California misses budget deadline, readies "IOUs"

(CALIFORNIA, BUDGET, STATE, BILLION, SENATE, OBLIGATION)

By Jim Christie
SAN FRANCISCO (Reuters) - California`s lawmakers failed to agree on a balanced budget by the start of its new fiscal year on Wednesday morning, clearing the way to suspend payments owed to the state`s vendors and local agencies, who instead will get "IOU" notes promising payment.
The notes will mark the first time in 17 years the most populous U.S. state`s government will have to resort to the unusual and dramatic measure.
Democrats who control the legislature could not convince Republicans late on Tuesday night to back their plans to tackle a $24.3 billion budget shortfall or a stopgap effort to ward off the IOUs. The two sides agree on the need for spending cuts but are split over whether to raise taxes.
Democrats have pushed for new revenues while Republican lawmakers and Governor Arnold Schwarzenegger, also a Republican, have ruled out tax increases. They instead see deep spending cuts as the solution to balancing the budget, but Democrats say that would slash the state`s safety net for the needy to the bone.
Tempers flared in the state Senate as the midnight start of the new fiscal year neared.
"There is no excuse to hold this whole state hostage," state Senate President Pro Tem Darrell Steinberg told Republicans during a floor debate.
Senate Republican Leader Dennis Hollingsworth countered that major cuts are urgently needed. Otherwise, "There will be entire programs that will have to be lopped off," he said.
CASH CRISIS LOOMS
California lawmakers struggle with budget deadlines practically every year, but this year`s budget fight is taking place amid the state`s worst drop in revenues from personal income taxes since the Great Depression as recession and rising unemployment pile on to the damage done to the state`s economy from its long housing slump.
Because of its steep revenue decline, California risks running out of cash later this month to pay all of its bills unless its books are balanced quickly.
To conserve cash, State Controller John Chiang plans to issue IOUs by Thursday to the state`s vendors, local agencies overseeing health programs and various recipients of state aid -- including the elderly and disabled and college students.
He plans to send $3.36 billion in IOUs this month to help maintain $10.9 billion in other payments, including money owed to investors holding California`s general obligation debt.
"The general obligation bonds will be paid," Chiang told Reuters on Tuesday. "California has never defaulted on its debt obligation and we don`t plan to do so."
California aims to reassure investors because Wall Street`s concerns about the state`s finances are growing and because state officials see the need to sell $7 billion to $9 billion in short-term debt for cash-flow purposes once there is a budget agreement.
Fitch Ratings last week downgraded its rating on California`s general obligation debt and warned it may lower the rating again. Fitch cut California`s rating by one notch to A-minus, placing it four notches above speculative, or "junk" status, and making it the lowest rating of any U.S. state.  Continued...
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Obama admin. sets wide scope for consumer agency

(AGENCY, WOULD, CONSUMER, PROTECTION, FINANCIAL, CREDIT)

