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October 2009

Congress moves to expand financial oversight

WASHINGTON – A federal agency to regulate home loans, credit cards, savings accounts and other financial services won the approval of a House committee on Thursday in spite of loud complaints from banks and businesses.
President Barack Obama, who had proposed the agency to Congress, applauded the 39-29 vote, which fell mostly along party lines.
This step "sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change," Obama said in a statement.
The House Financial Services Committee also approved by voice vote legislation that would impose new rules for credit cards by Dec. 1, moving up the date from mid-February. Democrats said changing the date was necessary because lenders were using the grace period to hike interest rates.
The proposed Consumer Financial Protection Agency is a cornerstone to Obama's broader plan to clamp down on Wall Street and prevent much of the reckless lending that contributed to last year's near-collapse of the market.
But the agency also has been the administration's toughest sell to lawmakers worried that the added regulation would strain neighborhood banks and small businesses.
Two Democrats — Travis Childers of Mississippi and Walt Minnick of Idaho — said they voted against the measure because they were afraid the bill would hurt businesses in their districts.
Rep. Mike Castle of Deleware was the sole Republican voting for it.
As business lobbyists pressed lawmakers to scale back the legislation and won several concessions, Treasury Secretary Timothy Geithner and other senior administration officials personally appealed to lawmakers not to weaken the bill.
In the end, the bill exempted general retailers, auto dealers, title insurers, accountants, lawyers and others. Lawmakers said businesses would only face scrutiny if they offer financial services, such as a car loan, but that the agency would not monitor every financial transaction, including store layaway plans.
Also under the bill, all but the biggest banks were spared from routine agency inspections and no businesses were required to offer standard, government-approved financial services, as Obama had wanted.
In addition, banks would be allowed to seek exemptions from state laws on consumer protection. Obama had wanted to give states blanket authority to regulate large national banks without exception.
Democrats and consumer advocates said they were content to see the legislation survive much of the backdoor political wrangling after such an aggressive backlash by businesses. The U.S. Chamber of Commerce led industry opposition with a $2 million advertising campaign this summer.
"Everyone told me that the banks always win. Quit now because they always win," said Elizabeth Warren, who heads an independent panel that monitors the government's bank bailout program and initially proposed the concept of a consumer protection agency. "They didn't win today."
The American Bankers Association said it would continue to try to make its case against the agency as the legislation moves to the House floor in coming weeks and, eventually, to the Senate.
"We still have major concerns with some principal areas" including "the very broad, ill-defined authority that is granted to this new agency that could be used to justify essentially any regulatory action," said Floyd Stoner, ABA vice president for congressional relations.
Obama chastised the financial industry in his statement. "They are doing what they always do — descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently those same American consumers bailed them out as a consequence of the bad decisions that they made," he said.
Administration officials said they expect a tougher fight in the Senate, where procedural rules will give Republicans more of a chance to influence the bill.

Senate Banking Committee Chairman Chris Dodd was expected to introduce his own version of the legislation. In a statement, the Connecticut Democrat said the House bill is a good one that "appreciates that the most important piece of financial reform is ensuring that Americans are treated fairly and honestly."

