Budget Cuts’ Impact May Be Difficult to See Right Away

WASHINGTON — Seventeen months after President Obama signed doomsday budget legislation that was never intended to become law, the sweeping spending reductions in the measure have been imposed.

Late Friday night, Mr. Obama formally triggered spending cuts that will reach across the breadth of the federal government after he failed to persuade Congressional Republicans to replace them with a mix of cuts and tax increases.

In a 70-page report to Congress accompanying the order and detailing the reductions — agency by agency and program by program — Jeffrey D. Zients, Mr. Obama’s budget director, called them “deeply destructive to national security, domestic investments and core government functions.”

But even as the cuts become official, some of the immediate impact is difficult to see.

The process of trimming government budgets is slow and cumbersome, involving lengthy notifications to unions about temporary furloughs, reductions in overtime pay and cuts in grant financing to state and local programs. Less federal money will, over time, mean fewer government contracts with private companies. Reduced overtime for airport security checkpoint officers will make lines longer, eventually.

And so as the first weekend began for the new, slimmer government, little of that is evident yet.

Letters to governors, informing them of the smaller grants are beginning to go out, officials said. Shaun Donovan, the secretary of housing and urban development, wrote to Gov. John R. Kasich of Ohio: “You can expect reductions totaling approximately $35 million,” helpfully putting the amount in a bold type.

The Air Force Thunderbirds — the elite team of F-16 pilots who perform tricks at air shows — announced on its Web site that all of its shows have been canceled starting April 1. The last show will be in Titusville, Fla., on March 23.

Still, it will take some time, officials acknowledged, before the cuts begin to make life more difficult for teachers, defense contractors, Head Start students, border patrol agents or others who rely on the largess of the federal government.

Emerging from an Oval Office meeting on Friday with the lawmakers, the president called the cuts “just dumb.” He said they would slow the economic recovery and spoke emotionally about their impact on people who would feel the consequences of government layoffs and disruptions in public services.

“I don’t anticipate a huge financial crisis, but people are going to be hurt,” Mr. Obama said during a 35-minute news conference at the White House, in which he acknowledged that his campaign of highlighting fallout from the cuts had failed to persuade Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.

But the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.

The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion.

Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion. The two parties are now expected to move to a broader argument over the right level of taxes and spending as they seek to develop a new budget for the coming year and beyond. Republicans said they welcomed a return to a more orderly budget process but warned they would not give in on their basic principles.

“I will not be part of any back-room deal, and I will absolutely not agree to increase taxes,” said Senator Mitch McConnell of Kentucky, the Republican leader.

After a public relations blitz lasting weeks that was aimed at stopping the cuts, Mr. Obama said he was prepared to extend a stopgap law that finances the government to March 27 if Republicans stuck to an agreement worked out in 2011 about the level of federal spending. The decision will most likely allow the across-the-board spending reductions to remain in place for months if not years.

White House officials and Senate Democrats had considered making one last stand around the March 27 deadline, declaring the Senate would not pass another government spending plan unless it undid the across-the-board cuts. But Senate Democrats were leery. The first furloughs are likely to hit in April, and the Democrats feared that little political pressure would have built on Republicans before the current stopgap spending law expired.

On Friday, Mr. Obama used janitors and security guards as examples of federal employees whose pay will be cut because of the reductions. “They’ve got to figure out how to manage that,” he said.

In fact, as pointed out by The Washington Post’s Fact Checker, Capitol officials e-mailed the building’s staff to say that the president’s comment was not true. The Capitol’s sergeant-at-arms, who is in charge of the building’s officers, said that, “None of my employees will have their pay cut nor will they face furloughs.”

In his weekly address on Saturday morning, the president acknowledged that the reductions would not affect everyone equally.

“While not everyone will feel the pain of these cuts right away, the pain will be real,” Mr. Obama said. “Many middle-class families will have their lives disrupted in a significant way.”

And heading into the weekend, some officials seemed eager to offer reassurance that government would continue to function despite the deep cuts.

While Leon E. Panetta, who just left the job of defense secretary, had thundered about the critical risk to national security — and lamented what he viewed as a shift of Washington’s political class away from good governance — his successor, Chuck Hagel, spoke in more conciliatory terms.

Read More..

Euro Watch: Euro Zone Unemployment Rose to New Record in February

PARIS — The unemployment rate in the euro zone edged up in January to a new record, official data showed Friday, as the ailing European economy continued to weigh on the job market.

Unemployment in the 17-nation euro zone stood at 11.9 percent in January, up from 11.8 percent in December, and from 10.8 percent in January 2012, Eurostat, the statistical office of the European Union, reported from Luxembourg.

For the 27 nations of the European Union, the January jobless rate stood at 10.8 percent, up from 10.7 percent in December. All of the figures were seasonally adjusted.

A separate Eurostat report showed price pressures easing in February. In the euro zone, the annual inflation rate came in at 1.8 percent, down from 2.0 percent in January, and below the European Central Bank’s 2 percent target.

The jobless data “suggest that wage growth is set to weaken from already low rates” and further depress consumer spending, which has already been damped by government austerity measures, Jennifer McKeown, an economist at Capital Economics in London, wrote in a research note.

Ms. McKeown noted that the low inflation numbers and high joblessness “should leave the E.C.B.’s policy options open,” and she said it was possible the central bank “might discuss an interest rate cut or other unconventional policies” when its governing council meets on Thursday.

There was a small bit of bright news Friday. A survey of European purchasing managers by Markit, a data and research firm, showed German manufacturing output growing in February for second straight month, as new business levels improved. The composite German purchasing managers’ index improved to 50.3 in February — just above the level that signals growth — from 49.8 in January.

“German industry is clearly rebounding and taking advantage from better external traction,” Gilles Moëc, an economist at Deutsche Bank in London, wrote.

Employment is sometimes seen as a lagging indicator of economic growth, since companies try to avoid adding to their costs until they are convinced that a rebound is at hand. Despite the green sprouts in German industry, there are few signs that recovery is certain. Markit’s overall euro zone purchasing managers’ index was unchanged in February, at 47.9, a level that signals continued contraction.

European unemployment bottomed in early 2008, just as the financial crisis was getting in motion, and has been on a rising trend ever since. The January numbers were the highest since the creation of the euro.

In absolute terms, Eurostat estimated Friday, 19 million people in the euro zone and more than 26 million people in the overall European Union. were unemployed.

Spain’s unemployment rate in January was 26.2 percent, and Portugal’s was 17.6 percent. Austria, at just 4.9 percent, had the lowest rate, followed by Germany and Luxembourg, both of which stood at 5.3 percent.

Greece’s unemployment rate in November, the latest month for which Eurostat has figures for the country, was 27 percent.

France, the second-largest euro-zone economy after Germany, had a 10.6 percent jobless rate in January. In Britain, not a euro member, the jobless rate stood at 7.7 percent.

Those numbers compare with the United States, where the January unemployment rate stood at 7.9 percent. In Japan, 4.2 percent of the work force was counted as unemployed in December.

