's former chief of staff John Harris and two other close friends — all of whom Burris had been specifically asked about by the committee's top Republican.

"You would think those would be the kind of people you'd remember you had a conversation with," said Rep. Gary Hannig, a Litchfield Democrat.

Burris initially told the impeachment committee he had only a brief conversation with Rod Blagojevich, a fellow Democrat, before he was named to the seat Dec. 30.

In testimony before the House committee Jan. 8, he added that he had discussed the seat with a longtime Blagojevich friend last summer.

U.S. Senate Democrats initially refused to seat Burris because he had been appointed by Blagojevich, who had been arrested three weeks earlier on federal charges he tried to profit from the Senate appointment.

But they relented, setting as a condition Burris' impeachment committee testimony.

Illinois House Speaker Michael Madigan called Sangamon County State's Attorney John Schmidt on Tuesday and alerted him to the package of material he was sending, but did not make any comments on the situation, Madigan spokesman Steve Brown said.

Schmidt released a statement saying only the matter is under review.
____

Associated Press reporter David Mercer contributed to this report from Peoria.

"Burris 'welcomes' probes into Blagojevich contacts"

By JOHN O'CONNOR, Associated Press Writer

18 FEBRUARY 2009

SPRINGFIELD, Ill. – An increasingly embattled U.S. Sen. Roland Burris said he "welcomes" the chance for authorities and elected officials to look into how he landed a coveted Senate appointment from ousted Gov. Rod Blagojevich.

Burris' admission that he had more contact with Blagojevich advisers about the Senate seat than he described under oath to a state House impeachment panel has furious lawmakers asking for an investigation into whether the Democrat committed perjury.

And the revelation that Burris tried to raise money for the governor after Blagojevich's brother asked him for fundraising help has triggered calls for Burris' resignation.

Burris insists he never raised money for Blagojevich while the governor considered whom to appoint to the seat President Barack Obama vacated.

"I have made an effort to be as transparent as I can and I'm willing to take a further step as I have nothing to hide," Burris told reporters Tuesday night.

"I welcome the opportunity to go before any and all investigating bodies, including those referred by Illinois Attorney General Lisa Madigan and the U.S. Senate Ethics Committee, to answer any questions they have."

Burris said he planned to release later this week "a concise document" related to his testimony in front of the state House panel that recommended Blagojevich's impeachment, but he would not elaborate.

Illinois Democrats have sent documents related to Burris' testimony to a county prosecutor for review.

The Chicago Tribune on Wednesday added its voice to the chorus demanding Burris' resignation.

In an editorial in its Wednesday editions, the paper said Burris has lost the benefit of the doubt with his latest version of events.

Burris told reporters on Monday he contacted friends after Blagojevich's brother, Robert, called him before Obama's election asking him to raise $10,000 or $15,000 for the governor.

"So sometime shortly after Obama was elected, the brother called and in the meantime I had talked to some people about trying to see if we could put a fundraiser on," Burris said, according to an audio clip provided by the (Peoria) Journal Star.

But Burris said his friends weren't willing to contribute and suggested Robert Blagojevich talk to Burris' partner about approaching other potential donors.

Burris reiterated that in the end, he raised no money and hosted no fundraiser.

He told Robert Blagojevich in a later conversation that he couldn't raise money because he was interested in the Senate seat.

Burris, however, already had indicated his interest in the Senate seat to gubernatorial aides, including Robert Blagojevich, before the November election.

Lawmakers of both parties have said Burris should resign after he admitted that he talked to several Blagojevich aides before getting the Senate post.

During his testimony before the panel, he said he remembered talking only to one aide about the seat and did not say he was hit up for campaign donations.

The new affidavit submitted to the impeachment panel indicated contact not only with Robert Blagojevich, but with Blagojevich's former chief of staff John Harris and two other close friends — all of whom Burris had been specifically asked about by the committee's top Republican.

"You would think those would be the kind of people you'd remember you had a conversation with," said Rep. Gary Hannig, a Litchfield Democrat and a member of the impeachment committee.

That panel's chairwoman has no plans to recall Burris to answer questions about the supplements to his story.

State Rep. Barbara Flynn Currie, D-Chicago, said Tuesday that doing so could interfere with a review of the situation by Sangamon County State's Attorney John Schmidt, who was contacted about the matter by House Speaker Michael Madigan.

U.S. Sen. Barbara Boxer, D-Calif., chairman of the Senate's ethics committee, declined to comment Tuesday on whether the panel would investigate Burris.

A spokeswoman for Boxer would not say whether a case would be opened but said preliminary inquiries begin whenever there are "allegations of improper conduct."

U.S. Senate Majority Leader Harry Reid, D-Nev., "supports Sen. Burris' decision to cooperate" with any investigation, a spokesman said Tuesday.

Reid and his No. 2, Illinois U.S. Sen. Dick Durbin, initially refused to seat Burris because he was appointed by Blagojevich, who was arrested three weeks earlier on federal charges he tried to profit from the Senate appointment.

They relented on condition Burris testify before the impeachment committee.

Burris initially told the committee he had only a brief conversation with Rod Blagojevich, a fellow Democrat, before he was named to the seat Dec. 30.

In testimony before the House committee Jan. 8, he added that he discussed the seat with a longtime Blagojevich friend last summer.

State Rep. Jack Franks, D-Woodstock, said he asked Reid's office Tuesday to open an ethics review.

"I don't see how they can really avoid it at this point with the ever-changing story of Sen. Burris," Franks said.
____

Associated Press writers Andrea Zelinski in Normal, David Mercer in Peoria, Deanna Bellandi in Chicago and Larry Margasak in Washington contributed to this report.

"Obama OKs about 17,000 more troops for Afghanistan - Obama approves adding about 17,000 US troops for war in Afghanistan, officials say"

By ANNE GEARAN, Associated Press

Last updated: 7:15 p.m., Tuesday, February 17, 2009

WASHINGTON -- President Barack Obama approved adding some 17,000 U.S. troops for the flagging war in Afghanistan, his first significant move to change the course of a conflict that his closest military advisers have warned the United States is not winning.

"This increase is necessary to stabilize a deteriorating situation in Afghanistan, which has not received the strategic attention, direction and resources it urgently requires," Obama said in a statement.

That was a slap at his predecessor, George W. Bush, whom Obama has accused of slighting urgent national security needs in Afghanistan in favor of war in Iraq.

The White House said the new commander in chief would send a Marine unit and one additional Army brigade to Afghanistan this spring and summer.

About 8,000 Marines are expected to go first, followed by an Army brigade, totalling about 4,000 troops, and 5,000 support forces.

The United States has slightly more than 30,000 troops in the country now.

Obama's decision shifts the Army brigade and several thousand Marines from already approved deployments to Iraq later this year to new destinations in southern Afghanistan.

As a result, the number of combat brigades in Iraq will likely drop from 14 to 12 by the summer, unless other units are identified to fill those slots.

A decision on that troop cut in Iraq has not yet been made, but Obama campaigned on a pledge to bring combat troops out of Iraq.

The new troops going to Afghanistan represent the first installment on a larger influx of U.S. forces widely expected this year.

Obama's move would put several thousand troops in place in time for the increase in fighting that usually occurs with warmer weather and ahead of national elections in August.

The additional forces partly answer a standing request from the U.S. commander in Afghanistan, Gen. David McKiernan, who has sought as many as 30,000 additional U.S. troops to counter the resurgence of the Taliban militants and protect Afghan civilians.

"There is no more solemn duty as president than the decision to deploy our armed forces into harm's way," Obama said.

"I do it today mindful that the situation in Afghanistan and Pakistan demands urgent attention and swift action."

The new units are the 2nd Marine Expeditionary Brigade from Camp Lejeune, N.C., and the 5th Brigade, 2nd Infantry Division, an Army Stryker brigade from Fort Lewis in Washington state.

The Pentagon outlined an addition of 12,000 combat forces, and said 5,000 support troops would be identified later.

A Marine Expeditionary Brigade can vary in size and makeup.

Among the forces recently notified of deployment is a Marine unit of infantry and ground troops from Camp Pendleton in southern California, said Kurt Bardella, a spokesman for Rep. Darrell Issa, a Republican who represents the congressional district where the base is located.

Ahead of his first foreign trip this week, Obama told a Canadian news organization that the United States will seek a more comprehensive, diplomatic approach to Afghanistan, where the U.S. has been engaged in war since 2001.

"I am absolutely convinced that you cannot solve the problem of Afghanistan, the Taliban, the spread of extremism in that region solely through military means," the president said in a White House interview with Toronto-based Canadian Broadcasting Corp.

Obama is scheduled to make a quick day trip to Ottawa on Thursday.

Obama agreed to a troop recommendation from Defense Secretary Robert Gates, the lone holdover from the Bush administration.

Pentagon officials had been expecting a similar announcement for weeks, but the new Obama team took about a month choosing how and when to add forces to a war that has been sliding backward.

The president made his decision Tuesday, a senior White House official said.

The official, who spoke on condition of anonymity ahead of the announcement, said Obama informed congressional leaders and Afghan President Hamid Karzai by phone.

The planned troop deployment does not preclude sending more forces in the future, the official said.

Any others, however, would come as part of a broader strategic review of the entire policy in Afghanistan and Pakistan, not as a stand-alone troop decision, the official said.

That review should be completed sometime around the end of March, which coincides with a NATO summit in Europe.

The strategy review for the Iraq war is expected to be completed in about two weeks or so, with announcements expected then on troop drawdowns, the White House official said.

U.S. commanders have said they want to beef up the expeditionary units and trainers in Afghanistan's southern region with enough new troops to stem the violence without becoming an occupying force that would alienate the population.

McKiernan has asked for more mobile forces and believes having a Stryker brigade will allow soldiers to move more easily along the rugged trails to the widely dispersed tribal enclaves.

Stryker brigades come outfitted with several hundred eight-wheeled, 19-ton Stryker vehicles, which offer greater protection than a Humvee and are more maneuverable than the heavily armored mine-resistant vehicles that are being used across Iraq.

--------

Associated Press writers Lolita C. Baldor, Anne Flaherty, Lara Jakes and Pamela Hess contributed to this report.

"B-52 BEN" BERNANKE IS WITHOUT A STITCH OF CREDIBILITY BY THIS TIME IN THIS FINANCIAL FIASCO ...