By David Lawder
WASHINGTON (Reuters) - A new U.S. agency would have sweeping powers to write and enforce tough consumer protection rules for banks, mortgage lenders and other financial institutions under proposed legislation the Obama administration sent to Congress on Tuesday.
The legislative language fleshes out a key component of President Barack Obama`s plan outlined earlier this month to revamp U.S. financial regulation in response to the worst financial crisis since the Great Depression.
The proposed Consumer Financial Protection Agency aims to protect Americans from abusive practices employed during the recent housing and credit boom, such as deceptive and undocumented mortgage lending, poor loan disclosures, unfair interest rate increases and "fee traps" on credit cards.
The proposal would consolidate financial consumer protection power in a single new agency, stripping this authority from six current regulators, including the Federal Reserve and the Office of the Comptroller of the Currency.
"Consumer protection will have an independent seat at the table in our regulatory system. By consolidating accountability in one place, we will reduce gaps in federal supervision and enforcement," U.S. Treasury Secretary Timothy Geithner said in a statement.
A Treasury official said the agency will be focused primarily on credit products such as mortgages, credit cards and other consumer loans, savings products and payments services, such as electronic funds transfers.
GOALS LAUDED, NEW AGENCY QUESTIONED
Senate Banking Committee Chairman Christopher Dodd, who will play a key role in pushing regulatory changes through Congress, said the proposal would address "the colossal failures that led to the economic crisis."
"Creating an independent agency whose sole focus is protecting consumers -- be it credit card holders, anyone with a bank account, or families with mortgages or student loans -- is really the key to creating the foundations for a stronger economy," Dodd said.
But many Republicans and the financial services industry are less enthusiastic about the plan, which they fear would impose a regulatory burden that will add costs, reduce the availability of credit and stifle innovation.
They also fear that stripping existing agencies of their consumer authority could reduce their effectiveness.
"We completely agree with and applaud the emphasis the administration has placed on enhancing consumer protection. Our concern is that a new agency, by its very nature, might not effectively serve that objective," said John Dearie, executive vice president at the Financial Services Forum, a lobbying group that represents the largest U.S. financial institutions.
He said the proposed agency could "monopolize" the government`s approach to consumer protection by creating one agency with one staff and one institutional view.
However, the new agency would not affect the authority of the Securities and Exchange Commission or the Commodity Futures Trading Commission to adopt rules, initiate enforcement proceedings or take action against those they regulate.
Still, the powers the Obama administration wants to invest in the new agency are sweeping.  Continued...
Original article

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Moscow condemns Honduran coup, calls for restoration of law

(HONDURAS, PRESIDENT, RUSSIA, COUNTRY, ZELAYA, MILITARY)

What Muscovites know about Honduras
Honduras Crisis : Soldiers ousted the democratically elected president
MOSCOW, June 29 (RIA Novosti) - Russia condemns the coup d`etat in Honduras and calls for the restoration of law and order in the country, a Foreign Ministry spokesman said on Monday.
Parliamentary speaker Roberto Micheletti was sworn in as president of the Central American state on Sunday after President Jose Manuel Zelaya was deposed in a coup. The military`s action, apparently supported by the country`s Supreme Court, has been condemned across the world.
"All actions by political players in the country must lie within the bounds of the law and the constitution," Andrei Nesterenko said.
He said Russia welcomed the efforts by regional organizations and groups trying "to work out a solution within the framework of international law."
The embassies of the member countries of the regional Bolivarian Alternative for the Americas (ALBA) backed Russia`s condemnation, the Cuban ambassador said at a news conference in Moscow.
Juan Valdes Figueroa said the ALBA diplomatic missions called for "a complete reinstatement of the Manuel Zelaya government," stressing that the coup violated "the fundamental norms of international law."
Honduran military arrested Zelaya on Sunday morning, hours before polls were due to open for a non-binding referendum on ending the restriction on presidents serving one four-year term.
Honduras` Supreme Court had ruled the referendum illegal. The president was arrested at his residence and transported aboard a military plane to Costa Rica in what was Central America`s first coup since the end of the Cold War.
Micheletti promised Monday that presidential polls would go ahead as scheduled on November 29, a Venezuelan paper said.
World leaders have condemned the coup, with United Nations Secretary General Ban Ki-moon urging "the reinstatement of the democratically elected representatives of the country."
U.S. President Barack Obama has called on the coup leaders to "respect the rule of law."
Miguel d`Escoto Brockmann, the president of the UN General Assembly, on Monday invited Zelaya to come to New York and speak at an extraordinary session of the assembly.
 