This article has been revised to reflect the following correction:

Correction: March 1, 2013

An earlier version of this article carried a headline that misstated the month of the data. The report was for January, not February.

Read More..

U.S. Economy Barely Grew in Fourth Quarter, Revision Shows

Breathe a tiny sigh of relief, if not exactly contentment: the American economy grew just barely in the last quarter of 2012.

Output expanded at an annual rate of just 0.1 percent, which is basically indistinguishable from having no growth at all and is far below the growth needed to get unemployment back to normal. But at least the economy did not shrink, as the Commerce Department had originally estimated last month, when the first report suggested that output contracted by an annual rate of 0.1 percent.

The department’s latest estimate for economic output, released Thursday, showed that growth was depressed by declines in military spending (possibly in anticipation of the across-the-board spending cuts set to begin Friday) and the amount that companies restored their stockroom shelves.

“The good news with business inventories is that what they take away in one quarter they tend to add to the next,” said Paul Ashworth, senior United States economist at Capital Economics, referring to the measure of this restocking process. “So there’s a good chance that first-quarter numbers will be better than originally thought.”

The output growth number was revised upward from the original estimate partly thanks to updated, and improved, data on business investment and net trade. Imports were lower than previously reported and exports were higher.

Economists expect that government spending will continue to drag on the economy this year, especially if Congress does not avert the spending cuts, which would shave around 0.6 percentage point off growth. Many are hoping that even if the cuts go through, Congress will reverse them in short order.

“They can always change their minds when they have to renew the continuing budget resolution at the end of this month or in April or May,” said Mr. Ashworth. “My expectation is that at most the cuts stay a month or two, and in most departments, with a wink or a nod, they won’t do anything crazy.”

Even if government does lop off $85 billion in the so-called sequester, as current law states, the private sector will offset most of this drag, thanks to the housing recovery and other sources of strength. Forecasts for the first quarter are for annual growth around 2.4 percent to 3 percent.

Monetary stimulus from the Federal Reserve, while under fire from some Republicans, is also helping offset the fiscal contraction.

“With monetary policy working with a lag and still being eased, the boost to the economy is probably still growing,” said Jim O’Sullivan, chief United States economist at High Frequency Economics.

The combination of monetary expansion and fiscal tightening has helped lead to a painfully slow drawdown in the unemployment rate. The jobless rate stood at 7.9 percent in January. The recent end of the payroll tax holiday is also expected to hold back consumer spending, and so job growth as well.

“I think it’s largely steady as she goes for employment,” said Jay Feldman, an economist at Credit Suisse, of the indications from the latest growth report. “I still think we’re in kind of a 175,000-jobs-a-month clip for a while, but with some downside risks later in the year from the sequester.”

Read More..

Clearing a Path for Renewal of Violence Against Women Act

WASHINGTON — Bowing to pressure from within their own party, House Republican leaders last night appeared to clear a path for House passage of the Senate’s broadly bipartisan reauthorization of the Violence Against Women Act.

The House Rules Committee, an arm of leadership, approved a bifurcated process to consider the legislation, which would broaden the landmark 1994 law. The House will vote on a Republican version on Thursday that contains provisions that weaken a Senate version that empowers Native American courts to prosecute non-Indians accused of violence on tribal land. The House version also does not explicitly extend programs to prevent domestic violence and treat its victims to members of same-sex relationships.

If that version fails to win passage, the House will take up the Senate-passed version — at this point the likely outcome. That would ensure a swift White House signing ceremony.

The Senate passed that version earlier this month, 78 to 22, with 23 Republicans voting yes, up from 15 last year.

House conservatives maintain that the Senate provision on tribal courts is a dangerous and unconstitutional expansion of tribal power, and they preferred to keep the bill silent on same-sex couples. But the pressure, especially on the tribal issue, was bipartisan. Republican Representatives Darrell Issa of California and Tom Cole of Oklahoma, himself a Chickasaw, pressed hard to toughen the tribal-courts language. Mr. Cole said on Sunday he would try to bring the House bill down if he did not prevail.

Ultimately, it is likely he will. Democrats are united against the Republican version, and Representative Eric Cantor of Virginia, the House majority leader, has committed to passing a bipartisan version in the House or none at all.

Read More..

Euro Watch: European Markets Dip Amid Italian Uncertainty

PARIS — Stocks fell Tuesday across Europe and investors sold Italian bonds, a day after an inconclusive election in Italy raised fears that political deadlock there could hamper efforts to restore the economy and complicate the governance of the euro zone.

European leaders argued for calm, stressing that the political confusion would soon clear up and that negative market reaction would be short-lived as Italians and their European partners returned to the work of building greater integration. But they also stressed that the course of reform started under the current prime minister, Mario Monti, must be continued, for the good of the 17-nation euro zone.

Results indicated that the center-left Democratic Party, led by Pier Luigi Bersani, would have a majority in the Lower House, thanks to the premium of bonus seats given to the largest bloc. But it would only have about 119 seats in the Senate, compared to 117 seats for the center-right People of Liberty party, led by former Prime Minister Silvio Berlusconi — far short of the majority of 158 required to govern.

Mr. Berlusconi hinted that his party might be inclined to form a grand coalition with the Democratic Party, a prospect that would be ideologically incoherent but that experts said might be the only governing coalition possible, given the results.

Mr. Monti’s party, which had helped restore investor confidence at the cost of unpopular spending cuts and tax increases, dropped into last place, behind the protest vote winner, the Five Star Movement of the former comedian Beppe Grillo. The result left the recession-weary nation with no clear path forward and the possibility that another round of elections will be necessary.

In afternoon trading in Europe, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 2.29 percent, while the FTSE 100 index in London dipped 1.28 percent. The yield on the Italian 10-year sovereign bond, which moves in the opposite direction of the price, gained 0.31 percentage points, to 4.79 percent. The MIB index in Milan was down 4.23 percent.

Bond yields have a direct effect on government financing costs, and it was the rise in Italian and Spanish government yields that led the European Central Bank to promise last July that it would do whatever necessary to save the euro.

The euro, which fell sharply on Monday, was up slightly at $1.3087 from $1.3056 late Monday in New York.

Uncertainty about the Italian situation has echoed around the world. Asian shares dropped Tuesday, with the Nikkei 225 stock average in Tokyo closing down 2.26 percent and the Hang Seng index in Hong Kong closing down 1.32 percent. New York stocks ended Monday down more than 1 percent.

Olivier Bailly, a spokesman for the European Commission, the policy making arm of the European Union, on Tuesday urged Italy to form a government and to continue policies aimed at bringing down its public debt.

“The European Commission places its full confidence in Italian democracy, and the European Commission will work closely with the new government in order to relaunch growth and the creation of jobs in Italy,” Mr. Bailly said during a news conference in Brussels.

He suggested that continuing reforms was the best way to combat the instability on financial markets that followed the vote. “Markets are free to react the way they want,” he said. Italian leaders needed to “establish a political majority that will continue to deliver a growth and jobs agenda, which is basically what Italy needs in order to reduce the unsustainable level of its debt.”