HE HAS BEEN MAKING THIS SAME VOW SINCE 2007 AND EVERY TIME HE SAYS IT, THINGS JUST CONTINUE TO GET WORSE ....

RIGHT NOW, AMERICA NEEDS BEN BERNANKE LIKE IT NEEDS A HOLE IN THE HEAD ....

And so ...

"Bernanke vows to do all he can to revive economy - Bernanke vows to do all he can to revive economy, defends Fed's bold programs to ease crisis"

By JEANNINE AVERSA, Associated Press

Last updated: 2:45 p.m., Wednesday, February 18, 2009

WASHINGTON -- Federal Reserve Chairman Ben Bernanke pledged anew Wednesday to do everything in his power to lift the country out of recession, while defending the extraordinary steps the Fed has taken to fight the worst credit and financial crisis since the 1930s.

The central bank has slashed a key interest rate to record lows and has launched a series of radical programs in hopes of getting credit -- the economy's oxygen -- to flow more freely again to American consumers and businesses, and stabilize Wall Street.

Such relief would help revive the U.S. economy, which has been mired in recession since December 2007.

"Recent economic statistics have been dismal, with many economies, including ours, having fallen into recession," Bernanke said in remarks to the National Press Club.

"In the United States, the Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability and economic prosperity as quickly as possible."

In a separate report Wednesday, the Fed sharply downgraded its projections for the U.S. economy this year.

Unemployment will rise to between 8.5 and 8.8 percent, the central bank said, from its current level of 7.6 percent.

The Fed also forecast that the economy will shrink between 0.5 and 1.3 percent this year, down from its mid-November estimate that the economy might decline 0.2 percent or grow 1.1 percent.

Unemployment will "go above 8 (percent) for sure" this year, Bernanke said, adding that the prospects for recovery depend on government policy.

Bernanke said the administration's efforts to rescue the financial sector to get credit flowing again are as important as the $787 billion stimulus package signed into law by President Barack Obama on Tuesday.

"If we can take strong and aggressive action ... we can break the back of this thing and we can begin to see improvements in 2009," Bernanke said.

"If we fail ... then the situation will continue to deteriorate."

The Fed has been exploring new tools -- as well as expanding existing programs -- to provide further economic and financial relief, although Bernanke didn't provide any new details on Wednesday.

With all the Fed's programs to provide loans or buy debt, its balance sheet has mushroomed to just under $2 trillion, from around $900 billion in September.

Critics worry the Fed's actions have the potential to put ever-more taxpayers' dollars at risk, spur inflationary pressure in the future and encourage "moral hazard," where companies feel more comfortable making high-stakes gambles because the government will rescue them.

Bernanke, however, sought to downplay some of those concerns.

"The credit risk with our nontraditional policies is exceptionally low," he said, adding that when the economy is on the mend, the Fed's programs can be quickly reversed "to avoid risks of future inflation."

The great bulk of the Fed's lending is generally short term and backed by more than ample assets, Bernanke said.

In other controversial moves, the Fed last year provided financial backing for JPMorgan Chase's take over of Bear Stearns, and bailed out insurer American International Group.

Although this carries "more risk than our traditional activities," Bernanke said the Fed intends over time to sell the assets it holds from those bailouts in a way that maximizes the return to taxpayers.

Elsewhere Wednesday, another Fed official said the U.S. economy likely will show signs of recovery this year, but warned that unemployment rates will probably rise further and the economic outlook will be similar to 2008.

Sandra Pianalto, president of the Federal Reserve Bank in Cleveland, projected real gross domestic product to decline sharply in the first half of 2009, followed by a modest upturn in the second half.

"Unfortunately, I don't expect this to get better until we see stability returning into housing and financial markets," Pianalto said in a speech to commercial developers in Columbus, Ohio.

Bernanke repeated a pledge -- made last week -- to keep Americans better informed about its efforts to ease credit and financial problems.

On that front, the central bank is developing a new Web site that will provide detailed information on its efforts.

The Fed hopes to have the site operational in the coming days.

The Fed's No. 2 official, vice chairman Donald Kohn, also is leading a committee to review the central bank's disclosure policies related to its lending programs and its balance sheet, which outlines its efforts to ease credit problems by providing loans and buying debt.

"The presumption of the committee will be that the public has a right to know," Bernanke said.

In another move to provide Wall Street and Main Street with better insights into the Fed's thinking about the economy, Bernanke said the central bank will start publishing longer-term projections on economic activity, unemployment and inflation beyond the three years now provided.

----------

AP Economics Writer Christopher S. Rugaber contributed to this report.

"Fed downgrades economic forecast for this year - Fed downgrades economic forecast for this year, warns of long road to recovery"

By JEANNINE AVERSA, Associated Press

Last updated: 3:55 p.m., Wednesday, February 18, 2009

WASHINGTON -- The Federal Reserve on Wednesday sharply downgraded its projections for the country's economic performance this year, predicting the economy will actually shrink and unemployment will rise higher.

Under the new projections, the unemployment rate will rise to between 8.5 and 8.8 percent this year.

The old forecasts, issued in mid-November, predicted the jobless rate would rise to between 7.1 and 7.6 percent.

Many private economists believe the jobless rate -- currently at 7.6 percent, the highest in more than 16 years -- will hit at least 9 percent by early next year even with the $787 billion stimulus package signed into law Tuesday by President Barack Obama.

The Fed also believes the economy will contract this year between 0.5 and 1.3 percent.

The old forecast said the economy could shrink by 0.2 percent or expand by 1.1 percent.

The last time the economy registered a contraction for a full year was in 1991, by 0.2 percent.

If the Fed's new predictions prove correct, it would mark the weakest showing since a 1.9 percent drop in 1982, when the country had suffered through a severe recession.

The bleaker outlook represents the growing toll of the worst housing, credit and financial crises since the 1930s.

All of those negative forces have plunged the nation into a recession, now in its second year.

"Given the strength of the forces currently weighing on the economy," Fed officials "generally expected that the recovery would be unusually gradual and prolonged," according to documents on the Fed's updated economic outlook.

Against that backdrop, unemployment will keep climbing and stay elevated for quite some time, the Fed predicted.

Fed officials anticipated that unemployment would remain "substantially" higher than normal at the end of 2011 "even absent further economic shocks."

The Fed forecast calls for the jobless rate to dip to between 8 and 8.3 percent next year, and to between 7.5 and 6.7 percent in 2011.

All those projections are worse than the Fed's previous estimates and would put unemployment higher than the normal range around 5 percent.

Employment is usually the last piece of the economy to heal once the country is out of recession and in recovery mode.

Businesses are usually reluctant to ramp up hiring until they feel confident that any recovery has staying power.

Under the Fed's new projections, the economy should grow between 2.5 and 3.3 percent next year.

Fed officials "generally expected that strains in financial markets would ebb only slowly and hence that the pace of recovery in 2010 would be damped," according to the Fed documents.

Fed officials, however, predicted the economy would pick up speed in 2011, growing by as much as 5 percent, which would be considered robust.

Still, given all the economy's problems, there are risks that the Fed's forecasts could turn out to be too optimistic.

And a few Fed officials -- none are identified -- feared that it could take five or six years for the economy and employment to get back into a sustainable mode of health.

On the inflation front, the weak economy should mean that companies will keep a lid on price increases this year as they try to lure skittish consumers.

The Fed expects prices to rise between 0.3 and 1 percent this year, down from a projection of between 1.3 and 2 percent in the fall.

Prices will pick up slightly in 2010 and 2011 as the economy strengthens.

For now, Fed officials are more worried about falling prices, than rising ones.

The Fed didn't use the word "deflation," which is a dangerous bout of falling prices, but officials noted "some risk of a protracted period of excessively low inflation."

Falling prices sound like a gift at first -- at least to consumers.

But a widespread and prolonged decline can wreak more havoc on the economy, dragging down Americans' wages, and clobbering already-stricken home and stock prices.

Dropping prices already are hurting businesses' profits, forcing them to slice capital investments and lay off workers.

America's last serious case of deflation was during the Great Depression in the 1930s.

Japan was gripped with a period of deflation during the 1990s, and it took a decade for that country to overcome those problems.

To revive the economy, the Fed has slashed interest rates to record lows and is expected to leave them there for the rest of this year.

It also has rolled out a series of bold programs to bust through credit clogs and is exploring other unconventional tools to provide relief.

Specifically, the Fed at its January meeting said it was "prepared" to buy longer-term Treasury securities if the circumstances warrant such action.

Doing so would help drive down mortgage rates and provide help to the stricken housing market, economists said.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, preferred moving forward to buy the securities to provide relief, rather than through targeted credit programs, including one to be operational sometime in February to bolster consumer loans.

"He saw no evidence of market failures" that made such programs necessary, according to Fed documents of its January 27-28 closed-door meeting.

Several unidentified Fed officials expressed a willingness to expand the size and duration of another program where the Fed is buying debt and mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac.

Mortgage rates have fallen since that program was announced late last year.

Even so, Fed officials saw "no indication that the housing sector was beginning to stabilize," the documents stated.

"Depositors turned away from Stanford banks - Depositors can't get cash from Stanford banks; Politicians scramble as regulators urge calm"

By BEN FOX, Associated Press

Last updated: 5:05 p.m., Wednesday, February 18, 2009

ST. JOHN'S, Antigua -- Panicky depositors were turned away from Stanford International Bank and some of its Latin American affiliates Wednesday, unable to withdraw their money now after U.S. regulators accused Texas financier R. Allen Stanford of perpetrating an $8 billion fraud against his companies' investors.

Some customers arrived in Antigua by private jet and were driven up the lushly landscaped driveway of the bank's headquarters, only to be told that all assets have been frozen pending an investigation by Antiguan banking regulators.

"I don't know what to think."

"I have my life savings here," said Reinaldo Pinto Ramos, 48, a Venezuelan software firm owner who flew in by chartered plane from Caracas Wednesday with five other investors to check on their accounts.

"We're waiting to see some light."

Banking regulators and politicians around the region are scrambling to contain the damage after U.S. Securities and Exchange Commission filed civil fraud charges against the billionaire on Tuesday.

Regional Director Rose Romero of the SEC's Fort Worth office called it a "fraud of shocking magnitude that has spread its tentacles throughout the world."