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Russian expert predicts return for ousted Honduran president

Russian expert predicts return for ousted Honduran president

(HONDURAS, PRESIDENT, MILITARY, THERE, CHAVEZ, LEADERS)

What Muscovites know about Honduras
Honduras Crisis : Soldiers ousted the democratically elected president
MOSCOW, June 29 (RIA Novosti) - International pressure means the deposed president of Honduras, sent into exile by the country`s military, is likely to return to power, a Russian expert said Monday.
"In all likelihood, he will return. There are such precedents, and when there is this kind of public opinion pressure - from the U.S., the European Union and Latin America - then there is a greater chance he will return than otherwise," said Vadim Teperman, director of the Latin America Institute`s economic research center.
Parliamentary speaker Roberto Micheletti was sworn in as president of the Central American state on Sunday after President Jose Manuel Zelaya was deposed in a coup. The military`s action, apparently supported by the country`s Supreme Court, has been condemned from Washington to Havana and Caracas.
Teperman said a major role in resolving the crisis could be played by Venezuelan President Hugo Chavez, a close ally of Zelaya.
"Much here depends on the position of Hugo Chavez. Chavez is an impulsive man, capable of making blunders. He has made ugly statements but fortunately has never crossed the line," the analyst said. "I think this time he will not cross it either, 95%."
"But there is a 5% chance commonsense will fail him, then everything will deteriorate, because that will create a foundation: aha, Chavez seized power and ours will follow this path as well," he said.
Teperman added that the president has his supporters but faced a strong opposition, including on the part of influential parties` leaders.
Honduran military arrested Zelaya on Sunday morning, hours before polls were due to open for a non-binding referendum on ending the restriction on presidents serving one four-year term.
Honduras` Supreme Court had ruled the referendum illegal. The president was arrested at his residence and transported aboard a military plane to Costa Rica in what was Central America`s first coup since the end of the Cold War.
Micheletti promised Monday that presidential polls would go ahead as scheduled on November 29, a Venezuelan paper said.
World leaders have condemned the coup, with United Nations Secretary General Ban Ki-moon urging "the reinstatement of the democratically elected representatives of the country."
U.S. President Barack Obama has called on the coup leaders to "respect the rule of law."
 
Original article

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Ousted Honduran leader to take part in emergency Nicaragua summit

Honduran interim leader promises polls in November

(PRESIDENT, HONDURAN, MICHELETTI, NOVEMBER, MILITARY, COUNTRY)

Honduras Crisis : Soldiers ousted the democratically elected president
MOSCOW, June 29 (RIA Novosti) - Honduran interim president Roberto Micheletti promised on Monday that presidential polls would go ahead as scheduled on November 29, a Venezuelan paper said.
"I promise to be faithful to the republic...There will be elections on November 29," he was quoted as saying by the paper.
Parliamentary speaker Micheletti took power in the Central American state after Honduran President Jose Manuel Zelaya was deposed in a coup.
Honduran military arrested Zelaya on Sunday morning, the same day polls were due to open for a referendum on the extension of his non-renewable, four-year term of office.
The country`s Supreme Court had ruled the referendum illegal. The president was arrested at his residence and transported aboard a military plane to Costa Rica in what was Central America`s first coup since the end of the Cold War.
Micheletti, speaking at his first press conference, also said that a 9:00 p.m. to 6:00 a.m. curfew had been imposed for a minimum of two days to ensure security in the country.
World leaders have condemned the coup, with UN Secretary General Ban Ki-moon urging "the reinstatement of the democratically elected representatives of the country."
U.S. President Barack Obama has called on the coup leaders to "respect the rule of law."
 
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Russia to raise oil export duty to $212.6 per ton from July 1

(EXPORT, CURRENT, GLOBAL, GOVERNMENT, PRODUCTS, PRICE)

MOSCOW, June 29 (RIA Novosti) - Russia will increase oil export duty from the current $152.8 to $212.6 per metric ton from July 1, following trends on global oil markets, the Russian government said on its website on Monday.
The decree was signed by Russian Prime Minister Vladimir Putin on June 26.
As of July 1, the duty on light petroleum products will rise to $155.5 from the current $115.2 per ton and for heavy petroleum products to $83.8 from the current $62.1 per ton.
Last year, the government abandoned its previously accepted bimonthly adjustments of export duties based on the price of the Urals blend on global oil markets, and from December 1 switched to setting duties for oil and oil products on a monthly basis to respond more swiftly to changes in world oil prices.
The global financial crisis has forced Russia, which receives a large part of its revenues from oil exports, to gradually devalue the ruble amid capital flight and a fall in global oil prices, which declined from their peak of $147 per barrel in July 2008 to around $40 per barrel in early 2009, before climbing back to about $70.
 