According to a recent and wide-ranging study on the reform prospects for countries in the euro zone, the Lisbon Council, a research organization based in Brussels, concluded that Italy ranked last among all countries that use the euro in terms of its ability to generate economic growth over the long term.

Luis de Guindos, the Spanish economy minister, said on Tuesday that he was confident that the negative impact of the Italian vote on financial markets would be “only in the short term.” He told Spanish reporters that Italy would eventually manage to form “a stable government,” which would also be in the interest of Spain and the rest of the euro zone.

Before the election, Germany made very clear its expectations that whoever takes over in Rome must continue to implement the course of reforms begun under Mr. Monti. This line echoed throughout Berlin on Tuesday.

“It is important that Italy have a functioning government,” Michael Grosse-Broemer, an important ally of Chancellor Angela Merkel and parliamentary floor leader of her center-right party, said Tuesday. “Mr. Monti’s course of reform must be continued.”

“There is no alternative to the course of structural reform that has been started,” Philip Rösler, Germany’s economy minister, told the German public broadcaster ARD, adding his disappointment at the apparent lack of support for the country’s pro-reform parties .

Guido Westerwelle, the foreign minister, also called for Italy to swiftly form a “stable and functioning government,” stressing its importance for the rest of Europe.

But Werner Faymann, chancellor of Austria, warned against allowing concerns over the future Italian government to spark another debate over the future of the euro, insisting that the common currency was strong enough to withstand a period of instability.

“The euro remains stable even when it is not yet clear in any given country how a government will be formed,” Mr. Faymann said, according to ARD.

How worried Germans are about what political chaos in Rome could mean for them came across clearly in the German media.

“The election shows that Italy remains susceptible for populist slogan. This is demonstrated by the nearly 25 percent support for the cheap, angry outbursts of the anti-party of comedian Beppe Grillo. And then the 30 percent for Berlusconi,” wrote the daily Tagesspiegel in a commentary on Tuesday, pointing out that amounted to about every second voter supporting a populist.

“It is a very scary prospect that does not engender hope for Italy’s future,” the newspaper wrote. “We are a long way from a cure for the Berlusconi disease.”

David Jolly reported from Paris. Rachel Donadio in Rome, James Kanter in Brussels, Melissa Eddy in Berlin, Raphael Minder in Madrid, and Landon Thomas Jr. in London contributed reporting.

Read More..

DealBook: Barnes & Noble Chairman Leonard Riggio to Bid for Bookstore's Retail Business

Correction Appended

The chairman of Barnes & Noble plans to bid for the retail business of the bookstore chain he started 40 years ago, as the company struggles with a changing competitive landscape.

On Monday, Leonard Riggio told the company’s board that he would make an offer for Barnes & Noble Booksellers, barnesandnoble.com and other retail assets. The proposal would not include the e-book division, Nook Media.

Like many retailers, Barnes & Noble is confronted by waning profit in its core business, as online retailers and other competitors gain market share. The company recently warned that earnings would be weak in the latest quarter, with losses rising in its Nook Media division.

Conceived as a serious competitor to Amazon.com’s Kindle, the Nook has instead become an also-ran in the race for digital book supremacy. The Kindle remains the top-selling dedicated e-reader, while the iPad consistently leads the competition among tablets. Amazon’s Kindle app has also maintained a huge lead in popularity, limiting Barnes & Noble’s reach across the broader digital bookselling landscape.

It is the boldest move yet by Mr. Riggio, the company’s largest shareholder who owns nearly 30 percent of Barnes & Noble, to try and save the company.

After building a small chain of college bookstores, Mr. Riggio in the 1970s bought the Barnes & Noble name and the flagship location in Manhattan, which had run into trouble. Over the next several decades, he built the company into the nation’s biggest brick-and-mortar bookseller.

In recent years, Mr. Riggio has fended off challenges from the likes of the billionaire Ronald W. Burkle. As part of that effort, Mr. Riggio argued, in large part, that the company was well-positioned in the future by betting on the Nook and digital books.

Others believed in the promise of the e-reader as well.

Microsoft paid $300 million in April for a 17.6 percent stake in the Nook business, valuing it then at $1.7 billion. Microsoft also secured Barnes & Noble’s commitment to produce an e-reader app for its Windows 8 operating system. And in December, the British publisher Pearson agreed to buy a 5 percent stake for $89.5 million.

Mr. Riggio, plans to negotiate the price with the board, according to a regulatory filing. The proposal is expected to be mainly in cash. The retailer’s board had already been weighing whether to spin off its Nook unit.

Barnes & Noble said in a statement that it had formed a special board committee of three directors – David G. Golden, David A. Wilson and Patricia L. Higgins – to consider Mr. Riggio’s proposal. The committee will be advised by Evercore Partners and the law firm Paul, Weiss, Rifkind, Wharton & Garrison.

---

Correction: February 25, 2013

An earlier version of this article referred imprecisely to the role of its largest shareholder, Leonard Riggio, in the company’s history. While Mr. Riggio founded the modern company that acquired the name in the 1970s, William Barnes and G. Clifford Noble opened the original Barnes & Noble bookstore, in 1917.

Read More..

Insurgents Launch 4 Attacks in Afghanistan

KABUL — Afghan intelligence agents on Sunday shot and killed a man in a sport utility vehicle that officials said had been packed with explosives, foiling what they described as an attempt to set off a massive explosion in a neighborhood of narrow streets lined with foreign embassies.

At about the same time, Taliban suicide attackers set off three separate car bombs in two provinces near the capital. But the bombs did minimal damage,  officials said, and the toll from the Sunday violence was low. In addition to the two attackers and the suspect, two security guards and a police officer were also killed and five other people wounded, including one attacker who managed to flee.

A spokesman for the Taliban, Zabiullah Mujahid, said the insurgents were behind the three successful bombings. But he disavowed knowledge of the attempt in Kabul, saying Taliban commanders in the city had no plans for an attack on Sunday.

While it is not unusual for the Taliban to deny having a hand in a failed attack, much about the attempted bombing Sunday remained murky, with officials hailing Afghan security forces for acting quickly but offering only the barest details about how the man identified as a bomber was spotted.

The police chief of Kabul, Gen. Mohammed Ayoub Salangi, said the suspect was in a Toyota sport utility vehicle and was trying to pass through a checkpoint when he was recognized by agents from the country’s intelligence service, the National Directorate of Security.

The man “was gunned down,” General Salangi said. The agents had to act quickly, he added, saying that there was no time to inspect the vehicle or question the suspect because that would have given him the chance to detonate the explosives.

General Salangi, who in an earlier statement said there were two men in the car, did not say how or why the agents recognized the man. But he added that the car bomb was quickly defused and carted away.

The bombing attempt, in the Wazir Akbar Khan neighborhood, led some embassies to did briefly lock down the streets on which they are located and on which they control security. The spot where the man was shot were was less than a mile from the United States Embassy and the headquarters of the American-led coalition, neither of which offered any comment.