Specifically, U.S. regulators accused Stanford, two other executives and three of their companies of luring investors with promises of "improbable and unsubstantiated" high returns on certificate of deposits and other investments.

They asked a federal judge to freeze all three companies' U.S. assets and seek the repatriation of any company assets overseas.

That would include the $7.2 billion managed by the Antigua-based Stanford International Bank, which has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela.

Also ordered frozen were the assets of Houston-based Stanford Group Company and Stanford Capital Management.

"The fallout threatens catastrophic and immediate consequences" for the economy of the twin-island nation of Antigua and Barbuda, said Prime Minister Baldwin Spencer.

Stanford, 58, has a personal fortune of $2.2 billion, according to Forbes magazine.

He owns a home in St. Croix, in the U.S. Virgin Islands, and operates his businesses from Houston and Antigua, where his businesses and charity have had such a prominent role that the islands' government knighted him in 2006.

Stanford's whereabouts Wednesday were not known.

James Sullivan, the U.S. marshal for the Virgin Islands, said agents are monitoring Stanford's "extensive holdings" in St. Croix, including a boat he sometimes docks there, but he could not say whether he is currently in the territory.

"As of right now, all we are doing is an ongoing investigation to monitor his holdings, for lack of better term, and we are not actively pursuing him," Sullivan told The Associated Press.

Stanford also has been a major political player in the U.S., where some congressmen quickly announced they would donate his campaign contributions to charity.

The Stanford Financial Group, through its political action committee and employees, has contributed $2.4 million to political candidates, parties and committees in the U.S. since 1989, with nearly two-thirds going to Democrats, according to the Center for Responsive Politics, a group that tracks campaign spending.

Most of that cash flowed during the 2002 election cycle, when Congress was debating a financial services antifraud bill that would have linked the databases of state and federal banking, securities and insurance regulators.

The bill ultimately died in the Senate, where the biggest recipients have been Sen. Bill Nelson, D-Fla. ($45,900); Rep. Pete Sessions, R-Texas ($41,375); Sen. John McCain, R-Ariz. (28,150); Sen. Chris Dodd, D-Conn. (27,500); and Sen. John Cornyn, R-Texas ($19,700).

Stanford and his wife Susan also donated $931,100 of their own money, with 78 percent going to Democrats, including $4,600 to President Barack Obama's presidential campaign last May 31.

Records show $2,300 of that was returned on the same day.

Governments across the region took a variety of actions Wednesday to protect Stanford assets.

Colombia suspended the activities of Stanford International Bank's local brokerage Wednesday to protect "clients and investors."

Panama occupied Stanford bank branches following a run on deposits, which its banking agency described as an isolated "consequence of decisions adopted by foreign authorities."

Assets at the bank's four Panama branches, which reportedly held $200 million in deposits at year's end, are held largely in liquid, fixed-income investments that can easily be converted into cash to cover deposits if necessary, the bank said, and Panama's banking regulator said the regulatory move does not reflect a deterioration in the Panama branches' financial situation.

In Venezuela, banking regulator Edgar Hernandez said the government was considering a bank request for help after a $26.5 million run on deposits removed about 12 percent of the holdings of Stanford Bank SA in Caracas.

"We suggested an open intervention" by the government, including the possibility of the government or a state-run bank depositing funds to prop up the bank," Hugo Faria, one of the bank's directors, told The Associated Press.

In Mexico, where the Stanford Fondos unit manages about $50 million for about 3,400 clients, a note posted on a shuttered office door in the capital's wealthy Polanco neighborhood announced that all accounts "are temporarily frozen."

"We don't have any other information at this time, you will be contacted in the future with more details," the note said.

Karina Klinckwort, 38, had rushed to the office Wednesday: "Everything I have is with them, everything that my husband, may he rest in peace, invested is with them."

"People have to come to get their money," said Rasta Kente, an electrician in Antigua who joined hundreds of depositors in a line that stretched outside a downtown bank branch.

Many clutched portable radios to listen to financial news.

Regional regulators warned that panicking will only make things worse.

"If individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid," said K. Dwight Venner, governor of the Eastern Caribbean Central Bank.

Virgin Islands Gov. John deJongh said he worries the probe will worsen the U.S. territory's flagging economy, potentially costing jobs and investment in local projects.

Stanford had pledged to build an office complex on land adjacent to St. Croix's airport.

------

Associated Press Writers Anika Kentish in St. John's, Antigua; Jim Abrams in Washington, D.C.; Frank Bajak in Bogota; Olga Rodriguez in Mexico City; and Fabiola Sanchez in Caracas, Venezuela contributed to this report.

"Burris saga is corruption deja vu for Illinois - More the same in Illinois: Burris allegations feel like Blagojevich scandal all over again"

By DEANNA BELLANDI, Associated Press

Last updated: 6:15 p.m., Wednesday, February 18, 2009

CHICAGO -- Should he resign?

Can he be forced out?

Will he face criminal charges?

Illinoisans who thought they had put one big mess behind them with the ouster of Gov. Rod Blagojevich are getting that queasy, here-we-go-again feeling from Sen. Roland Burris, who has given shifting accounts of how he came to be appointed to the Senate.

"I think he should resign," Jan Treptow, 58, a registered nurse in Chicago said Wednesday.

"He seems to have lied."

"We've got enough dishonesty."

A preliminary U.S. Senate Ethics Committee inquiry is under way.

Illinois lawmakers have asked local prosecutors to look into perjury charges.

And the chorus of calls for his resignation grows, even from his own party.

"Our state and its citizens deserve the whole truth, not bits and pieces only when it is convenient," Rep. Phil Hare, D-Ill., said Wednesday in calling on Burris to step down.

Blagojevich was arrested Dec. 9 on charges he plotted to sell President Barack Obama's vacant Senate seat for campaign cash or a plum job for himself.

Before he could be impeached and removed from office, he defied lawmakers by appointing Burris to the Senate.

Now Burris is accused of lying to an Illinois House committee back in January when he testified that he hadn't had contact with key Blagojevich staffers or offered anything in return for the seat.

Last weekend, Burris released an affidavit saying he had spoken to several Blagojevich advisers, including Robert Blagojevich, the former governor's brother and finance chairman, who Burris said called three times last fall asking for fundraising help.

This week, Burris admitted trying, unsuccessfully, to raise money for Blagojevich.

Illinois Sen. Dick Durbin, the U.S. Senate's No. 2 Democrat, said Wednesday that Burris' statements "need to be looked at very carefully."

"His sworn testimony in Springfield did not satisfy our requirement in that it was not complete and we need to have the complete story before the final conclusion that we reach," Durbin said.

At a City Club of Chicago luncheon Wednesday, a fiery Burris asked guests to stop the rush to judgment.

"If I had done the things I been accused of, I would be too embarrassed to stand up here in front of you because you all are my friends," Burris said, adding that during his decades of public service there was "never a hint of a scandal."

Burris then said he would no longer speak with the media.

The Senate Ethics Committee could recommend disciplinary action up to and including expulsion, though the final decision would rest with the Senate as a whole.

That may be the only way, short of resignation, to remove Burris, whose seat would be up at the next regular election in November 2010.

There has been some talk of holding a special election sooner to fill the seat, but the constitutionality of that is questionable.

And a special election would give the GOP a chance to snatch the seat away.

That leaves Democrats with no good options, said Kent Redfield, a political science professor at the University of Illinois in Springfield.

"Blagojevich really hung them out to dry," Redfield said.

"So the Democrats are going to make the best of a bad situation and Republicans are going to milk it for all it's worth."

In an editorial Wednesday, the Chicago Tribune called resignation the only honorable action left for Burris.

And in Washington, White House spokesman Robert Gibbs said Burris needs to explain the circumstances surrounding his appointment.

Some Illinoisans said Burris should be allowed to serve until the next election.

"If you don't like him, throw him out at the election," said 77-year-old retiree John Fussell, as he waited for a burger at the Korner Kafe in the St. Louis suburb of Cahokia.

"I think everyone should just shut the hell up and let it run."

"How much damage can he do in less than two years?"

Fussell figured Burris "wasn't as straight as he could be" when he testified before the state panel.

But he said he is willing to give the 71-year-old Burris a pass, since "his memory may not be what it should be."

But Gail Doherty, manager of the Billy Goat Tavern in Chicago, said:

"He's a liar, him and Blagojevich."

"I think they were in cahoots."

"He should resign."

Chris Mooney, a political science professor at the University of Illinois at Springfield, said Burris won't do that.

"Burris has shown he has no shame and, like Blagojevich, will just stay there till he gets forced out," Mooney said.

"He wanted this so badly was willing to degrade himself politically and will not step down willingly."

------

Associated Press Writers John O'Connor and Andrea Zelinski in Springfield, Jim Suhr in Cahokia, Caryn Rousseau and Tammy Webber in Chicago, Larry Margasak in Washington and Nicholas Paphitis in Athens, Greece contributed to this report.

THESE BANKS ARE LIKE VULTURES, FEEDING OFF OF THE CARCASS OF AMERICA ....

"AP IMPACT: Jobless hit with bank fees on benefits - More pain for unemployed as banks turn profit on new debit card jobless benefits"

By CHRISTOPHER LEONARD, Associated Press

Last updated: 5:06 p.m., Thursday, February 19, 2009

First, Arthur Santa-Maria called Bank of America to ask how to check the balance of his new unemployment benefits debit card.

The bank charged him 50 cents.

He chose not to complain.

That would have cost another 50 cents.

So he took out some of the money and then decided to pull out the rest.

But that made two withdrawals on the same day, and that was $1.50.

For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even when they're collecting unemployment benefits, they're paying the bank just to get the money -- or even to call customer service to complain about it.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found.

All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards.

Some banks even charge overdraft fees of up to $20 -- even though they could decline charges for more than what's on the card.

"They're trying to use my money to make money," said Santa-Maria, a laid-off engineer who lives just outside Albuquerque, N.M.

"I just see banks trying to make that 50 cents or a buck and a half when I should be given the service for free."

The banks say their programs offer convenience.

They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller.

But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets.

Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it's spent.

The banks and credit card companies also get roughly 1 percent to 3 percent off the top of each transaction made with the cards.

"It's a racket."

"It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October.

Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.

Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest.

It's difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.

But the potential is clear.