Original article

Ousted Honduran leader to take part in emergency Nicaragua summit

(PRESIDENT, HONDURAN, ZELAYA, LEADER, COUNTRY, CALLED)

Honduras Crisis : Soldiers ousted the democratically elected president
MEXICO CITY, June 29 (RIA Novosti) - Honduran President Jose Manuel Zelaya, deposed in a coup on Sunday, has flown from Costa-Rica to Nicaragua to take part in an emergency regional summit, Mexican media reported on Monday.
Venezuelan leader Hugo Chavez provided his personal plane to take Zelaya to the summit, which will see the participation of over 15 regional leaders, including those of Mexico, Ecuador and Cuba. The situation in Honduras will top the agenda.
Chavez, one of Zelaya`s strongest allies, also threatened military action if Venezuela`s envoy in Honduras was attacked.
Honduran military arrested Zelaya on Sunday morning, the same day polls were due to open for a referendum on the extension of his non-renewable four-year term of office.
The country`s Supreme Court had ruled the referendum illegal. The president was arrested at his residence and transported aboard a military plane to Costa-Rica in what was Central America`s first coup since the end of the Cold War.
Interim president, Roberto Micheletti, imposed an overnight curfew in the country after taking power. However, Zaleya supporters have set up barricades near the presidential place and there have been unconfirmed reports of shots being fired.
Honduran trade union leader Angel Alvarado has called for a nationwide strike in support of Zelaya.
World leaders have condemned the coup, with UN Secretary General Ban Ki-moon urging "the reinstatement of the democratically elected representatives of the country". U.S. President Barack Obama has called on the coup leaders to "respect the rule of law."
Former Cuban leader Fidel Castro called the coup a "suicidal mistake" in an article published early on Monday.
 
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British taxpayers` funding of Queen rises to $68.5 mln a year

(QUEEN, MILLION, POUNDS, ROYAL, PALACE, SPENDING)

LONDON, June 29 (RIA Novosti) - Queen Elisabeth II is getting increasingly expensive to British taxpayers, with state funding up by about 4% to 41.5 million pounds ($68.5 million) over the past year, the Royal Family said in a report on Monday.
Under an annual financial report, every Briton annually currently spends 69 pence ($1.14) on the maintenance of the Royal family, while the sum was 66 pence ($1.09) last year.
The Queen receives the annual payment of 7.9 million pounds ($13 million) from the government to perform her duties as head of state. The sum covers visits, the participation of the Queen and Prince Philip in official events, and wages to Palace employees.
Elisabeth II is also granted 15 million pounds ($24.7 million) annually to maintain her residences.
However, the Royal Household is seeking some 32 million pounds ($52.8 million) for the maintenance of the palaces.
Meanwhile, the Treasury and the Department for Culture, Media and Sport, which oversees the maintenance of the royal palaces, warned that the Queen was likely to face a cut in spending amid the current economic crisis.
Government spending on the Royal Family has to be reviewed by December 2010. The issue is expected to be discussed soon after the next parliamentary polls slated to be held by May 2010.
The parliamentary spending watchdog published a report earlier in June saying it had failed to obtain an independent expert confirmation of royal spending.
The Queen also rejected in June a recommendation from MPs to raise funds by opening Buckingham Palace to tourists year-round.
 