Earlier in the day, in Jalalabad, a city in eastern Afghanistan, a single bomber in a Toyota Corolla directly targeted the Security Directorate, officials said, detonating his explosive-laden vehicle outside a building used by the intelligence agency. Two guards were killed and a third was wounded, said Hazrat Mohammad Mashraqiwal, a police spokesman in Jalalabad.

Later on Sunday, two people in another car laden with explosives tried to enter the district governor’s compound in Baraki Barak district of Logar Province, south of Kabul. But they were stopped by police officers guarding the compound, prompting one man to jump and make a run for it and the other to set off the car bomb, said Abdul Rahim Amin, the governor.

One police officer was wounded in the attack, along with the man who fled.

Earlier in Logar, around dawn, a minivan packed with explosives was set off at a police post near the provincial capital, Pul-e-Alam. One officer was killed and two others wounded, an official said.

Sharifullah Sahak contributed reporting.

Read More..

Iraq President’s Health Is Improving, Doctor Says

KIRKUK, Iraq (Reuters) - Iraqi President Jalal Talabani is now able to talk, his doctor said, adding he was hopeful the Kurdish statesman would soon be fit to return to Iraq from Germany, where he has been receiving medical treatment for a stroke.

A peace-maker who often mediated among Iraq's Shi'ite, Sunni and Kurdish factions, 79-year-old Talabani was flown abroad in December in critical condition.

"I am in continuous contact with the German team treating President Talabani," said Najmaldin Karim, who is also governor of the city of Kirkuk.

"He can talk now with the people around him and started to think in a good way. I and the German team are optimistic that he will get much better and can return back to Iraq soon."

During Talabani's absence, Iraq's political crisis has intensified, with thousands of Sunni Muslims taking to the streets in protest against the Shi'ite-led government

The veteran politician often worked to ease tensions in the country's fragile power-sharing government and negotiated between Baghdad and the autonomous Kurdistan region, which are locked in feud over land and oil rights.

(Writing by Isabel Coles; Editing by Nick Macfie)

Read More..

Magistrate Grants Bail for Pistorius

Mike Hutchings/Reuters

Oscar Pistorius in court on Friday.

PRETORIA, South Africa — After four days of combative hearings, a South African magistrate on Friday granted bail for Oscar Pistorius, the double amputee track star accused of murdering his girlfriend, in a case that has horrified and fascinated the nation.

Magistrate Desmond Nair announced the decision after hearing impassioned final arguments from the defense and the prosecution in Courtroom C of the Pretoria Magistrates Court in the presence of an emotional Mr. Pistorius, who has testified that he mistook his girlfriend, Reeva Steenkamp, for an intruder and never intended to kill her.

Magistrate Nair said Mr. Pistorius did not represent a flight risk and was not likely to interfere with state witnesses.

”The accused has made a case to be released on bail,” the magistrate concluded. Pistorius family members in the packed courtroom shouted, “Yes!”

The magistrate set bail at 1 million rand, or about $112,000.

Before announcing his ruling, the magistrate reprised the four days of conflicting arguments by defense and prosecution lawyers. Mr. Pistorius’s shoulders shook with emotion and tears fell from his eyes as, at one point, Magistrate Nair said, “The deceased died in his arms.”

Magistrate Nair said bail was not a matter of guilt and innocence but about determining whether justice would be served by holding a defendant in custody.

But he took issue with the testimony and actions of the prosecution’s lead investigator, Detective Warrant Officer Hilton Botha, who has since been removed from the case, saying the officer committed “several errors and concessions” and “blundered” in gathering evidence.

“It is his evidence that may have been tarnished by cross-examination, not the state case,” he said. At the same time, the state case was not so “strong and watertight” that Mr. Pistorius “must come to the conclusion that he has to flee.”

In a two-hour summary of the case and of the laws governing bail, the magistrate also read a series of character references from friends of the athlete, who described his relationship with Ms. Steenkamp, a 29-year-old model and law school graduate, as loving and happy.

The prosecution had opposed the sprinter’s application to be released on bail until a full trial, arguing that he might flee. It said Mr. Pistorius, 26, murdered Ms. Steenkamp when he fired four shots through a locked bathroom door at his home in a gated community in Pretoria on Feb. 14 while she was on the other side.

The sprinter, who underwent double amputation as an infant after being born without fibula bones and uses prostheses, has said he believed that the person in the bathroom was an intruder.

Magistrate Nair said that while the prosecution case rested on “nothing more than circumstantial evidence,” there were “improbabilities that need to be explored” in Mr. Pistorius’s account of events.

“The only person who knows what happened there is the accused,” he said. But “I cannot find that it has been established that the accused is a flight risk.”

He cited legal requirements that the defense must establish “exceptional circumstances” to qualify for bail in cases of premeditated murder.

Premeditated murder is the most serious murder charge under South African criminal law and carries a mandatory life sentence, with parole in 25 years at the latest.

Mr. Pistorius’s lawyer, Barry Roux, said Friday that if he were prosecuting the case, the charge would be culpable homicide — a less serious charge implying either negligence or a lack of intention to kill. Prosecutors say judges decide the sentence for culpable homicide depending on the circumstances.

With his head bowed as he entered the court on Friday in advance of the ruling, Mr. Pistorius appeared to be struggling to hold back tears, his jaw clenched, as the prosecutor described Ms. Steenkamp’s plight on Feb. 14.

Lydia Polgreen reported from Pretoria, and Alan Cowell from London.

Read More..

Gen. Philip M. Breedlove Likely Candidate for Top NATO Post

BRUSSELS — Senior NATO officials said on Thursday that Gen. Philip M. Breedlove, currently the commander of American Air Force units in Europe and Africa, was emerging as the likely candidate to be nominated by President Obama to be the alliance’s supreme military commander.

An opening to serve as NATO’s next military commander surfaced this week as the previous nominee, Gen. John R. Allen of the Marine Corps, announced that he was retiring.

General Allen, who served until earlier this month as the top commander in Afghanistan, said he was retiring to focus on family health issues. He had been caught up in the scandal that led to the resignation of David H. Petraeus as the director of the Central Intelligence Agency. Last month, the Pentagon officially cleared him of any misconduct after an investigation into his exchange of e-mails with Jill Kelley, a Tampa, Fla. socialite.

General Breedlove at present holds several positions. He is the Air Force’s top officer for both the European Command and for the Africa Command.

He was commissioned into the Air Force in 1977 from the R.O.T.C. program at George Tech. According to his official biography, he has commanded a fighter squadron, an operations group and three fighter wings.

Before his current command position, General Breedlove also served as vice chief of staff of the Air Force.

Senior NATO officials described General Breedlove as the leading candidate for the top alliance military post, but spoke on condition of anonymity because it has not yet been announced by Mr. Obama.

The disclosure on the likely personnel decision came as Defense Secretary Leon E. Panetta joined other defense ministers from the alliance for a two-day session. The future of the mission in Afghanistan was on the agenda for the defense ministers' meeting, the first since Mr. Obama ordered American forces in Afghanistan to be reduced by 34,000 troops within a year.

Read More..