In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank.

Analysts say a recipient uses a card an average of six to 10 times a month.

If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000.

If half of the cardholders also call customer service three times in any given week, the bank's revenue would jump to more than $521,000.

That would yield $6.3 million a year.

Rachel Storch, a Democratic state representative, received a wave of complaints about the fees from autoworkers laid off from a suburban St. Louis Chrysler plant.

She recently urged Gov. Jay Nixon to review the state's contract with Central Bank with an eye toward reducing the fees.

"I think the contract is unfair and potentially illegal to unemployment recipients," she said.

Central Bank did not return two messages seeking comment.

Glenn Campbell, a spokesman for Rep. Russ Carnahan, D-Mo., said the congressman would support a review of the debit card programs nationwide.

Another 10 states -- including the unemployment hot spots of California, Florida and South Carolina -- are considering such programs or have signed contracts.

The remainder still use traditional checks or direct deposit.

With the national unemployment rate now at 7.6 percent, the market for bank-issued unemployment cards is booming.

In 2003, states paid only $4 million of unemployment insurance through debit cards.

By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion, according to a study conducted by Mercator Advisory Group, a financial industry consulting firm.

The economic stimulus plan signed by President Barack Obama this week will increase federal unemployment benefits by $40 billion this year.

Subsequently, there will be more money from which banks can collect fees.

The U.S. Department of Labor allows the fees as long as states create a way for recipients to get their money for free, spokeswoman Suzy Bohnert said.

"Beyond that, the individual decides how to manage his drawdowns using the debit card," she said in an e-mail.

A typical contract looks like the agreement between Citigroup and the state of Kansas, which took effect in November.

The state expects to save $300,000 a year by wiring payments to Citigroup instead of printing and mailing checks.

Citigroup's bill to the state: zero.

The bank collects its revenue from fees paid by merchants and the unemployed.

"If you use your card the right way, you're not going to pay fees at all," said Paul Simpson, Citigroup's global head of public sector, health care and wholesale cards.

But that's not always practical.

Santa-Maria, the laid-off New Mexico engineer, said he didn't pay any fees the first time he was laid off, for several months in 2007.

His unemployment benefits were paid by paper checks.

He found a new job last year but was laid off again last fall.

This time, he was issued a Bank of America debit card -- a "prepaid" card in industry lingo -- but he was surprised to learn he had to pay fees to get his money.

He asked the bank to waive them.

It said no.

That's when Santa-Maria called back to ask how to check his account online.

He logged on and saw that the call cost him a half dollar.

To avoid more fees, Santa-Maria found a Bank of America ATM at a strip mall and withdrew $80 at no charge.

When he got back to his car, he decided to take out the rest of his money -- $250 -- and deposit it in his bank account.

Afterward, Santa-Maria logged on to his account and saw a charge of $1.50 for two withdrawals in one day.

New Mexico authorities bargained with Bank of America to get lower fees for unemployment recipients, said Carrie Moritomo, a spokeswoman for the state Department of Workforce Solutions.

The state saves up to $1.5 million annually by not printing checks.

Banks could issue unemployment debit cards with no fees for cardholders, but that would likely mean that states would have to pay more of the administrative costs, said Mark Harrington, director of marketing for Citigroup's prepaid card services.

If a state demanded no cardholder fees and could pay the difference, Citigroup might enter such a contract.

"We would be open to that," Harrington said.

"We're not looking to structure any programs where we would lose money, but we're definitely flexible."

Simpson noted that the cards can save money for jobless workers who have no bank accounts.

In the past, these people had to use corner check-cashing shops that charged fees as high as 2 percent, or $6 for a $300 check.

Now, they can swipe their cards at McDonald's, Wal-Mart or elsewhere for free.

Kenna Gortler, a laid-off paper mill worker in Oregon, said her union is advising members to avoid the debit cards and sign up to get their benefits through direct deposit.

More than 300 of her fellow workers have lost their jobs at the mill in the last three months, and horror stories about ATM fees and overdraft charges are starting to filter back to others who are just now signing up for their benefits.

"It's discouraging," Gortler said.

"People have limited funds and they don't need to be giving money to the banks."

"They need to be keeping that money to feed their families and pay bills."

"Paterson: No records kept of Senate pick process"

By MICHAEL GORMLEY, Associated Press

Last updated: 5:45 p.m., Thursday, February 19, 2009

ALBANY -- Gov. David Paterson is refusing to make public any of the responses candidates gave to his written questions in his much-criticized process to appoint a U.S. senator, or to provide a list of who was considered for the job.

Responding to a request by The Associated Press under New York's Freedom of Information Law, the Paterson administration said it kept no list of candidates and that their responses to questions, even on public policy issues, should be kept secret under a legal provision intended to protect people's privacy and safety.

"That's mind boggling," said Blair Horner of the New York Public Interest Research Group.

He suspects Paterson and his staff purposely avoided taking notes and making lists to protect the secrecy of the process that culminated in the Jan. 23 appointment of Rep. Kirsten Gillibrand.

"It was pretty clear from the beginning that the governor wanted to avoid FOIL, so they would do everything they could not to leave a paper trail," Horner said.

Robert Freeman, executive director of the state Committee on Open Government, had called for Paterson to release the questionnaire blank during the process.

Freeman maintained that some of the responses also probably should have been made public, but he said the administration isn't required to create records after the fact.

Throughout the process begun in December, Paterson refused to identify anyone who expressed interest in the seat being vacated by Hillary Rodham Clinton, now secretary of state.

Paterson wouldn't say how many candidates applied, and at various times he estimated the field at a dozen or more than 20.

The candidates who publicly identified themselves included Caroline Kennedy, Gillibrand, several other members of Congress and Nassau County Executive Tom Suozzi.

During the decision process, none would release the extensive questionnaire seeking background information such as family status, investments, any criminal record as well as education and career data.

Gillibrand posted her complete questionnaire on her Web site after she was selected but blacked out some information.

"They simply cannot defend the position that those records are exempt from FOIL," Horner said.

"They are certainly within their rights to redact certain information from the forms, but I cannot imagine under any scenario that they are put in risk of personal harm if their name was released."

"I don't get it," Horner said.

"This is supposed to be the open, transparent government."

"Instead we're getting stonewalled."

The AP is appealing the administration's response.

Paterson's press officers did not respond Wednesday or Thursday to questions about the administration's response.

State law provides for, but doesn't require, the retention of "certain essential records documenting the governor's major accomplishments," said Bob McDonnell, head of the state's retention scheduling unit in the state archives.

Those records include letters, communications, directives, and "related supporting documents received or generated by the government and executive chamber staff."

AND WITH RESPECT TO OBAMA'S $20 BILLION PROPOSAL TO CONVERT PAPER MEDICAL RECORDS TO ELECTRONIC FORMAT, WE HAVE ...

"Slip puts patient data on Internet - Security lapse at N.C. firm lets info from orthopedic practice get on the Internet"

By CATHLEEN F. CROWLEY, Staff writer, Albany, New York Times Union

First published in print: Thursday, February 19, 2009

Alice Fisk searched Google hoping to find condolence messages written on memorial sites for her daughter, who died in September from complications of diabetes.

Instead of condolences, Fisk found a medical report about her daughter's visit to a bone doctor.

"I was astonished," said Fisk, who lives in Schaghticoke.

"What a violation of a right of privacy to have someone's medical report online."

Records of more than 1,000 patient visits to Northeast Orthopaedics, a large Albany surgical practice on Everett Road, have been posted on the Internet, a violation of patient privacy laws.

Alan Okun, practice administrator, said the North Carolina company that transcribes dictation for the doctors had a security lapse.

The problem was discovered earlier this week and the company, MRecord, removed the records, he said.

However, as of Wednesday evening, Google's archiving system had kept copies that could still be discovered by a 70-year-old retired legal secretary like Fisk, and anyone else.

Fisk's daughter Alison Urzan, 48, a dental assistant, lived in Troy and suffered from diabetes for 25 years.

One of the complications of the disease was orthostatic hypertension, which caused her blood pressure to drop when she stood up.

Often, she collapsed.

She saw Dr. Leonard Goldstock at Northeast Orthopaedics for shoulder pain she developed after a fall, a fact that appears in the doctor's summary of her visit posted online.

Other records like this can be viewed:

An Aug. 13 visit of a 50-year-old restaurateur who plays a lot of tennis and golf complaining of elbow pain, an 80-year old-man who is 5 feet 7 inches tall and weighs 135 and limps because of pain in his knee but can't take anti-inflammatories because he is on blood thinners; and a 126-pound boy with shoulder pain from throwing a baseball too much.

The records include names and birth dates.

The patients range from elderly people recovering from knee replacement surgery to high school athletes with sports injuries and workers dealing with on-the-job accidents.

At least 300 records are detailed narratives of patient visits.

About 1,000 patients' records are revealed through daily schedules for the practice from March through August 2008.

The schedules include patient names, dates of birth and the reason for the visit, like "follow-up knee."

"Our plan is to contact those patients, let them know, and be forthright," Okun said.

"We are outraged."

MRecord, which is based in Raleigh, did not return calls on Wednesday.

The company provides transcription services and document storage for hospitals and doctors' groups.

The company's Web site promises protection of patient privacy in compliance with HIPAA (Health Insurance Portability and Accountability Act).

MRecord "was the breacher," Okun said.

"I can't say we are innocent, but I'd say we are innocent bystanders here."

The records appeared on the Web site visvabpo.com, which seems to be a defunct company in India called Visva BPO.

Some of the documents include records from a South Carolina orthopedic practice.

Those records include patient names, birth dates and Social Security numbers.

"If patient records are accessible to people who have no right or need to see them, particularly if they are available online, that is a violation of New York state laws on patient confidentiality as well as HIPAA," said Albany lawyer Jeffrey Sherrin, who practices health law with O'Connell and Aronowitz in Albany.

Fines of $100 for each violation up to $25,000 are possible, and if there is criminal intent, fines can reach $250,000 and up to 10 years in prison, said Sanjay Goel, associate professor of information technology at the University at Albany and director of the New York State Center for Information Forensics and Assurance.

However, punishments for HIPAA violations are rare, he said.

Medical records should be transmitted through encrypted, password-protected networks, Goel said.

Secure channels are safe and password-protected servers are inaccessible to search engines.