Preview of MJ movie shows him in fine voice

NEW YORK – Kenny Ortega was responsible for some of Michael Jackson's biggest concerts, including what were to be his comeback shows in London. But in the singer's final days, the producer-director-choregrapher felt like he needed to take on another responsibility — making sure Jackson stayed healthy.
"Michael had sleepless nights and we had to look after him. (I'd say to him), 'Stay hydrated, have a protein shake — Did you eat today before you came?'" Ortega said in an interview Thursday to promote the new Jackson documentary, "This Is It."
When Jackson would say he had, a skeptical Ortega would say — "Michael?"
"Michael's an adult. ... We didn't want to baby him," he said. "(But) I had concerns and we had conversations, wanting to make sure he was doing everything he could to build himself and not break himself down."
Jackson died June 25 at age 50. The Los Angeles County coroner has ruled Jackson's death a homicide, caused primarily by the powerful anesthetic propofol and another sedative. Jackson's personal physician, Dr. Conrad Murray, has not been charged with a crime but is the focus of the police investigation.
Ortega's work with Jackson included world tours for Jackson's "Dangerous" and "HIStory" albums. He was directing the "This Is It" shows — which would have marked the performer's comeback concerts in London's O2 Arena in July — and was brought on to direct a film adaptation of those taped rehearsals after Jackson's death.
"This Is It" will premiere globally on Tuesday and run for two weeks. The soundtrack for the film, which includes the newly released title track as well as some of his best-known hits, is being released Monday.
In a 12-minute clip previewed for media on Thursday, a strong-voiced King of Pop is shown enthusiastically practicing some of his biggest hits.
Jackson, though frail-looking, is shown warming up his vocals during a performance of "Human Nature." That's followed by the singer running through the song in various outfits.
Later, he playfully dances with a woman as he sings "The Way You Make Me Feel," touching her thigh and holding her waist.
"One more time," Jackson says toward the end of the song after being told the last eight bars were to be cut.
Ortega says although he worried about Jackson's health, he doesn't believe the preparation for the shows wore the singer down. In fact, he says it was the opposite.
"I can tell you this experience, working on this show, was invigorating, was nourishing. ... (it) wasn't taking away from Michael," he said.
Travis Payne, a choreographer who worked on "This Is It" and other Jackson tours, says he remembers spending one-on-one time with Jackson — especially visiting Web sites like YouTube.
"I used to love sitting and just surfing the 'net with him," Payne said. "And we would just do that and we would be able to have our creative reference time in a different way now."
Musical director Michael Bearden recalls Jackson's lofty goal to try to capture all of his music in one, over-the-top show.
"He had so, so much music that we tried to get everything in but not cheat the audience at the same time, which is a delicate balance if you will to try to get everything in and still feel like you're getting a full song," he said.
Ortega says Jackson was very adamant about the look of the tour — from the length of the songs to the stage's lighting.

"From the very beginning Michael was very vocal, and very upfront about what he wanted to do and why he wanted to do it," Ortega said.

"That's what 'This Is It,' Michael Jackson's 'This Is It' the film, is about — it's a privileged peak into the final creative process of Michael's last theatrical work."

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On the Net:

http://www.thisisit-movie.com/

Colorado sheriff sees no hoax in balloon incident

DENVER (Reuters) –
A Colorado sheriff largely dismissed suggestions on Friday that a family of amateur scientists staged a hoax by reporting their 6-year-old son had floated away in a home-made helium balloon.

The bizarre incident on Thursday gripped U.S. television viewers as the silver balloon raced across the Colorado sky, tracked by U.S. National Guard helicopters for hours before the boy, Falcon Heene, was found alive and well in his attic.

Questions about the saga were raised after Falcon was asked on CNN's "Larry King Live" why he had stayed in hiding so long when family members and other searchers were desperately calling his name.

"You guys (his parents) said that, um, we did this for the show," he said.

The boy's father strongly denied in television interviews on Friday that the incident was a stunt.

"We believe at this time that it was a real event," Larimer County Sheriff Jim Alderden told a news conference on Friday.

"We have to operate on what we can prove as a fact and not what people want to be done or what people speculate should be done," Alderden said.

He acknowledged the boy's comment "has raised everybody's level of scepticism again and we feel its incumbent on us to go back to the family and re-interview them and establish whether in fact this was a hoax," Alderden said.

Authorities had considered desperate measures to bring the craft down safely and, after discovering the boy was not inside, had begun scouring the countryside amid fears he had fallen out.

Richard Heene and his wife, Mayumi, and three sons have appeared on the ABC television reality show "Wife Swap" in which families swap mothers to deal with family problems. Richard Heene said the balloon was part of an experiment by the family, which is known locally for its storm-chasing and scientific experiments.

NEW VIDEO SURFACES

A new videotape surfaced of the balloon leaving the family's yard, which showed Richard and Mayumi Heene and at least one of their sons loudly counting down to the moment of lift-off.

Richard Heene then appears to fly into a rage, kicking a wood framing that had once held the craft.