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Medvedev to discuss energy, trade during Azerbaijan visit

(AZERBAIJAN, TRADE, ECONOMIC, COOPERATION, SOURCE, NATURAL)

Top plays of the World Cup 2010 qualifier Russia vs. Azerbaijan
MOSCOW, June 29 (RIA Novosti) - Russian President Dmitry Medvedev will visit Azerbaijan on Monday to discuss trade and economic cooperation, including in the energy sector, a Kremlin source said.
"Talks between the leaders of the two countries will focus on the development of trade and economic ties, including effective cooperation during the global economic crisis," the source said.
According to the source, bilateral trade grew by 39.3% to $2.4 billion in 2008, but decreased by 16.9% in the first quarter of 2009 year-on-year due to the global financial crunch.
One of the key areas of cooperation to be discussed during the visit is the supply of natural gas from Azerbaijan to Russia.
Azerbaijan has proven natural gas reserves of some 1.5 trillion cubic meters. The South Caucasus country annually consumes 14 billion cubic meters of gas.
Gazprom`s CEO Alexei Miller said last Friday the Russian energy giant was planning to sign an agreement with Azerbaijan`s state oil and gas company on natural gas supplies from Shah Deniz, the country`s largest gas field. Azerbaijani President Ilkham Aliyev has said Baku sees no obstacles to the gas deal.
 
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Power struggle impedes New York gay marriage vote

(NEW, STATE, YORK, MARRIAGE, RIGHTS, DEMOCRATS, PARADE)

By Edith Honan
NEW YORK (Reuters) - New York`s annual Gay Pride parade was a colorful celebration of 40 years of progress toward civil rights for gays, but once the dust settled, gay couples who wish to marry in New York state remain thwarted.
A bill to legalize gay marriage in the state that saw the dawn of the gay rights movement is mired in political stalemate in the state capital Albany, where Democrats and Republicans are battling over control of the state Senate.
"I had hoped today`s march would have been a bit of a wedding march. It`s not," Christine Quinn, the gay speaker of the New York City Council, said at Sunday`s Gay Pride parade. Held annually, this year`s event marked the 40th anniversary of the Stonewall riots in New York`s Greenwich Village, which triggered the modern U.S. gay rights movement.
"We are disappointed. ... But I know there have been other times our community has been disappointed and you need to keep fighting," Quinn said at the start of the parade, which organizers said drew more than a million people.
Gay couples can marry in Massachusetts, Connecticut and Iowa and will be allowed marry in Vermont starting in September and in New Hampshire from January. Other states offer same-sex unions that grant many of the same rights as marriage.
Forty-two U.S. states explicitly prohibit gay marriage, including 29 with constitutional amendments, according to Human Rights Campaign, a gay rights advocacy group.
In May, the New York state Assembly, where Democrats hold a majority, voted by a wide margin to legalize gay marriage.
On June 8, state Senate Republicans engineered a coup by getting two Democrats to switch allegiance and vote in a new leadership, effectively erasing the slim 32-30 majority the Democrats won in the November 2008 election.
But Democrats have refused to recognize the leadership vote and one of the senators has since rejoined the Democrats, creating an even 31-31 split in the chamber.
New York Governor David Paterson has vowed to bring gay marriage to a state Senate vote before the end of the current legislative session -- which has already been extended due to the deadlock. But Paterson can not force a vote, and it is not clear if it would pass, or even if such a vote would be legal.
Even the state`s main gay rights organization has called on the Senate to resolve the leadership dispute first and not treat gay marriage as "a political football." With no immediate prospect of a resolution to the crisis, supporters of the bill are left wondering if it will come to a vote this year.
"There certainly have been moments of high adrenaline and great disappointment ... but I`m always optimistic," said Senator Tom Duane, the bill`s sponsor, at Sunday`s parade.
Many at Sunday`s parade said they thought gay marriage was inevitable in New York.
"I think every year we see great advances. I mean, this year New Hampshire passed gay marriage and Iowa, of all places," said Brent Hayrynen, 63. "We`ll get there."
(Reporting by Edith Honan; editing by Claudia Parsons and Todd Eastham)
Original article