But once the information is on the Internet, search engines will pick it up.

"Google has Web crawlers going all over the place looking for information," he said.

Even if the information is changed or removed, search sites like Google maintain a record of the old data.

The companies can petition Google to remove the data from caches.

Until then, the medical records are there for anyone to see.

Cathleen Crowley can be reached at 454-5348 or ccrowley@timesunion.com.

"Activists 'shocked' at Clinton stance on China rights"

20 FEBRUARY 2009

WASHINGTON (AFP) – Amnesty International and a pro-Tibet group voiced shock Friday after US Secretary of State Hillary Clinton vowed not to let human rights concerns hinder cooperation with China.

Paying her first visit to Asia as the top US diplomat, Clinton said the United States would continue to press China on long-standing US concerns over human rights such as its rule over Tibet.

"But our pressing on those issues can't interfere on the global economic crisis, the global climate change crisis and the security crisis," Clinton told reporters in Seoul just before leaving for Beijing.

T. Kumar of Amnesty International USA said the global rights lobby was "shocked and extremely disappointed" by Clinton's remarks.

"The United States is one of the only countries that can meaningfully stand up to China on human rights issues," he said.

"But by commenting that human rights will not interfere with other priorities, Secretary Clinton damages future US initiatives to protect those rights in China," he said.

Students for a Free Tibet said Clinton's remarks sent the wrong signal to China at a sensitive time.

"The US government cannot afford to let Beijing set the agenda," said Tenzin Dorjee, deputy director of the New York-based advocacy group.

China has been pouring troops into the Himalayan territory ahead of next month's 50th anniversary of the uprising that sent Tibet's spiritual leader the Dalai Lama into exile in India.

"Leaders really need to step up and pressure China."

"It's often easy to wonder whether pressure makes a difference."

"It may not make a difference in one day or one month, but it would be visible after some years," Dorjee said.

Amnesty International and Human Rights Watch had sent a letter to Clinton before her maiden Asia visit urging her to raise human rights concerns with Chinese leaders.

Before she left, State Department spokesman Robert Wood said human rights would be "an important issue" for Clinton and that she would "raise the issue when appropriate."

China has greeted President Barack Obama's administration nervously, believing he would press Beijing harder on human rights and trade issues than former president George W. Bush.

Bush never had concerns for anyone's rights. Neither did Ronald Reagan and Bush41 and Gerald Ford

And Harry Truman for that matter murdered how many?

So, really then, graham ....

The LADY HILLARY fits right in down there in Washington, which is not a surprise, since she is a denizen of those foetid depths, herself ....

And so ...

By the way, graham, have you heard the LADY HILLARY speaking lately?

Her voice is sounding more and more manly all the time ....

They say she had Bill's testosterone-producing glands harvested from his body for tranplant in hers, to make her more MACHO, as if Bill ever was ....

From the sounds of her voice, the procedure was a success .....

And Bill didn't need those organs, anyway ....

He wasn't using them for anything ....

And so ...

AND AS THE AMERICAN ECONOMY CONTINUES TO TANK ....

WE HAVE A CRISIS OF CONFIDENCE IN THE OBAMA-ISTS TO PULL THE FAT BACK OUT OF THE FIRE ....

WHICH SHOULD COME AS NO REAL SURPRISE ....

SINCE OBAMA IS SUBCONTRACTING CARE OF THE ECONOMY TO THE SAME PACK OF LOSERS AND BOZOS WHO GOT US HERE IN THE FIRST PLACE WITH THEIR BONE-HEADED INEPTNESS AND TOWERING ARROGANCE ....

And so ...

"Major indexes fall more than 6 percent for week - Wall Street ends another terrible week; major indexes drop by more than 6 percent"

By TIM PARADIS, Associated Press

Last updated: 7:36 p.m., Friday, February 20, 2009

NEW YORK -- Wall Street ended another terrible week Friday, leaving major indexes down more than 6 percent as investors worried that the recession will persist for at least the rest of the year and that government intervention will do little to hasten a recovery.

Investors shaved 100 points off the Dow Jones industrial average just a day after the market's best-known indicator dropped to its lowest level since the depths of the last bear market, in 2002.

Stocks of struggling financial companies were among the hardest hit.

The Standard & Poor's 500 index, the barometer most closely watched by market pros, came close to its lowest point in nearly 12 years.

"Right now, more than a crisis in mortgages or in housing, we have a crisis in confidence."

"That is biggest problem in trying to analyze the current market," said James Stack, president of market research firm InvesTech Research in Whitefish, Mont.

"You cannot analyze psychology."

Wall Street has been sinking lower as investors come to terms with the fact that the optimism behind a late-2008 rally was clearly unfounded.

Companies' forecasts for this year, on top of a dismal series of fourth-quarter earnings reports, pounded home the reality that no one can determine when the recession will end.

"It was a market that was built on that hope, and what we're seeing now is an unwinding of that," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research in Cincinnati, of the rally from late November to early January.

The disappointment seen this week arose from the market's growing recognition that the Obama administration's multibillion-dollar stimulus and bailout programs are unlikely to turn the economy around anytime soon.

"There were a lot of people that were banking on Washington to get us out of this."

"I don't know if there is anything Washington can do," Salamone said.

He said the global economy is going through the tedious process of reducing borrowing and working through bad debt -- something government help can't speed up.

With the week erasing whatever shreds of hope the market had, there is virtually no chance of a rally on Wall Street.

What the market might see is a blip upward -- but blips tend to evaporate quickly.

That's what happened Friday.

Stocks erased some of their losses after White House press secretary Robert Gibbs doused fears that the government would nationalize crippled banks.

Investors who worried about seeing their shares wiped out by a government takeover welcomed the news, but it didn't ease broader concerns about the economy.

The Dow Jones industrials briefly went into positive territory, but quickly turned down again.

Salamone said investors had been too hopeful in late 2008 and at the start of this year that the new administration would be able to swiftly disentangle the economy.

The Dow industrials fell 100.28 points, or 1.3 percent, to 7,365.67 after earlier falling more than 215 points.

On Thursday, the Dow broke through its Nov. 20 low of 7,552.29, and closed at its lowest level since Oct. 9, 2002.

The Dow's 6.2 percent slide for the week was its worst performance since the week ended Oct. 10, when it lost 18.2 percent.

The Standard & Poor's 500 index on Friday fell 8.89, or 1.14 percent, to 770.05.

The benchmark most watched by traders came within less than 2 points of its Nov. 20 close of 752.44, which was its lowest since April 1997.

It remains above its Nov. 21 trading low of 741.02.

The Nasdaq composite index fell 1.59, or 0.11 percent, to 1,441.23.

For the week, the S&P fell 6.9 percent, while the Nasdaq lost 6.1 percent.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 8.12 billion shares as options contracts expired.

Volume on Thursday came to 5.64 billion shares.

The Russell 2000 index of smaller companies fell 5.75, or 1.4 percent, to 410.96.

Other world indicators also fell sharply.

Britain's FTSE 100 declined 3.2 percent, Germany's DAX index tumbled 4.8 percent, and France's CAC-40 fell 4.3 percent.

Shares of financial bellwethers Citigroup Inc. and Bank of America Corp. fell on worries the government will have to take control of them.

Citigroup tumbled 22 percent, while Bank of America fell 3.6 percent.

The stocks were down as much as 36 percent during the session.

The fears about the banks are hurting shareholders of those companies and dragging down the rest of the market because the broader economy can't function properly when banks are unable to lend at more normal levels.

"Financing is the blood which runs through our nation's veins."

"It's what keeps us alive," said Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors.

He said the talk of nationalizing banks only underscores the troubles with the economy.

"Things are clearly not normal."

"It's not healthy."

"The patient was on life support, and now what we're talking about getting out the paddle with respect to nationalization," Creatura said.

As investors dropped out of stocks, safer investments like Treasury debt and gold rose.

The price of the benchmark 10-year Treasury note rose sharply, sending its yield down to 2.79 percent from 2.86 percent.

The yield on the three-month T-bill, considered one of the safest investments, fell to 0.26 percent from 0.30 percent late Thursday.

Gold broke above $1,000, closing at $1,002.20 an ounce on the New York Mercantile Exchange.

Investors are looking desperately at any safe havens simply because the stock market, which rises and falls on investors' expectations for the future, sees only trouble ahead.

"There's still a big fear factor syndrome," said Michael Strauss, chief economist and market strategist at Commonfund.

"There is a focus on what is happening here and now instead of six months to nine months from now."

----

The Dow Jones industrial average closed the week down 484.74, or 6.2 percent, at 7,365.67.

The Standard & Poor's 500 index fell 56.79, or 6.9 percent, to 770.05.

The Nasdaq composite index fell 93.13, or 6.1 percent, closing at 1,441.23.

The Russell 2000 index, which tracks the performance of small company stocks, declined 37.40, or 8.3 percent, to 410.96.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 7,802.27, down 583.47, or 6.96 percent, for the week.

A year ago, the index was at 13,758.35

"Volcker sees crisis leading to global regulation - Volcker sees greater international cooperation on regulations growing from economic crisis"

By EILEEN AJ CONNELLY, Associated Press

Last updated: 6:35 p.m., Friday, February 20, 2009

NEW YORK -- "Even the experts don't quite know what's going on."

Speaking to a number of those experts Friday, Paul Volcker, a top economic adviser to President Barack Obama, cited not only the lack of understanding of the global financial meltdown but the "shocking" speed with which it had spread across the world.

"One year ago, we would have said things were tough in the United States, but the rest of the world was holding up," Volcker told a conference featuring Nobel laureates, economists and investors at Columbia University in New York.

"The rest of the world has not held up."

In fact, the 81-year-old former chairman of the Federal Reserve said, "I don't remember any time, maybe even the Great Depression, when things went down quite so fast."

He noted that industrial production is falling in countries across the globe faster than in the U.S., one result of the decline caused by the breakdown of unbridled financial markets that operated on a global scale.

"It's broken down in the face of almost all expectation and prediction," he noted.

Volcker didn't offer specifics on how long he thinks the recession will last or what will help start a recovery.

But he predicted there will be some lasting lessons from the experience.

"I don't believe it will be forgotten ... and we will revert to the kind of financial system we had before the crisis," he said.