That video seemed to be at odds with earlier accounts, in which Heene said he was inside the house when the device somehow broke loose from its tethers and floated away.

Alderden told reporters he had not yet seen that videotape but said Heene would be questioned about it as part of the investigation.

The sheriff said that if the balloon incident were found to be a hoax, it could lead to misdemeanour charges of filing a false police report and that law enforcement could seek restitution for the cost of the search-and-rescue operation.

Alderden said the re-interviews had been scheduled for Saturday because the family was exhausted and overwrought after appearing on a series of morning shows.

"Absolutely not, this is not some sort of hoax," a visibly irritated Richard Heene said on NBC's "Today" show in an interview during which Falcon vomited while his father talked.

"What have I got to gain?" asked Heene.

Mayumi Heene said on CNN: "What we went through the whole day is real. ... I really thought we might have lost him."

(Additional reporting by Robert Boczkiewicz in Denver; Writing by Dan Whitcomb; Editing by Mary Milliken and Peter Cooney)

WHEN HISTORY CALLS (Richard Reeves)

LOS ANGELES -- Sen. Olympia Snowe said last week that in the end, which is near, she may or may not vote for health care reform. But she will, judging by her last comment as the Senate Finance Committee voted out a bill: "When history calls, history calls."

That certainly is one of the wisest quotes to come out of this Congress this year, particularly from the Republican side. The not-so-loyal opposition has been answering all questions with a single answer, "No."

The Republican theory seems to be that their job is to destroy the president of the United States -- and to do it before next year's midterm elections. History might judge that as harshly as some Republican elder statesmen have. Former Sen. Robert Dole, once chairman of the Republican National Committee, a partisan who voted against Medicare in 1965, but not a fool, put it this way the other day: "Republicans all stand up and say they're for health care reforms, so why don't they do something about it? ... I don't believe they could absorb just across-the-board being against everything."

Dole may be out of touch with the party he loves, but he is more in touch with the feel of history. It has taken almost a century, but the people of the United States seem to realize that something has to be done about a dysfunctional system. I assume that is what Snowe and Dole were talking about: If it's broken, there does come a day when you do have to try to fix it.

Howard Dean, the current chairman of the Democratic Party, offered his own interpretation of history last month saying:

"All the really great programs in American history -- Social Security was done without Republicans; Medicare was done without Republican support until the last vote, where they realized they had to get on board. So a lot of the things that have been done that have helped seniors in particular have been done without Republican support at all."

That is an exaggeration. During the great Social Security debate of 1935 and the Medicare debate of 1965, a majority of Republicans argued against the legislation -- even though national health care was first proposed by a party hero, Theodore Roosevelt -- but there were many Republicans for those bills from the beginning. Not a majority of Republicans, but many. Perhaps they felt the breath of history.

But Dean's hyperbole points to a revealing bit of history. There were many moderates and even some liberals representing the Republican Party in those days. Today there are almost none, except perhaps in Maine, the home state of Sen. Snowe. Republicans representing hyperconservative states and districts, mostly in the South and Southwest, are probably not going to be punished for doing what a young conservative, William F. Buckley, advocated in 1955: "Stand athwart history, yelling Stop ..."

That was part of the mission statement of Buckley's new magazine, National Review. Well, Buckley could not stop history, but he did affect it in many ways. That is, I think, where we are going now. Once having declared, as Dole noted, that health care reform is now necessary, it is hard to see all Republicans yelling, "Stop."

What they are yelling now is "socialism." But history has seen that before. In 1965, when a majority of Republicans did vote against Medicare, Sen. Carl Curtis of Nebraska said: "This is not public welfare. It is not charity. It is not kindness. It is socialism. ... It is brazen socialism."

Within weeks, it was also law, and few elderly Americans would argue that it is bad law. Primarily because of Medicare, the number of Americans over 65 living below the poverty level has dropped from 28.5 percent to 9.7 percent.

Socialism or not, history is pushing health care reform into law. It will not be 100 percent of what President Obama wanted. It will be a compromise bill with some Republican input -- and it will be added to and expanded over the years. For now, on passage, Obama will say something historic, similar to what Franklin Roosevelt said in 1935:

"We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

U.S. charges billionaire Rajaratnam with record insider trading

NEW YORK (Reuters) –
Billionaire hedge fund founder Raj Rajaratnam and five executives from some of the most prestigious U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever.