In Montana’s Kalispell, Guns Are a Matter of Life

Making Guns in Montana:
Kalispell, Mont., has become the center of a growing firearms industry, particularly for high-end rifles and industrial rifle parts.

BIGFORK, Mont. — Jerry Fisher’s big and careful arms cradled a polished cutout of English walnut, which was aging in his workroom like a fine wine. The slight tapering along one edge gave a ghostly hint of its future as the stock of a handmade hunting rifle.

His eyebrows lifted as he explained the properties of this piece of walnut. “This wood will assume the moisture content of the atmosphere you store it in,” he said. “It takes five or six years to dry it.”

Mr. Fisher, 82, is a gunsmith whose exquisite firearms, decorated with designs by fine artists, have attracted customers from around the world. He built on the work of older gunsmiths here, just as younger ones hope to learn from him. He epitomizes the values of the Flathead Valley of northwestern Montana, where people grow up with, relax with and live around guns.

Since the 19th century, hunting has been a pastime in the forests that climb up the tiara of rocky peaks around Flathead Lake. Members of the growing group of high-end gunsmiths say it is the mountains, the air and the game that draw them, not the presence of other artisans. But the area’s reputation for this kind of gunsmithing has also made it a growing destination for more prosaic manufacturing of gun parts and guns — including high-end semiautomatic rifles and military weapons.

In Kalispell, the Flathead County seat, 250 people earn a living making guns or gun parts, a tenfold increase since 2005. That growth helped mitigate the effects of the recession, which was a body blow to construction, a major local employer. Another longtime industry, logging, has also withered.

Clint Walker’s company, New Evolution Military Ordnance, became one of the newest entrants in the business within the last couple of years, joining a roster of companies that included Montana Rifle, McGowen Precision Barrels and SI Defense.

Mr. Walker, who had been an editor of trade magazines covering video equipment, said Montana Rifle was “doing literally tens of thousands of barrels” for large gunmaking companies back East. “They have to slow down and stop what they are doing to help us out,” he said. “And they’ve done that. They said: ‘You guys are local. You’re family.'”

“That is a large part of the success of this area,” Mr. Walker added.

To provide trained hands for companies like these, Flathead Valley Community College started a course in gunsmithing last summer. Students learn everything from hollowing out a barrel to checkering a stock – carving fine crosshatched indentations behind the trigger both for decoration and to create a solid grip.

Jane A. Karas, a former New Yorker who is the school’s president, said the program “focuses on craftsmanship that maintains the historic values” of the area. Her colleague Susan Burch, who worked with a transplanted Oklahoma gunsmith, Brandon Miller, to teach the course, added, “You’re looking at the intersection of art and the outdoors.”

Homicides with guns are relatively rare in the area. There have been six murders in Kalispell (population 20,000) in the past 12 years, said Roger Nasset, the local police chief. His officers are never surprised to find a gun inside a car they stop for a traffic violation – and seldom bother to discuss it, much less confiscate it. Montana’s laws on gun possession are among the least restrictive in the nation.

Guns are not permitted in schoolrooms, but have been used to raise money for them. Last fall, the Stillwater Christian School earned more than $20,000 when its parent-teacher organization held a raffle for a locally made semiautomatic AR-15 assault rifle donated by Mr. Walker, a parent of two young students there.

“When we did the fund-raiser, it didn’t cross my mind, ‘Wow, we’re donating an assault rifle to a school for a fund-raiser,'” he said. It was just, ‘This is one of the No. 1-selling rifles in America.'”

Butch Hurlbert, whose daughter and teenage granddaughter were murdered with a gun near Kalispell on Christmas Day in 2010, blames the killer — his daughter’s former boyfriend — and the police, not the gun. Having a gun, he said, “is pretty much just a normal thing.”

Read More..

Obama to Turn Up Pressure for Deal on Budget Cuts

WASHINGTON — President Obama, back from his three-day golf getaway, on Monday morning will make use of his bully pulpit, while Congress remains out all week, to turn up the pressure for a bipartisan agreement to avoid indiscriminate across-the-board budget cuts that will otherwise hit March 1.

In the morning, Mr. Obama will speak at a White House auditorium, where he will be joined by first responders to illustrate the sorts of Americans whose jobs are threatened if the cuts take effect. According to the White House, the Federal Emergency Management Agency would not be able to provide grants to states and local governments that currently support hiring for firefighters and other local emergency personnel.

Some Republicans in Congress have proposed alternative savings that would spare any cuts in military spending but not in domestic accounts. Mr. Obama and Congressional Democrats are calling for a mix of spending cuts and additional tax revenues by closing some tax breaks for wealthy investors and corporations.

A White House statement announcing the president’s scheduled remarks summarized the political frame that Mr. Obama has devised to try to corner the Republicans into compromising: “The president will challenge Republicans to make a very simple choice: do they protect investments in education, health care and national defense or do they continue to prioritize and protect tax loopholes that benefit the very few at the expense of middle- and working-class Americans?”

The president’s latest deficit reduction push comes as the heads of his 2010 deficit reduction commission — former Senator Alan K. Simpson and Erskine B. Bowles, a former chief of staff to President Bill Clinton — unveil a new plan that would reduce the deficit by $2.4 trillion through a series of spending cuts and an overhaul of the tax system.

When Congress returns from a winter recess next week, just days remain before the deadline for the so-called sequester of spending cuts, a deadline that already was moved once — at the start of the year — to allow more time for the two parties to negotiate.

Read More..

Tech Industry Sets Its Sights on Gambling

Jim Wilson/The New York Times

Cesar Miranda, left, and his brother, Edgar, working on their claw crane game in San Jose, Calif.

SAN FRANCISCO — Look out Las Vegas, here comes FarmVille.

Silicon Valley is betting that online gambling is its next billion-dollar business, with developers across the industry turning casual games into occasions for adults to wager.

At the moment these games are aimed overseas, where attitudes toward gambling are more relaxed and online betting is generally legal, and extremely lucrative. But game companies, from small teams to Facebook and Zynga, have their eye on the ultimate prize: the rich American market, where most types of real-money online wagers have been cleared by the Justice Department.

Two states, Nevada and Delaware, are already laying the groundwork for virtual gambling. Within months they will most likely be joined by New Jersey.

Bills have also been introduced in Mississippi, Iowa, California and other states, driven by the realization that online gambling could bring in streams of tax revenue. In Iowa alone, online gambling proponents estimated that 150,000 residents were playing poker illegally.

Legislative progress, though, is slow. Opponents include an influential casino industry wary of competition and the traditional antigambling factions, who oppose it on moral grounds.

Silicon Valley is hardly discouraged. Companies here believe that online gambling will soon become as simple as buying an e-book or streaming a movie, and that the convenience of being able to bet from your couch, surrounded by virtual friends, will offset the lack of glittering ambience found in a real-world casino. Think you can get a field of corn in FarmVille, the popular Facebook game, to grow faster than your brother-in-law’s? Five bucks says you cannot.