While he assured his audience of his confidence that capitalism will survive, Volcker said stronger regulations are needed to protect the world economy from such future shocks.

And he said he is concerned about the amount of power central banks, treasuries and regulatory agencies have acquired while trying to contain the meltdown.

"It is evident in the United States, and not just in the United States, the central bank is taking on a role that is way beyond what a central bank should be taking," he said.

Volcker stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries -- the reverse of what's happened in recent years.

"The more international agreement we have on where we want to get to, the better off we'll be," Volcker said.

And while major banks should be more tightly controlled and less able to make the sort of risky bets that led to their current debacle, Volcker said there should also be more oversight of some kind for hedge funds, equity funds and the remaining investment banks.

He scoffed at the notion that those entities must be free to innovate -- stating that financial "innovations" like asset backed securities and credit default swaps have brought few benefits.

The most important "innovation" in banking for most people in the last 20 or 30 years, he maintained, is the automatic teller machine.

"Some denounce Obama's homeowner rescue as unfair - Bailout backlash: Some denounce homeowner rescue as unfair, while others see little choice"

By STEVENSON JACOBS and ALAN ZIBEL, Associated Press

Last updated: 9:35 p.m., Friday, February 20, 2009

NEW YORK -- Banks got bailed out.

So did automakers.

So why not struggling homeowners?

The question has struck a raw nerve across the country, with critics saying the Obama administration's latest housing rescue rewards people who bought homes they couldn't afford.

Others counter that the taxpayer-financed plan will slow spiraling home prices and avert a deeper economic disaster.

The debate captures the strong emotions stirred up over who benefits as the government tries to fix the financial crisis.

It's likely to remain on the front burner for months as lawmakers consider other contentious issues -- like whether bankruptcy judges should be given the power to impose changes on borrowers' home loans.

"I feel like I'm doing the right thing paying my mortgage, and now apparently I have to pay my neighbor's mortgage, too."

"People are really angry," said Kim Guymon, a stay-at-home mom who bought a three-bedroom home with her husband in suburban Seattle in 2001 and has watched it drop $150,000 in value since last summer.

Rescuing people whose homes are worth less than they own on their mortgages doesn't sit well with Robert Bechler, either.

Still, the 37-year-old flooring contractor said he sees little choice.

"If they don't bail those people out, it's just going to get worse."

"It's a necessary evil, I suppose," said Bechler, who with his fiancee just bought a house in Cape Coral, Fla. for $92,000 after waiting years for prices to fall.

The rescue plan unveiled Wednesday by President Barack Obama offers $75 billion in incentives for banks and investors to reduce struggling home borrowers' interest rates and make other changes to loan terms.

The money will come from the second half the $700 billion federal financial bailout.

The goal is to keep 4 million homeowners out of foreclosure and halt free-falling home prices.

To qualify, lenders and mortgage investors would have to agree on a lower interest rate that would be designed to reduce the borrower's mortgage payments to 38 percent of their pretax income.

The government would then provide financing to bring that ratio down to 31 percent.

Another piece is designed to help borrowers who are still making their payments on time, but want to refinance into lower mortgage rates.

Republican lawmakers and conservative pundits immediately denounced the plan as an affront to free market principles and said it promotes irresponsible borrowing.

Rep. Jeb Hensarling, a Texas Republican, summed up the plan as "Nice guys finish last."

Conservative columnist David Brooks echoed those sentiments in a New York Times column titled "Money for Idiots."

Rick Santelli, a reporter for financial network CNBC, compared the government's actions to those of communist Cuba during a dramatic, televised rant Thursday from the floor of the Chicago Mercantile Exchange.

"The government is promoting bad behavior, America!" he said.

Video of the exchange has been viewed over 1.2 million times on CNBC.com, more than any other clip in the Web site's history.

Supporters of the plan are pushing back.

"This is the financial equivalent of what Hurricane Katrina did to New Orleans."

"Did they know they were living below sea level?"

"Yes."

"Does that mean we shouldn't help them?"

"That's ridiculous," said Kathleen Day of the nonprofit Center For Responsible Lending.

In an interview with The Associated Press, Obama's housing secretary, Shaun Donovan, said it's in everyone's interest to stop the wave of foreclosures, which drag down the prices of all homes in an affected area.

"What we're doing is we're benefiting everybody," he said.

Donovan said administration officials considered the potential backlash from angry borrowers when they designed the plan.

That's why it doesn't just help borrowers in danger of losing their homes, he said.

It also aims to make it easier for households who owe more on their mortgages than their homes are worth to refinance.

There are nearly 14 million households in that situation, according to Moody's Economy.com.

In the coming months Congress is poised to try to hash out a set of housing issues, including whether the bankruptcy change is needed and a proposal to protect companies that collect mortgage payments from investor lawsuits.

The tussle over the housing bailout comes as the government is doling out hundreds of billions in bailouts and stimulus for banks, Detroit automakers and recession-weary consumers.

So why has the housing bailout wound up so many people?

Part of it has to do with the critical role housing plays in the national identity, said Barry Ritholtz, a financial analyst and author of "Bailout Nation, How Corrupt money Shook Wall Street."

"The average family doesn't have a huge stock portfolio."

"But you have 100 million families that own homes," Ritholtz said.

Rosa Valdez, a resident of Coachella, Calif., hopes it's not too late for her family to be helped.

The native of Mexico saved enough to buy a new $380,000 home in 2006 in the Lennar development of La Morada, where foreclosures are rampant.

She fears her home could be next without federal help.

"It's our last resource," said Valdez, who was turned down when she tried to renegotiate her loan.

O.B. Brock of Charleston, W. Va., opposes bailing out people who got in over their heads and the banks that helped them.

"It's just rewarding crooks," said the 38-year-old single mother, who said she turned down a bank's $100,000 mortgage offer five years ago because she knew she couldn't afford it.

Others are more sympathetic.

Debra Rodriguez, of Tucson, said she believes many borrowers were victimized by unscrupulous lenders.

"I could sit back and say 'Hey, I'm not getting anything and that's not fair.'"

"But I've been fortunate enough that I don't need a bailout," Rodriguez said.

For Chris Grande of suburban Dayton, Ohio, helping troubled borrowers only makes sense after the billions spent on other bailouts.

"Does it reward bad behavior?"

"Absolutely, it does."

"But no more than the banks who offered these loans rewarding themselves for their own bad behavior," said Grande, 26.

------

Zibel reported from Washington. Associated Press writers James Hannah in Dayton, Ohio, Noaki Schwartz in Los Angeles, P.J. Dickerscheid in Charleston, W. Va. and Terry Tang in Phoenix contributed to this report.

"White House tries to end bank nationalization talk - White House stands by private banking as talk of nationalization surfaces amid deep recession"

By BEN FELLER, Associated Press

Last updated: 5:45 p.m., Friday, February 20, 2009

WASHINGTON -- The White House on Friday insisted it's not trying to take over two ailing financial institutions, even as stocks tumbled again.

On Wall Street, talk of nationalization of Citigroup Inc., and Bank of America Corp., prompted investors to continue to balk, worried that the government would have to take control and wipe out shareholders in the process.

Citigroup fell 20 percent, while Bank of America fell 12 percent in afternoon trading but also came off their lowest levels.

"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government," White House press secretary Robert Gibbs said when asked about nationalizing the banks.

"That's been our belief for quite some time, and we continue to have that," Gibbs said.

Investors have shown decreasing confidence that U.S. banks can right themselves.

Citigroup and Bank of America have already received significant help from taxpayers as the government has rushed in to try to save the financial sector, which has been choked by bad assets and seen the flow of credit shrink.

The speculation about the two banks' future continued to take a direct toll on the market.

Gibbs was pressed for more details on his answer -- specifically whether Obama would not nationalize banks.

He said it was hard for him to be any clearer.

When a reporter suggested Gibbs could do that by saying point bank that Obama would never nationalize banks, Gibbs would not make that statement, but emphasized:

"I think I was very clear about the system that this country has and will continue to have."

"More than fear itself - Americans are skeptical of the President's bold actions despite efforts exceeding FDR programs"

By TOM RAUM, Associated Press

First published in print: Saturday, February 21, 2009

WASHINGTON — In sheer size, the economic measures announced by President Barack Obama to address "a crisis unlike we've ever known" are remarkable, rivaling and in many cases dwarfing the New Deal programs that Franklin D. Roosevelt famously created to battle the Great Depression.

Winning approval was a political tour-de-force for the new administration.

Yet gloom and uncertainty persist about the plan's ability to deliver a cure for the economy's severe ailments.

Stocks plunged to six-year lows after the burst of bill signings, bailout announcements and presidential pledges.

And polls show Americans are increasingly worried about losing jobs and not having enough money to pay their bills.

Why the skepticism?

Maybe there's just been too long a run of bad news.

Arthur Hogan, chief market analyst at Wachovia Securities, blames much of the negativity on "the fact that people are so down."

"They have no confidence in the future."

Republicans complain about wasted money.

Some Democratic supporters say the plan won't help very much very quickly.

Former President Bill Clinton, who gives Obama high marks for straight talk in telling the nation the bad economic news, says his successor might try a more upbeat approach now.

"I just want the American people to know that he's confident that we are going to get out of this and he feels good about the long run," Clinton said Friday on ABC News' "Good Morning America."

Patience, pleads the administration.

Lawrence Summers, Obama's chief economics adviser, says the success of the plan will be measured "not by daily market reaction but what happens over time."

Still, he says, "We are moving rapidly."

No matter how people feel about the plans, they are undoubtedly ambitious — and expensive.

Tomorrow's taxpayers will still be paying for them long after Obama is out of office.

So far in his month-old presidency:

— Congress passed and Obama signed into law a record $787 billion mix of tax cuts, job-creating projects and aid to struggling states.

— The President pledged up to $275 billion in federal aid to help stem a tidal wave of home foreclosures.

— The Treasury Department and the Federal Reserve announced financial rescue steps that could send up to $2 trillion coursing through the economy.

In all, the plans would raise the federal portion of the U.S. economy to some 31 percent, more than twice the level after eight years of FDR's historic New Deal spending.

"All Americans have a stake in making this work," says Treasury Secretary Timothy Geithner.

But you wouldn't know it from the reaction.

Rather than the bipartisan support Obama first sought, Republicans remain in near unanimous opposition.