Investigators said they used court-approved telephone wire taps for the first time in a Wall Street insider trading case, sending shivers through the hedge fund industry which has traditionally picked up and shared trading tips to make big profits.

At the center of the case are executives from hedge funds Galleon and New Castle, which was a unit of Bear Stearns Asset Management, and executives from major American companies such as IBM, top consulting firm McKinsey & Co and chip giant Intel Corp.

"This is not a garden-variety insider trading case," Preet Bharara, the U.S. Attorney for Manhattan, said at a news conference. He said the scheme made more than $20 million in illegal profits over several years.

One of the criminal complaints accuses Rajaratnam, 52, considered the richest Sri Lankan in the world, of conspiring with Intel employee Rajiv Goel and Anil Kumar, a director of powerful management consulting firm McKinsey & Co. The alleged offenses took place over three years starting in January 2006.

Galleon had as much as $7 billion under management, the complaint said. Intel Capital is the investment arm of Intel.

A second criminal complaint accused three other people -- Danielle Chiesi, Mark Kurland and Robert Moffat -- of insider trading crimes and earning millions of dollars in illegal profits.

"It shows that we are targeting white-collar insider trading rings with the same powerful investigative techniques that have worked so successfully against the mob and drug cartels," Bharara said.

All six were charged with securities fraud and conspiracy in two criminal complaints filed in U.S. District Court in New York.

They are under arrest and they were also charged in a separate civil complaint by the U.S. Securities and Exchange Commission (SEC). The SEC said the accused traded on insider information from 10 companies.

SCHEME TARGETED TOP COMPANY STOCKS

The companies included Hilton Hotels Corp, Google Inc, IBM, Advanced Micro Devices Inc and several other companies.

The prosecutor also fired a warning shot for the rest of Wall Street.

"Today, tomorrow, next week, the week after, privileged Wall Street insiders who are considering breaking the law will have to ask themselves one important question: Is law enforcement listening?" he said.

Securities fraud charges carry possible maximum prison sentences of up to 20 years.

Whitney Tilson, founder and managing partner of T2 Partners LLC and the Tilson Mutual Funds said: "I'm not surprised that among 8,000 hedge funds there will always be a few rogues behaving badly. It's quite stunning somebody who is already a billionaire could be so foolish."

She said that for the "few dishonest hedge funds, it hopefully it will serve as a big wake up call."

"Galleon was shocked to learn today that Raj Rajaratnam was arrested this morning at his apartment," Galleon Group LP said in a statement. "We had no knowledge of the investigation before it was made public and we intend to cooperate fully with the relevant authorities. Galleon continues to operate and is highly liquid."

Rajaratnam, born into a family of well-to-do Tamils in the Sri Lankan capital of Colombo, is one of the largest investors on the Colombo Stock Exchange.

Last month, he pledged $1 million to help pay for the rehabilitation of former soldiers of the separatist "Tamil Tigers," which fought 25 years to create a separate state for Sri Lanka's minority Tamils but were defeated in May.

But on Friday, he was handcuffed and walked in front of TV cameras as federal agents arrested him.

An Intel spokesman said Goel, 51, an employee of its treasury department, was placed on administrative leave on Friday morning. He said Intel was not aware of the case until Friday and has not been contacted by authorities.

Kumar, also 51, was on a leave of absence, a McKinsey spokeswoman said. She said the firm "was looking into the matter urgently."

Chiesi, 43, worked for New Castle, an equity hedge fund group of Bear Stearns Asset Management before Bear Stearns crumbled in March 2008, according to the complaint. Kurland, 60, was a senior managing director of BSAM, the same unit that ran two funds that suffered fatal mortgage market losses in 2007.

Moffat, 53, was group executive of IBM's systems and technology group and a 31-year veteran of the company. Moffat was accused of passing insider information about an IBM deal with Advanced Micro Devices Inc. An IBM spokesman declined to comment.