“Gambling in the U.S. is controlled by a few land-based casinos and some powerful Indian casinos,” said Chris Griffin, chief executive of Betable, a London gambling start-up that handles the gaming licenses and betting mechanics of the business for developers. “What potentially becomes an interesting counterweight is all of a sudden thousands of developers in Silicon Valley making money overseas and wanting to turn their efforts inward and make money in the U.S.”

Betable has set up shop in San Francisco, where 15 studios are now using its back-end platform. “This is the next evolution in games, and kind of ground zero for the developer community,” Mr. Griffin said.

Overseas, online betting is generating an estimated $32 billion in annual revenue — nearly the size of the United States casino market. Juniper Research estimates that betting on mobile devices alone will be a $100 billion worldwide industry by 2017.

“Everyone is really anticipating this becoming a huge business,” said Chris DeWolfe, a co-founder of the pioneering social site Myspace, who is throwing his energies into a gaming studio with a gambling component backed by, among others, the personal investment funds of Jeff Bezos, Amazon’s founder, and Eric E. Schmidt, Google’s executive chairman.

As companies eagerly wait for the American market to open up, they are introducing betting games in Britain, where Apple has tweaked the iPhone software to accommodate them. Facebook began allowing online gambling for British users last summer with Jackpotjoy, a bingo site; deals with other developers followed in December and this month.

Zynga, the company that developed FarmVille, Mafia Wars, Words With Friends and many other popular casual games, is advertising the imminent release of its first betting games in Britain. “All your favorite Zynga game characters will be there, except this time they’ll have real money prizes to offer you,” an ad says. “Play online casino games for pennies and live the dream!”

Mr. DeWolfe’s studio, SGN, is also on the verge of starting its first real-money games in Britain. “Those companies that have a critical mass of users that are interested in playing real-money games are going to be incredibly valuable,” he said.

Mark Pincus, the chief executive of Zynga, said the company was just following the market. “There is no question there is great interest from all kinds of people in games of chance, whether it is for real money or virtual rewards,” he said. Zynga, which has missed revenue expectations in the last year, is making gambling a centerpiece of its new strategy. It has just applied to Nevada for a gambling license.

Casual gaming first blossomed on Facebook’s Web site, where players could readily corral friends into their games. It is now being rethought for mobile devices, so people can play in brief snippets as they wait for a bus or a sandwich.

Some games mimic the slots and poker found in casinos; others emphasize considerably more creativity. The vast majority of casual game players play at no charge. A small number buy virtual objects in the game to speed their play or increase their status.

Tech executives expect an equally small number to play for real money but believe they will bet heavily, making them much more valuable to the gaming companies. By Betable’s estimate, the lifetime value of a casual player is $2 versus $1,800 for a real-money player.

Read More..

Blasts Across Baghdad Kill at Least 21 People

A wave of attacks targeting Shiite neighborhoods in Baghdad on Sunday killed at least 21 people and wounded 125, a security source said.

Four car bombs exploded in Sadr City, targeting civilians in a market, at a bus station and on a major road, killing seven civilians and wounding more than 30 others, according to officials and a security source.

Car bombs also struck in Husseiniya, Al Ameen and Kamaliya, leaving a total of at least seven dead and 32 injured in those areas.

In the central Baghdad neighborhood of Karrada, close to the Babil Hotel, a roadside bomb killed one person and wounded five others.

Read More..

Wrestling Group’s President Quits After Olympic Omission

PHUKET, Thailand (AP) — The president of the international wrestling federation has quit in the wake of the IOC's decision to remove the sport from the 2020 Olympics.

Raphael Martinetti's resignation was announced Saturday at the FILA executive committee meeting in Phuket. The Swiss had been in the position since 2002.

On Tuesday, the executive board of the International Olympic Committee dumped wrestling from its guaranteed berth in future Summer games, forcing the sport to compete for a spot on the program.

U.S.A. Wrestling executive director Rich Bender said Martinetti's departure "provides international wrestling with an opportunity to change and improve," giving the sport a chance "to create a fresh new relationship" with the IOC.

Wrestling will still be on the program at the 2016 Olympics in Rio de Janeiro.

Read More..

Meteorite Fragments Are Said to Rain Down on Siberia; Hundreds of Injuries Reported

www.ng.kz, via Associated Press

In a screen grab from video taken by a dashboard camera, a streak could be seen in the sky on a highway from Kostanai, Kazakhstan to the Chelyabinsk region in Russia.

MOSCOW — Bright objects, apparently debris from a meteorite, streaked through the sky in western Siberia early on Friday, accompanied by a boom that damaged buildings across a vast area of territory. Hundreds of people were reported to have been injured, most from breaking glass.

Emergency officials had reported no deaths by Friday afternoon, but administrators in the city of Chelyabinsk said that more than 750 residents had sought medical care and 31 had been hospitalized.

Russian experts believe the blast was caused by a 10-ton meteor known as a bolide, which created a powerful shock wave when it reached the Earth’s atmosphere, the Russian Academy of Sciences said in a statement. Scientists believe the bolide exploded and evaporated at a height of around 20 to 30 miles above the Earth’s surface, but that small fragments may have reached the ground, the statement said.

The governor of the Chelyabinsk district reported that a search team had found an impact crater on the outskirts of a city about 50 miles west of Chelyabinsk. An official from the Interior Ministry told the Russian news agency Interfax that three large pieces of meteorite debris had been retrieved in the area and that 10,000 police officers are searching for more.

A small asteroid, known as 2012 DA14, is expected to pass close to Earth later on Friday, NASA reported on its Web site. Aleksandr Y. Dudorov, a physicist at Chelyabinsk State University, said it was possible that the meteorite may have been flying alongside the asteroid.

“What we witnessed today may have been the precursor of that asteroid,” said Mr. Dudorov in a telephone interview. Video clips from the city of Chelyabinsk showed an early morning sky illuminated by a brilliant flash, followed by the sound of breaking glass and multiple car alarms. Meteorites typically cause sonic booms as they enter the Earth’s atmosphere. On Friday, the force was powerful enough to shatter dishes and televisions in people’s homes.

“I saw a flash in the window, turned toward it and saw a burning cloud, which was surrounded by smoke and was going downward — it reminded me of what you see after an explosion,” said Maria Polyakova, 25, head of reception at the Park-City Hotel in Chelyabinsk, which is 950 miles east of Moscow. A video made outside a building in Chelyabinsk captured the astonished voices of witnesses who were uncertain what it was they had just seen.

“Maybe it was a rocket,” said one man, who rushed outside onto the street along with his co-workers when the object hit, far out of sight. A man named Artyom, who spoke to the Moscow FM radio station, said the explosion was enormous.

“I was sitting at work and the windows lit up and it was as if the whole city was illuminated, and I looked out and saw a huge streak in the sky and it was like that for two or three minutes and then I heard these noises, like claps,” he said. “And then all the dogs started barking.”

He said that there was a blast that caused balconies to shake and windows to shatter. He said he did not believe it was a meteorite. “We are waiting for a second piece, that is what people are talking about now,” the man said.