They contend the stimulus package is tainted by wasteful spending and that the mortgage-foreclosure plan leaves out many struggling homeowners while rewarding lenders and borrowers who made bad decisions.

Some Republican governors from the South even talk of spurning the new federal money.

Even while supporting the initiatives, some Democrats suggest the efforts won't deliver enough quick help to make a difference.

Joblessness keeps rising.

Consumers and businesses are cutting back.

Bank lending remains down.

And auto demand keeps falling.

Rutgers University political science professor Ross Baker said, "There is a degree of skepticism involved."

"Not surprisingly, people are wary of some very expensive proposals with no guarantee of success or even a high probability of how well they'll work."

As for the New Deal, it's hard to compare Obama's moves to FDR's initiatives.

They were a series of programs spread over years, not all-encompassing packages like the new proposals.

Some of Roosevelt's signature programs dealt with revamping government structure rather than job creation, such as securities-market regulation, insuring bank deposits.

His biggest idea, Social Security, didn't really have much impact until later.

The largest of Roosevelt's jobs programs, the Works Progress Administration, begun in 1935, did provide jobs across the nation building roads, bridges and other projects.

Among his other job-creating programs were the Civilian Conservation Corps, the Civil Works Administration, the Public Works Administration and the Tennessee Valley Authority.

Roosevelt had a bigger crisis on his hands than Obama has.

Unemployment was 25 percent when Roosevelt took office.

Last month's jobless rate was 7.6 percent, up from 4.9 percent a year before but still shy of the postwar high of 10.8 percent in 1982 — and far from Great Depression levels.

"Anger over mortgage aid may portend class fight - Cable tirade against bailout draws pointed White House response"

By MICHAEL D. SHEAR, Washington Post

First published in print: Saturday, February 21, 2009

WASHINGTON — Anger among homeowners about President Obama's foreclosure bailout plan boiled up to the White House Friday as press secretary Robert Gibbs unleashed a barrage of criticism at a former trader whose rants against the plan this week have made him a cable and Internet phenomenon.

Rick Santelli, a CNBC reporter who exploded in a tirade this week from the Chicago Board of Trade, has accused the President of crafting a housing bailout that is unfair to the millions of responsible mortgage holders.

"Government is promoting bad behavior," Santelli said on his network.

"Do we really want to subsidize the losers' mortgages?"

He continued:

"This is America!"

"How many of you people want to pay for your neighbor's mortgage?"

Later, in a video that has become a YouTube sensation, Santelli called for Obama to put his plan to an Internet referendum and called for a new Tea Party to protest the housing plan.

"President Obama!"

"Are you listening?" Santelli demanded.

Apparently someone in the White House was.

In response, Gibbs attacked Santelli by name repeatedly at a press briefing, accusing him of not reading the President's housing plan and mocking the former derivatives trader as an ineffective spokesman for the little guy.

Gibbs told reporters in a derisive tone, "Mr. Santelli has argued — I think quite wrongly — that this plan won't help everyone."

"This plan will help, by the money that's invested in Freddie and Fannie, will drive down mortgage rates for millions of Americans."

Later, Gibbs added:

"I would encourage him to read the President's plan and understand that it will help millions of people, many of whom he knows."

"I'd be more than happy to have him come here and read it."

"I'd be happy to buy him a cup of coffee, decaf."

The exchange underscores the potential for a new wave of class warfare as the President unveils economic plans that reward some people, often at the expense of others.

The housing plan — which targets up to 9 million homeowners for help — quickly has become a focal point for homeowners who are paying their mortgages but still struggling financially.

In his response, Gibbs insisted that the plan will not reward irresponsible behavior.

"It won't help somebody trying to flip a house."

"It won't bail out an investor looking to make a quick buck," Gibbs said.

"It won't help speculators that were betting on a risky market."

"And it is not going to help a lender who knowingly made a bad loan."

OBAMA WANTS TO ROB AND STEAL FROM US TO REWARD SPECULATORS ....

"Loan-market bailout planned"

New York Times

First published in print: Friday, February 20, 2009

The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.

The Fed is expected to start the first phase of the program, which will provide $200 billion in loans to investors, in early March.

Most banks no longer hold the loans they make, content to collect interest until the debt comes due.

Instead, the loans are bundled into securities that are sold to investors, a process known as securitization.

But the securitization markets broke down last summer after investors suffered steep losses on these investments.

So banks and other companies can no longer shift loans off their books easily, throttling their ability to lend.

The result has been a drastic contraction of the amount of credit available throughout the economy.

The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets.

But analysts question whether this approach will be enough to unlock the credit that the economy needs to pull out of the recession.

The program also does not try to change securitization practices that, many investors say, spread risks throughout the world and destroyed financial institutions.

Under the program, the Fed will lend to investors who acquire new securities backed by auto loans, credit card balances, student loans and small-business loans at rates ranging from roughly 1.5 percent to 3 percent.

"Analysis: Even military split over Iraq pullout"

By ROBERT BURNS, Associated Press Writer

21 FEBRUARY 2009

WASHINGTON – President Barack Obama faces split opinions within the military on whether to make the speedy withdrawal from Iraq he championed on the campaign trail.

Obama's top generals in Baghdad are pressing for an elongated timetable, while some influential senior advisers inside the Pentagon are more amenable to a quicker pullout.

Although Obama has yet to decide the matter, his announcement last week that he's sending thousands more combat troops to Afghanistan implies a drawdown of at least two brigades from Iraq by summer.

But that does not answer the question that has been dangling over Iraq since he took office in January: Will Obama stick to his stated goal of a 16-month pullout or opt for a slower, less risky approach?

Gen. Ray Odierno, the top American commander in Baghdad, favors a longer timetable for leaving Iraq.

He sees 2009 as a pivotal year, with parliamentary elections set to be held in December; he doesn't want to lose more than two of the 14 combat brigades that are now in Iraq before the end of the year.

And he believes the U.S. military will need to remain engaged in Iraq, to some degree, for years to come.

Odierno's boss at U.S. Central Command, Gen. David Petraeus, leans toward Odierno's view.

Gen. David McKiernan, the top U.S. commander in Afghanistan, has steered clear of the debate over withdrawing from Iraq, but he sees his battlefield as an increasingly urgent priority — not just for additional combat troops but also for Iraq-focused surveillance aircraft and more civilian support.

There are now about 146,000 U.S. troops in Iraq, compared with 38,000 in Afghanistan.

Obama has directed 17,000 more to head to Afghanistan, including Marines and soldiers who had been in line for Iraq duty.

At the Pentagon, a more mixed view prevails.

The uniformed service chiefs see Iraq as a strain on their troops and, more broadly, a drain on their resources.

The Marines, in particular, are in the tough position of having a foothold in both major U.S. wars — Iraq and Afghanistan.

As a relatively small service, they would prefer to concentrate more fully on Afghanistan, if only they could get out of Iraq.

Neither Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, nor Defense Secretary Robert Gates has said publicly whether he supports a 16-month withdrawal timeline.

But they have their own perspective — an obligation to consider the full spectrum of threats and potential threats to U.S. national security.

"There's a very clear understanding of what is at stake here," Mullen said Feb. 10.

"And it's very natural for Gen. Odierno to want to go slower and to hang onto capability as long as possible," he added.

"That's not unusual."

"It's very natural for Gen. McKiernan to say, 'I need more.'"

"And so that's the tension."

"We don't have an infinite pot (of resources and deployable forces)."

"We have to make hard decisions about where to accept risk."

In internal discussions, the emphasis appears to be on getting out responsibly rather than quickly, several officials said, speaking on condition of anonymity because no decisions have been made.

Obama must weigh an array of hard-to-figure tradeoffs in security and politics.

And he must reconcile his conviction that the combat phase of U.S. involvement in Iraq must end with his commanders' concern in Baghdad that hard-fought gains could be squandered.

It boils down to this: How much more effort is the Iraq war worth?

What is the risk of leaving too soon?

Is the 16-month timetable too short, given the uncertain state of stability and political reconciliation in Iraq and the potential cost of seeing the country slide back into widespread sectarian war?

And is anything substantially beyond 16 months too long, given the call for still more troops in Afghanistan, where Obama himself has said the battle against extremists is going in the wrong direction?

Obama is still considering his options, which officials say includes a less hurried, 23-month withdrawal.

The deadline he inherited from the Bush administration is Dec. 31, 2011, the date set in a security agreement with Baghdad that says all U.S. troops, not just combat forces, must be gone by then.

One clue to some of the thinking inside the White House might lie with the views of Obama's national security adviser, retired Marine Gen. James Jones.

Jones co-chaired a study published in January 2008 on the way ahead in Afghanistan.

The group endorsed the idea of providing more military support for Afghanistan, including resources that become available as combat forces are withdrawn from Iraq.

The president has an additional factor to weigh: the political cost of backing off the 16-month pullout timetable that was a prominent feature of his campaign.

Although he has said he thinks 16 months is a reasonable timetable, he also has assured military leaders that he will consider their advice.

Notably absent, at least so far, is even a whiff of public pressure from fellow Democrats to stick to a 16-month timeline.

That suggests Obama's party might be satisfied so long as he makes early and clear steps in the direction of ending U.S. combat involvement in Iraq, even if on a somewhat longer timeline.

Obama campaigned for the White House on a promise that he would end the war and get U.S. commanders moving immediately on a transition to Iraqi control of their own security.

He said military experts believe combat troops can be pulled out safely at a rate of one to two brigades a month, meaning all 14 combat brigades there now could be gone within 16 months, which equates to mid-2010.

Peter Mansoor, a retired Army colonel who was the executive officer for Petraeus when the general was in Baghdad overseeing the "surge" of U.S. forces in 2007-08, said he thinks it likely that Obama will pull at least four combat brigades out of Iraq by the end of this year.

But he hopes the president does not insist on getting all 14 brigades out within 16 months.

"If the president orders it, the military can do it, but whether it's advisable or not is a different story," he said in a telephone interview.

"Quite frankly, I don't think it is, given the risk you would incur to potentially upsetting the political situation" inside Iraq.
___

EDITOR'S NOTE — Robert Burns has been covering national security affairs for the AP since 1990. Associated Press writers Robert Reid, Jennifer Loven, Pam Hess and Lara Jakes contributed to this report.