Obama: Violence affects U.S. hope for Iran dialogue

By David Alexander
WASHINGTON (Reuters) - President Barack Obama, in some of his sharpest remarks to date, said on Friday hopes for U.S. dialogue with Iran were affected by what he called Tehran`s "outrageous" brutality following a disputed election.
"There is no doubt that any direct dialogue or diplomacy with Iran is going to be affected by the events of the last several weeks," Obama told a joint White House news conference with German Chancellor Angela Merkel.
"We don`t yet know how any potential dialogue will have been affected until we see what has happened inside of Iran," he said.
Obama`s remarks came as protests continued in Iran over the country`s June 12 presidential election, in which President Mahmoud Ahmadinejad was declared the victor by a wide margin.
Ahmadinejad`s rivals, led former Prime Minister Mirhossein Mousavi, said the election was stolen and hundreds of thousands of people have protested in Tehran and elsewhere. Security forces responded with a violent crackdown and one hardline cleric on Friday called for leading "rioters" to be executed.
Some Republicans have criticized Obama for his cautious reaction to the crisis but his tone sharpened this week after some demonstrators were killed.
Merkel, whose country is one of Iran`s main trading partners for sophisticated engineering technology, was an early critic calling for Tehran to permit peaceful protests and to recount votes in the disputed election.
"The Iranian people need to be given the right to peaceful demonstrations, that the Iranian people have the right to have votes be counted and the election results substantiated," Merkel told the news conference.
CREDIBILITY PROBLEM
Iranian leaders have accused Obama and other foreign officials of meddling in their affairs and encouraging the opposition but State Department spokesman P.J. Crowley told reporters their problem was self-inflicted.
"It`s not a matter of something that was brought in from the outside. A significant segment of the Iranian population believes that their voices have not been heard and that the results that ... the government has announced do not reflect the will of the people," he said.
Still, Obama said he remained open to resuming nuclear talks between Tehran and major world powers. Washington asserts Iran`s nuclear program is designed to produce atomic weapons, but Iran says it is for energy.
"There are going to be discussions that continue on the international stage around Iran`s nuclear program," Obama said. "I think the direct dialogue between the United States and Iran and how that proceeds, I think we`re going to have to see how that plays itself out in the days and weeks ahead."
Crowley said the administration hoped Iran would accept an offer for talks with the United States and other major powers about its nuclear program.
"We seek engagement with Iran," he said. "But so far ... we haven`t seen a meaningful response from Iran materialize."  Continued...
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U.S. subsidies "poison" emerging market talks: U.S. official

By Peter Griffiths
LONDON (Reuters) - The United States` subsidies for failing industries risk "killing" American attempts to discuss trade with China and other developing nations, U.S. Federal Trade Commissioner William Kovacic said on Friday.
Subsidies can damage internal competition and undermine efforts to persuade other countries to avoid protectionism during the worst economic crisis in decades, he said.
"The poison in this for the longer term is this is going to kill our efforts in talking with emerging market economies," Kovacic, who chaired the FTC until March, said in a speech to a competition conference at the Chatham House thinktank in London.
"I have trips coming up this year to visit with Chinese officials and I am dreading the question and answer period because they are particularly astute students of what happens in Brussels and Washington," he said.
"They have a keen eye for the contradictions that seem to creep into policy. So you are left there saying `don`t try this at home, we can handle it, we are adults, but it is bad for you`."
Leaders of the G20 major economies pledged at a summit last November to fight protectionism, but 18 of their economies were named in a World Trade Organization report in March on measures taken that could be seen as restricting trade.
Part of the $787 billion U.S. stimulus package requires public works projects to use iron, steel and other goods made in the United States, if that does not contravene trade commitments.
Similar provisions feature in a climate change bill working its way through the U.S. Congress. It would give aid to carmakers building plug-in electric cars in the United States.
Helping failing industry undermines successful companies and sends the wrong signals to industry, Kovacic added.
Washington has taken a stake worth $50 billion in General Motors Corp and an 8 percent stake of $12 billion in Chrysler as part of its plan to restructure them in bankruptcy.
"Subsidy schemes not only are going to affect competition internally but they are sending a larger message that `if you fail grotesquely we will help you out, if you succeed thank you for your contributions to the American economy but no special help for you`," Kovacic said.
"Buy American" may boost cartels and damage free trade, and it must end after an "appropriate period," he added.
"The message that ought to have been driven home is that our experience with cartels tells us that `Buy American` has been a great protection and stimulus for cartel coordination," he said.
(Editing by Sophie Hares)
Original article