The object was visible from the city of Nizhniy Tagil, around 220 miles north of Chelyabinsk, where so many people called an emergency assistance number that it stopped working, the Novy Region news service reported.

The government response on Friday was huge. Seven airplanes were deployed to search for places where meteorites might have fallen and more than 20,000 people dispatched to comb the area on foot, according to the Ministry of Emergency Situations. There were also 28 sites designated to monitor radiation. No unusual readings had been detected, the ministry reported.

The area around Chelyabinsk is also home to “dozens of defense factories, including nuclear factories and those involved in production of thermonuclear weapons,” said Vladimir Lipunov, an astrophysicist at the Shternberg State Astronomy Institute.

“No one needs to be told what the Urals is,” Mr. Lipunov told the NTV television station. “A second hit in the same area is unlikely and everything could have been much, much worse.”

Siberia stretches the length of Asia, and there is a history of meteor and asteroid showers there. In 1908 a powerful explosion was reported near the Tunguska River in central Siberia, its impact so great that trees were flattened for 25 miles around. Generations of scientists have studied that event, analyzing particles that were driven into the Earth’s surface as far away as the South Pole. A study published in the 1980s concluded the object weighed a million tons.

In the United States, NASA alluded to the Tunguska incident when it said that it was watching closely an asteroid 150 feet in diameter expected to whiz past Earth on Friday at a distance of around 17,200 miles, the closest for many decades.

In a statement on its Web site, NASA said on Friday that there was no risk that the asteroid, 2012 DA14, would collide with Earth. But it would pass within “the belt of satellites in geostationary orbit, which is 22,200 miles above Earth’s surface.”

The asteroid is set to pass Earth at around 2:25 p.m. Eastern time, NASA said. “At the time of closest approach, the asteroid will be over the eastern Indian Ocean, off Sumatra,” the agency said.

“Asteroid 2012 DA14 will not impact Earth, but if another asteroid of a size similar to that of 2012 DA14 were to impact Earth, it would release approximately 2.5 megatons of energy in the atmosphere and would be expected to cause regional devastation,” NASA said. The asteroid will not be visible to the naked eye, the agency added.

Referring to the “Tunguska Event,” NASA said the impact of an asteroid just smaller than 2012 DA14 “is believed to have flattened about 825 square miles of forest in and around the Podkamennaya Tunguska River in what is now Krasnoyarsk Krai, Russia.”

Viktor Klimenko contributed reporting from Moscow, and Alan Cowell from London.

Read More..

DealBook: Berkshire and 3G Capital to Buy Heinz for $23 Billion

9:07 a.m. | Updated

Warren E. Buffett has found another American icon worth buying: H. J. Heinz.

Berkshire Hathaway, the giant conglomerate that Mr. Buffett runs, said on Thursday that it would buy the food giant for about $23 billion, adding Heinz ketchup to its stable of prominent brands.

Mr. Buffett is teaming up with 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in a company whose business is complementary to Heinz’s: Burger King.

Under the terms of the deal, Berkshire and 3G will pay $72.50 a share, about 20 percent above Heinz’s closing price on Wednesday. Including debt, the transaction is valued at $28 billion.

“This is my kind of deal and my kind of partner,” Mr. Buffett told CNBC on Thursday. “Heinz is our kind of company with fantastic brands.”

In many ways, Heinz fits Mr. Buffett’s deal criteria almost to a T. It has broad brand recognition – besides ketchup, it owns Ore-Ida and Lea & Perrins Worcestershire sauce – and has performed well. Over the last 12 months, its stock has risen nearly 17 percent.

Mr. Buffett told CNBC that he had a file on Heinz dating back to 1980. But the genesis of Thursday’s deal actually lies with 3G, an investment firm backed by several wealthy Brazilian families, according to a person with direct knowledge of the matter.

One of the firm’s principal backers, Jorge Paulo Lemann, brought the idea of buying Heinz to Berkshire about two months ago, this person said. Mr. Buffett agreed, and the two sides approached Heinz’s chief executive, William R. Johnson, about buying the company.

“We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz,” Mr. Johnson said in a statement.

Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo.

Mr. Buffett told CNBC that 3G would be the primary supervisor of Heinz’s operations, saying, “Heinz will be 3G’s baby.”

The food company’s headquarters will remain in Pittsburgh, Heinz’s home for over 120 years. Heinz’s stock was up nearly 20 percent in premarket trading, at $72.46, closely mirroring the offered price.

Heinz was advised by Centerview Partners, Bank of America Merrill Lynch and the law firm Davis Polk & Wardwell. A transaction committee of the company’s board was advised by Moelis & Company and Wachtell, Lipton, Rosen & Katz.

Berkshire’s and 3G’s lead adviser was Lazard, with JPMorgan and Wells Fargo providing additional advice. Kirkland & Ellis provided legal advice to 3G, while Berkshire relied on its usual law firm, Munger, Tolles & Olson.

Read More..

DealBook: Big Banks Are Told to Review Their Own Foreclosures

Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices.

In doing so, the regulators are trying to speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers, according to people briefed on the matter. But housing advocates worry that the banks, eager to end the costly process, could take shortcuts as they comb through loan files for errors, potentially diverting aid from the neediest homeowners.

Regulators say they will check the work. And banks have already agreed to pay a fixed amount to troubled homeowners, creating another backstop.

According to officials involved in the process, who spoke anonymously because the matter is not public, the regulators had few alternatives.

Last month, the Office of the Comptroller of the Currency scuttled the foreclosure review by independent consultants because it was marred by delays and inefficiency. Instead, the regulator struck a multibillion-dollar settlement directly with the nation’s largest banks, a deal that includes $3.6 billion in payments to aggrieved homeowners.

To accelerate the payments, the comptroller’s office decided to cut out the middlemen, the consultants, from the reviews. In a conference call last week, the government outlined a plan to use the lenders instead, according to people with direct knowledge of the discussion. Banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners.

The decision to tap the banks for support is the latest twist in the review of more than four million foreclosures, a process that has incensed lawmakers and ensnared the nation’s largest lenders. Regulators are eager to make the payments to homeowners, who have languished for more than a year.

In 2012, housing advocates, regulators and some bank executives suggested the government release an initial round of payments to homeowners, people briefed on the matter said. Such a move might have quelled suspicions among homeowners that the independent review was an empty promise, or worse, a fraud. But the effort went nowhere.

Now, the first payments to homeowners are not expected until late March.

For Judie Lee, 51, a paralegal who is battling to save her three-bedroom home in Lynn, Mass., it might not come in time. Ms. Lee says she submitted a request for aid more than six months ago after a series of botched loan modifications.

“We are in trouble,” said Ms. Lee, who said that she fell behind on her loan payments after losing a job in 2007.

Under the plan outlined last week, the banks will pore over loan files like Ms. Lee’s to identify the worst possible errors. Military personnel illegally foreclosed on, for example, will rank highest on the list. Borrowers who might be current on their loan payments — and therefore did not warrant a foreclosure — will be next.

Regulators will then decide how much money to pay each category of borrower. The worse the errors, the bigger the payout.