The Galleon case also dealt another black eye for credit rating firm Moody's Corp Moody's Investors Service, one of the major rating agencies that have been strongly criticized for their role in the global credit crisis.

An analyst at Moody's who was involved with evaluating Hilton passed on insider information that Hilton would be acquired by Blackstone Group and that Hilton would likely announce the acquisition before July 4, 2007, according to one complaint. A Moody's spokesman said the firm would provide investigators with assistance in its investigation of the matter.

(Reporting by Grant McCool and Joseph Giannone; Additional reporting by Edith Honan, Walden Siew and Ritsuko Ando in New York, Clare Baldwin in San Francisco, and Bryson Hull in Colombo, Sri Lanka; Editing by Phil Berlowitz, John Wallace and Bernard Orr)

Florida Homeowners Insurance

Gambling or gaming is designed at the start so that the odds are not affected by the players' conduct or behavior and not required to conduct risk mitigation practices. But players can prepare and increase their odds of winning in certain games such as poker or blackjack. In contrast to gambling or gaming, to obtain certain types of insurance, such as fire insurance, policyholders can be required to conduct risk mitigation practices, such as installing sprinklers and using fireproof building materials to reduce the odds of loss to fire. In addition, after a proven loss, insurers specialize in providing rehabilitation to minimize the total loss.

What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).

Florida Homeowners Insurance

London stocks firm at open

LONDON (AFP) –
London shares started the session on a firm note Friday led by banks and commodities.

The FTSE 100 index of top shares gained 0.63 percent to reach 5,255.87 points.

Bomb kills 11 in Pakistani city of Peshawar: police

PESHAWAR, Pakistan (AFP) –
A suspected suicide car bomb ripped through a police building in an army garrison of Pakistan's northwest city of Peshawar on Friday, killing up to 11 people, police said.

It was the second bomb attack in Peshawar in 24 hours, striking a day after 40 people died in a wave of militant attacks against security targets in Pakistan's eastern city Lahore and the country's volatile northwest.

"I have counted 11 dead bodies and 13 wounded in the emergency unit of the hospital," police official Mohammad Gul told AFP by telephone from the main government-run hospital in Peshawar.

Ambulances screeched through the streets, sirens blaring as rescue teams rushed to the scene of the attack, where TV footage showed smouldering wreckage and a damaged brick wall.

Police at the scene earlier put the death toll at seven with detainees in custody at the police building among the wounded.

"There are seven killed and 15 wounded in a car bomb blast. There are some prisoners among the injured," said senior police official Mohammad Karim Khan.

North West Frontier Province police chief Malik Navid told Pakistan's state PTV it was an apparent suicide attack, with the bomber driving a car.

The bomb ripped through the police-run Central Investigation Agency (CIA) building in Peshawar -- the largest city in northwest Pakistan which lies on the fringes of the lawless tribal belt on the Afghan border.

Navid slammed the attack as a reaction to military operations against Taliban and Al-Qaeda-linked militants in the semi-autonomous tribal belt and parts of the northwest where radicals have carved out sanctuaries.

Natural Baby Cream

Pacifiers have been shown to interfere with breastfeeding, especially if introduced within the first 6 weeks of life.

The term "infant" derives from the Latin word in-fans, meaning "unable to speak." There is no exact definition for infancy. "Infant" is also a legal term with the meaning of minor; that is, any child under the age of legal adulthood.

Natural Baby Cream

Fed eyes facility to drain reserves: report

(Reuters) –
The U.S. Federal Reserve is contemplating accessing money market funds through clearing banks or the creation of a facility to drain cash added to the financial system, Bloomberg said, citing people familiar with the plans.

With the Fed looking to remove some of the more than $1 trillion that was pumped into the U.S. economy, the methods under consideration could help conserve the capital of the 18 primary dealers that act as counterparties for open market transactions, the people told the news agency.

Talks on how to access a broader array of counterparties other than primary dealers are still developing, one of the people told the news agency.

The Federal Reserve did not immediately reply to a Reuters email seeking comment that was sent outside of regular U.S. business hours.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Kim Coghill)