Nominees emerge for U.S. panel on Wall Street meltdown

By Karey Wutkowski
WASHINGTON (Reuters) - A bipartisan panel armed with subpoena power to investigate causes of the Wall Street meltdown is on the brink of being launched, as Congress embarks on an ambitious effort to reform policing of the financial sector.
A short list of names has emerged for the Financial Crisis Inquiry Commission that includes former Republican presidential candidate Fred Thompson; former Democratic head of the Commodities Futures Trading Commission Brooksley Born; and Alex Pollock, a fellow at the conservative think tank American Enterprise Institute, according to a source familiar with the matter.
Congress last month created the 10-member commission to study how fraud, regulatory lapses, monetary policy, accounting, lending practices and executive pay contributed to the worst U.S. financial crisis since the Great Depression.
House of Representatives Speaker Nancy Pelosi has said the panel is modeled after the Pecora Commission, a Depression-era U.S. Senate panel that investigated the causes of the 1929 Wall Street crash.
"I think the announcement should be coming in the near future," Pelosi spokesman Nadeam Elshami said about the naming of the appointees.
The source, speaking anonymously because discussions were still ongoing, said other possible appointees include Bill Thomas, former Republican chairman of the House Ways and Means Committee; Jake Garn, former Republican senator; and Bob Graham, the former Democratic senator and Florida governor.
Born, Pollock and Thomas declined to comment. Thompson, Garn, and Graham did not immediately respond to messages.
The crisis commission must report its findings to Congress in December 2010. Its work will run parallel to Congressional efforts to draft the most dramatic overhaul of the financial regulatory system since the 1930s.
President Barack Obama has said he hopes reform legislation can be finalized by the end of this year. Obama`s proposal, unveiled earlier this month, calls for the Federal Reserve to police systemic risks to the economy and proposes consolidating primary bank supervision into a new regulator.
The plan also calls for creating a new consumer financial product watchdog and for giving the federal government the power to unwind troubled firms whose stability impact the broader financial system.
The Financial Crisis Inquiry Commission will study what led to the failure of several large Wall Street firms, which prompted Congress last year to pass a $700 billion financial bailout that has been unpopular among voters.
The U.S. economy has shed six million jobs since December 2007 in the midst of a recession that has seen the jobless rate hit 9.4 percent.
The crisis commission was given the power to hold hearings and to subpoena witnesses` testimony as well as correspondence and documents.
(Reporting by Karey Wutkowski, additional reporting by Jeremy Pelofsky; editing by Carol Bishopric)
Original article

U.S. calls for new approach in Doha trade talks

By Jonathan Lynn
GENEVA (Reuters) - The United States called on Thursday for a new approach to concluding the long-running Doha round to free up world trade. U.S. Trade Representative Ron Kirk said Washington wanted to negotiate directly with key trading partners in the World Trade Organization talks as the traditional multilateral approach was not working. Major emerging countries said they would reject calls for bilateral concessions.
"We believe we have to start with an honest assessment that continuing on the same path that we have engaged in for the last three rounds will most likely yield the same result and that would be a failure to come to a successful conclusion," Kirk told a news conference.
From the current incomplete package of deals it was clear what the United States would give up but hard to see exactly what it would gain, he said, given the many exceptions to an overall agreement for various countries, making the deal opaque.
"We think getting more clarity around that may be the key to helping us find a solution to a way forward," Kirk said after a meeting of ministers at the Organization for Economic Co-operation and Development (OECD).
Kirk has also called on big emerging countries to open their markets further to foreign goods to help secure a deal in the Doha talks, launched in late 2001 to help poor countries prosper through trade.
But the trade ministers from India, Brazil and South Africa, meeting on the sidelines of the OECD, rejected that call and said any renewed dialogue must be part of a "transparent and inclusive multilateral process."
"At this final stage of negotiations, in the midst of the worst economic environment since the Great Depression of the 1930s, it would be unreasonable and unrealistic to assume that further unilateral concessions from developing countries will be forthcoming, especially in the context of the current economic crisis," the three ministers said in a statement.
Developing countries fear they could be strongarmed into an unbalanced deal through a one-on-one approach.
The Doha talks have been effectively on ice since a meeting of ministers in July failed to clinch an outline deal.
A number of positive comments in recent weeks, not least from Kirk and his new Indian counterpart Anand Sharma, have kindled hopes the talks could resume shortly.
But the differences between rich and emerging countries over process and substance underline how difficult it will be to conclude the negotiations, which WTO Director-General Pascal Lamy says are 80 percent complete.
Developing countries say they are under pressure to open up while rich countries have hedged their sensitive farm sectors around with waivers and get-outs to any deal, and EU Agriculture Commissioner Mariann Fischer Boel ruled out any new concessions.
"We have tried our very best and we don`t move," Fischer Boel told reporters in Paris after meeting the newly appointed French farm minister, Bruno Le Maire, who echoed her words.
WTO chief Lamy told the OECD meeting that completing Doha "through a multilateral negotiating process coupled with bilateral discreet contacts among players" was all the more important because trade was expected to contract by 10 percent this year -- 14 percent in developed countries and 7 percent in developing countries.
The economic crisis underlying this contraction was also giving rise to protectionist pressures, he said.  Continued...
Original article