The plan, regulators say, offers a more equitable way to divide the money than paying the same amount to each homeowner.

The strategy, though, presents potential conflicts of interests. The banks, in haste to meet tight deadlines, could fail to provide an accurate portrayal of what went wrong. The loan files are also in disarray, officials say, complicating the task for banks.

“The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” said Isaac Simon Hodes, an organizer with the community group Lynn United for Change. “The latest development shows how there has been no accountability.”

Regulators say the lenders have no incentive to manipulate the reviews. Under the settlement, the banks committed to dole out a set amount. Bank of America must distribute $1.1 billion to homeowners. Wells Fargo owes more than $700 million. The costs will not change, regardless of what the banks find in the loan files in the coming weeks.

The Office of the Comptroller of the Currency, which is running the review, also said it would perform regular checks on the banks’ work and make sure they adopt controls to prevent errors.

“Regulators will verify and test the work of servicers to slot borrowers into broad categories and then regulators will determine the amount of payment for each category,” explained Morris Morgan, the deputy comptroller in charge of supervising large banks.

By relying on the banks, regulators can part ways with the consultants.

Despite billing for roughly $2 billion in fees in the 14-month review, consultants examined only a sliver of the 500,000 complaints filed by homeowners, people involved in the matter said. Their efforts were stymied, in part, because regulators urged consultants to first scrutinize a random sample of the four million foreclosures before digging into specific homeowner complaints, the people involved said. The decision, the people said, may have undercut the scope of the settlement and potentially deprived homeowners of additional relief.

Consultants were also criticized for a faulty review process.

Some consulting firms, including the Promontory Financial Group, farmed out much of the work to contract employees. Others faced questions about their objectivity. The consultants, critics note, were paid billions of dollars by the same banks they were expected to police.

Some consultants say they sounded repeated alarms about the process. Last spring, a group of consulting firm executives met with comptroller officials in Washington to voice concerns that the reviews were too narrow, according to people with direct knowledge of the meetings.

Other people close to the review say consultants were only partly to blame for the problem. The review process, with its narrow focus, was created by the comptroller’s office in 2011, under previous leadership.

Now, some consultants feel spurned by the regulators’ decision to hand off the review.

“Why did you not trust the banks a month ago?” asked one consultant who spoke anonymously for fear of offending regulators. “And why do you solely rely on them now?”

A version of this article appeared in print on 02/13/2013, on page B1 of the NewYork edition with the headline: Banks Told To Review Their Own Foreclosures.

Read More..

Finmeccanica Chief Is Arrested in Bribery Case

Italy awoke Tuesday to yet another corporate scandal with political overtones, as Milan prosecutors arrested the head of the state-controlled aerospace company Finmeccanica in an investigation related to the sale of 12 helicopters to India in 2010.

The Finmeccanica chairman and chief executive, Giuseppe Orsi, was taken in for questioning by prosecutors, as was Bruno Spagnolini, head of Finmeccanica’s AgustaWestland helicopter unit. Prosecutors also raided the AgustaWestland corporate offices in Milan.

The investigation is focused on whether company executives violated bribery and corruption laws in seeking the helicopter deal with the Indian military.

Prime Minister Mario Monti said Tuesday that the government — owner of a 30 percent stake in Finmeccanica – was prepared to do whatever necessary to clean up the company, the second-largest industrial group in Italy after Fiat.

“There is a problem with the governance of Finmeccanica at the moment and we will face up to it," Reuters quoted Mr. Monti as saying on RAI television.

Finmeccanica said Tuesday that “the operating activities and ongoing projects of the company will continue as usual.” In addition, the company expressed “support for its chairman and C.E.O., with the hope that clarity is established quickly,” while “reaffirming its confidence in the judges.”

The Indian Defense Ministry said in a statement that in “view of media reports” linking it with Finmeccanica’s AgustaWestland unit in Britain, it “had sought information” from the Italian and British governments, but that “no specific inputs” were received substantiating the allegations. The ministry said it was referring the case to the Central Bureau of Investigation, the Indian agency responsible for investigating corruption cases.

Italian press reports said two others, residents of Switzerland, were being sought by Milan prosecutors on suspicion that they had acted as middlemen.

A spokeswoman for Finmeccanica in London, Clare Roberts, declined to comment beyond the company’s official statement.

Prosecutors could not immediately be reached for comment.

Consob, the Italian stock market regulator, banned short selling of Finmeccanica shares for Tuesday and Wednesday, after the company's shares fell more than 10 percent in early trading.

The news was first reported by the Italian newspaper Corriere della Sera.

With national elections just two weeks away, the Italian establishment has been unnerved recently by a series of high-profile corporate investigations.

In one, Banca Monte dei Paschi di Siena, a Tuscan bank, has acknowledged using secret derivatives deals to mask hundreds of millions of euros in losses.

That investigation has focused attention on the role played by the Bank of Italy and its then-chairman, Mario Draghi, who is now president of the European Central Bank.

It has also given the former prime minister, Silvio Berlusconi, an issue with which to attack his political enemies as he angles for a comeback. The bank is based in Siena, in a part of northern Italy that is a stronghold of the leftist Democratic Party. Mr. Berlusconi, the conservative former prime minister who hopes to be a spoiler in the elections this month, has been trying to lay blame for the scandal at the Democratic Party’s doorstep.

Mr. Draghi asserted last week that the Bank of Italy had “done everything it should” with respect to the bank, adding that much of the criticism was “part of the regular noise that elections produce.”

In another case, Eni, the country’s biggest oil company, said last week that Milan prosecutors had expanded an investigation of alleged corruption at one of its subsidiries, Saipem, to include the parent company and its chief executive, Paolo Scaroni.

In a country that is rarely held up as a technological leader, Finmeccanica’s trendsetting AgustaWestland helicopter division and Alenia Aermacchi aeronautics unit are sources of national pride. Finmeccanica is among the world’s largest aerospace, defense and security companies, employing 70,000 people worldwide and reporting first-half 2012 revenue of about €8 billion, or about $10.7 billion.

Since taking over in May 2011, Mr. Orsi has sought to restore investor confidence by cutting debt and selling off nonstrategic operations, but the restructuring has lagged behind market hopes. On Jan. 18, Standard & Poor’s cut Finmeccanica’s credit rating to junk status and said the outlook was negative, citing the company’s failure to reduce its debt more quickly.

Mr. Orsi’s problems mark just the latest troubling chapter for Finmeccanica. He took over in May 2011 after his predecessor, Pier Francesco Guarguaglini, was himself felled by allegations involving the role of his wife, Marina Grossi, while she was chief executive of Finmeccanica’s Selex unit.

Reporting was contributed by Hari Kumar in New Delhi, Elisabetta Povoledo in Rome and Jack Ewing in Frankfurt.

Read More..

The Lede: Latest Updates on Pope’s Resignation

The Lede is providing updates on Pope Benedict XVI’s announcement on Monday that he intends to resign on Feb. 28, less than eight years after he took office, the first pope to do so in six centuries.

Read More..