MONEY IS MUCH MORE IMPORTANT TO AMERICA THAN HUMAN RIGHTS ....

"Clinton assures China on investments in US"

By MATTHEW LEE, Associated Press Writer

21 FEBRUARY 2009

BEIJING – U.S. Secretary of State Hillary Rodham Clinton and Chinese officials say they will expand high-level talks on economic issues to include troubling security matters as well.

The two nations also agreed Saturday to cooperate in stabilizing the global economy and combating climate change, putting aside long-standing concerns about human rights.

With the export-heavy Chinese economy reeling from the U.S. downturn, Clinton sought in meetings with Premier Wen Jiabao and other top Chinese government leaders to reassure Beijing that its massive holdings of U.S. Treasury notes and other government debt would remain a good investment.

"I appreciate greatly the Chinese government's continuing confidence in United States treasuries."

"I think that's a well-grounded confidence," Clinton told reporters at a joint news conference with Chinese Foreign Minister Yang Jiechi.

"We have every reason to believe that the United States and China will recover, and together we will help lead the world recovery," she said.

After a day of talks on her first visit to China as America's top diplomat, Clinton and Yang said a regular high-level U.S.-China dialogue on economic matters would be expanded to include security issues.

Details of the dialogue are to be finalized by President Barack Obama and Chinese President Hu Jintao when they meet at an economic summit in London in early April, Clinton said.

Yang said China wants its foreign exchange reserves — the world's largest at $1.95 trillion — invested safely, with good value and liquidity.

He said future decisions on using them would be based on those principles, but added that China wanted to continue work with the U.S.

"I want to emphasize here that the facts speak louder than words."

"The fact is that China and the United States have conducted good cooperation, and we are ready to continue to talk with the U.S. side," Yang said.

Beijing is the last and perhaps most important stop on Clinton's weeklong visit to Japan, Indonesia, South Korea and China on which she wanted to focus on the economy and global warming.

China last year surpassed the United States as the world's leading producer of greenhouse gases and Clinton said she and Chinese officials had agreed to develop clean energy technology that would use renewable sources and safely store the dirty emissions from burning coal.

Visiting a new gas-fueled power plant in Beijing, Clinton urged China not to repeat the "same mistakes" western countries had made when they developed.

"When we were industrializing and growing we didn't know any better," she said.

"Neither did Europe."

"Now we are smart enough to figure out how to have the right kind of growth, sustainable growth, clean-energy driven growth."

"This plant could be a model."

Along with cooperating on the financial crisis and climate change, the United States wants China to step up efforts to address threats like Iran and North Korea's nuclear programs and tenuous security situations in Afghanistan and Pakistan.

In addition, Clinton said the U.S. would like to see China play a positive role in Myanmar and Sudan, two countries which receive large Chinese investments but whose governments are at odds with Washington.

The emphasis on the global economy, climate change and security highlight the growing importance of U.S.-China relations, which have often soured over disagreements on human rights.

Authorities in Beijing are facing a difficult year on the rights front as they deal with politically sensitive anniversaries: 20 years since the crushing of the Tiananmen Square democracy movement and 50 since the failed Tibetan uprising that forced the Dalai Lama to flee into exile.

Activists complained Saturday that Chinese police were monitoring dissidents and had confined some to their homes during Clinton's two-day visit.

Several of those targeted had signed "Charter 08," an unusually open call for civil rights and political reforms that circulated in December, according to the China Human Rights Defenders.

But ahead of her talks, Clinton signaled that China's poor human rights record, while still of deep concern to the United States, would not be at the top of her agenda.

She noted that both sides already knew the other's positions on the matter and said that human rights concerns "can't interfere with the global economic crisis, the global climate change crisis and the security crises."

Her comments drew immediate fire from rights groups who said they sent the wrong message, undermined efforts to promote basic freedoms in China and squandered Washington's leverage with Beijing.

Asked to respond to the criticism, Clinton said "the promotion of human rights is an essential aspect of our global foreign policy," noting in particular the issues of Tibet, religious freedom and freedom of expression.

"Human rights are part of our comprehensive agenda," she said.

But she added that the work of civic groups and private advocates that she has highlighted is "at least as important in building respect for and making progress on human rights" as government-to-government contact.

Yang appeared pleased by Clinton's reply, saying China was happy to engage on human rights with the United States but only "on the basis of equality and noninterference in each other's internal affairs."

"EU leaders back sweeping financial regulations"

By PATRICK McGROARTY, Associated Press Writer

22 FEBRUARY 2009

BERLIN – European leaders backed sweeping new regulations for financial markets and hedge funds at a summit Sunday in Berlin as politicians and nations scrambled to tame the global economic crisis.

German Chancellor Angela Merkel hosted heads of state and finance ministers from Europe's largest economies to try to establish a common European position on economic reforms before an April 2 summit of the Group of 20 nations.

"All financial markets, products and participants including hedge funds and other private pools of capital which may pose a systematic risk must be subjected to appropriate oversight or regulation," Merkel said in a statement released on behalf of the summit members, following the talks.

Top officials from Britain, France, Germany, Italy, Luxembourg, Spain, the Netherlands and Czech Republic agreed on seven key points during their one-day meeting in Berlin, the statement said.

"A clear message and concrete action are necessary to engender new confidence in the markets and to put the world back on a path toward more growth and employment," Merkel said.

But the call for blanket global regulation was sure to be resisted by the financial industry and may not be entirely welcomed by other members of the G-20, which in addition to European nations includes the United States, China, Japan and developing nations like India and Brazil.

Merkel urged stricter market regulation two years ago but met with strong resistance from the United States and Britain.

European leaders this time backed Merkel's call for a "charter of sustainable economic activity" to reduce economic imbalances and stabilize financial markets.

The charter would subject all financial market activities around the globe to regulation, including credit rating agencies.

Merkel said the charter would be "based on market forces but prevent excess and ultimately lead to the establishment of a global governance structure."

The leaders also agreed to strengthen the IMF and to support doubling its funds.

British Prime Minister Gordon Brown said that international institutions need some $500 billion and called for a "global New Deal" to be adopted to help right the world economy.

"The IMF's resources must be doubled to enable it to help its members swiftly and flexibly when they experience difficulties with respect to their balance of payments," Merkel said.

Other key points included adopting a "sanctions mechanism" to safeguard against tax havens and urging banks to keep larger reserves of capital.

"A new system of regulation without sanctions would not have any meaning," said French President Nicolas Sarkozy.

He said European countries were jointly drawing up a list of tax havens and the sanctions they might face for continuing what he called reckless financial activity.

Merkel also warned the United States to avoid protectionism in its automobile market.

"When I look at the restructuring plans of some American companies, there are a lot of state funds flowing into them," Merkel said, swiftly adding that "this is not an accusation."

She said the European Commission would be asked to examine whether the U.S. was violating global trade laws.

The U.S. government has extended multibillion-dollar bailout packages to General Motors and Chrysler, and the two companies asked for an additional $21.6 billion last week.

Officials said a final copy of the summit agreement would not be circulated Sunday, to allow European Union members not present to view it first.

The EU has 27 member nations.

The ideas were based on an agenda adopted by the G-20 in November and will be taken up by the European Council on March 19-20, then presented to the G-20 meeting April 2 in London.

President Barack Obama and other top world leaders are scheduled to attend the London summit.
___

Associated Press Writer Michael Fischer in Berlin contributed to this report.

"Republican governors split over Obama stimulus"

By Alan Elsner

22 FEBRUARY 2009

WASHINGTON (Reuters) – U.S. Republicans governors were split on Sunday over whether to accept all of the money their states stand to receive from a $787 billion economic stimulus plan which President Barack Obama signed last week.

Three governors of southern states have come out against taking part of the money designated to extend unemployment benefits and perhaps for other programs.

A handful of others are considering follow suit.

With the global economy in crisis and unemployment at record levels, Obama made a top priority for his first month in office the package of tax cuts and spending for infrastructure projects and social services including unemployment aid.

Only three Republicans in Congress backed its passage, charging Obama and his Democratic party had loaded it up with unnecessary spending and failed to cut taxes enough.

"There is some (stimulus money) we will not take in Mississippi."

"If we were to take the unemployment insurance reform package that they have, it would cause us to raise taxes on employment when the money runs out, and the money will run out in a couple of years," said Mississippi Governor Haley Barbour on CNN's "State of the Union."

"Then we'll have to raise the unemployment insurance tax, which is literally a tax on employment."

"I mean, we want more jobs."

"You don't get more jobs by putting an extra tax on creating jobs," Barbour said.

South Carolina Governor Mark Sanford and Louisiana's Bobby Jindal, who has often been mentioned as a potential Republican presidential candidate in 2012, have also said they would reject the unemployment funds, which make up a small proportion of the overall package.

Sanford, on "Fox News Sunday" said some of the stimulus money came with strings attached.

"What we would be required to do would be, for the first time, increase the level of benefit for part-time workers."

"Right now, it's full-time workers -- increase it to part-time workers," he said.

"We can't pay for the benefits already in the program, but to get the stimulus money, we've got to increase the program's size and scale."

Later, speaking to reporters at a National Governors' Association meeting in Washington, Sanford listed some other monies he did not want, possibly including $42 million for retrofitting state buildings to be more energy efficient.

"We're looking at other things from a scale standpoint that are frankly irrelevant," he said.

CALIFORNIA HAPPY FOR MONEY

But California Governor Arnold Schwarzenegger, also a Republican, said on ABC's "This Week" he would gladly take all the money.

"Governor Sanford says that he does not want to take the federal stimulus package money."

"And I want to say to him: I'll take it."

"I'm more than happy to take his money or any other governor in this country that doesn't want to take this money, I take it, because we in California need it," he said.

Republican Minnesota Governor Tim Pawlenty, seen as a prominent conservative voice and possible future presidential candidate, said he would take the money even though he did not agree with the philosophy behind the package.

"We are a major net subsidizer of the federal government ..."

"For every dollar we send in, we only get 72 cents back."

"So we're paying the bill either way."

"We're going to take our share of the money," he said on Fox.

Pawlenty said Minnesota already covered part-time workers who lose their jobs so taking the money would not entail changing the program.

The economic recovery bill provides increases in federal backing for states' social services, infrastructure and education funding.

(Additional reporting by Lisa Lambert, editing by Jackie Frank)