Democrats stoke grassroots healthcare campaign

By Carey Gillam
KANSAS CITY, Missouri (Reuters) - From a living room in Kansas to a bagel shop in New York to an Alabama church, Democrats have started mobilizing support for President Barack Obama's healthcare reform plans.
Suburban housewives and social workers mixed with Baptist ministers, college students, retirees and many others at grassroots gatherings over the weekend. Spurred by the Democratic National Committee's burgeoning political machine dubbed "Organizing for America," thousands of such meetings had been planned for Friday through Monday.
Those attending the scripted two-hour events viewed a videotaped message from Obama, shared personal stories and made local battle plans to counter the expected stiff opposition.
"It's going to be a vicious fight," said 76-year-old Hank Putsch who attended an organizing meeting on Saturday at a Kansas City restaurant. "The insurance companies and healthcare companies are gearing up to oppose this. We've got to get our voices heard."
Obama has declared this summer "make-or-break" time for healthcare reform and has called on Congress to pass comprehensive legislation by the end of the year, saying America can no longer afford the costs of a system dominated by profit-driven insurance and healthcare companies which leaves 46 million people uninsured.
Though he is leaving the details to Congress, Obama has said reform must ensure a public health insurance option operating alongside private plans, a reduction in basic costs, and assurance that no one is denied insurance.
"This is why we elected him," said Sarah Starnes, a hospital social worker who has volunteered to help campaign for the Obama plan in Missouri. "It used to be that we'd elect a president and then the lobbyists would determine what happened. This time it is going to be us who determine what happens."
The Democrats' strategy calls for tapping an estimated 2 million volunteers and a database of more than 10 million e-mail addresses built during Obama's election campaign.
SCRIPTED TALKING POINTS
Supporters are receiving talking points and scripted messages to lobby friends and family. A signature drive is underway to petition members of Congress and online fund-raising is earmarked for TV and radio advertisements.
Supporters hope to demonstrate their strength in a "National Health Care Day of Service" later this month.
"All it takes is one big medical crisis to ruin a family," said Melissa Carlson, who with her husband Bob, hosted an organizing effort on Saturday in their Overland Park, Kansas home. "One person can't make a difference but if we all do something eventually it adds up."
White House economic advisers last week said U.S. healthcare spending accounts for about 18 percent of the country's economic output, but could reach 34 percent by 2040 and the uninsured population could climb to 72 million.
Even those with insurance are finding it harder to pay their portion of medical bills while job losses are making healthcare costs more burdensome.
At one meeting held Saturday in a suburban Dallas, Texas, home, 59-year-old Grace Allison said she could not pay for a recent emergency room visit after losing her health insurance along with her job as a university administrator. Continued...
Source: Reuters