- The Washington Times - Friday, February 26, 2010

BANKING

Fed investigates Greece default swaps

Federal Reserve Chairman Ben S. Bernanke told lawmakers Thursday that the central bank is examining arrangements that Goldman Sachs and other Wall Street firms have with Greece involving high-risk financial instruments.

Mr. Bernanke said the Fed is looking into companies’ use of credit default swaps, a form of insurance against bond defaults. Mr. Bernanke made the comments at the start of a Senate Banking, Housing and Urban Affairs Committee hearing. It marked the second day that the Fed chief testified on Capitol Hill about the state of the economy.

“Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive,” Mr. Bernanke said. “We’ll certainly be evaluating what we can learn from the activities of the [bank] holding companies that we supervise here in the U.S.”

The panel’s chairman, Sen. Christopher J. Dodd, Connecticut Democrat, cited reports that financial companies are using credit default swaps to bet that Greece will default on its debt. He said he is troubled that this practice could worsen Greece’s debt crisis.

“We have a situation in which major financial institutions are amplifying a public crisis for what would appear to be private gain,” Mr. Dodd said.

TRANSPORTATION

Toyota chief pledges ‘next level’ of safety

Toyota’s chief executive visited the assembly line at Toyota’s largest North American manufacturing plant Thursday and met with Transportation Secretary Ray LaHood, repeating pledges he made to Congress this week to improve safety efforts.

Akio Toyoda told Mr. LaHood that the world’s top automaker would “advance safety to the next level” as it tries to restore customer faith in its cars and trucks that has been badly damaged by the recall of 8.5 million vehicles over safety concerns. He later toured Toyota’s plant in Georgetown, Ky., and said the company was “at a crossroads.”

“We need to rethink everything about our operations,” he told about 100 workers.

The recall has damaged Toyota’s reputation, and the company is facing legal and public relations problems on several fronts: a criminal investigation by federal prosecutors in New York; a probe by the Securities and Exchange Commission; and anger by U.S. dealerships in line to repair potentially millions of recalled vehicles. Toyota is offering some customers new reimbursements for rental cars and other expenses.

GEORGIA

Candidate’s wife starts own campaign

ATLANTA | Georgia now has a married couple running for the state’s two highest offices.

The wife of a Democratic gubernatorial candidate announced Thursday that she is mounting her own campaign for lieutenant governor.

Carol Porter is the first Democrat to enter the race. If she is nominated, she will face off against Republican incumbent Casey Cagle in November. Her husband, state Rep. DuBose Porter, is in a five-way primary race for governor. Mrs. Porter said she and her husband will campaign separately, though they share a common message.

Observers say such a combination is rare - maybe even unprecedented - in American politics. Janet Huckabee ran unsuccessfully for Arkansas secretary of state in 2002, the same year her husband, Gov. Mike Huckabee, was re-elected.

NEW YORK

Gay voters give Ford a tough time

NEW YORK | Harold E. Ford Jr., a former congressman from Tennessee and potential U.S. Senate candidate, got a tough reception while speaking to a gay advocacy group and tried to explain that he no longer opposes gay marriage.

Mr. Ford voted twice for a constitutional amendment defining marriage as a union between a man and a woman.

Speaking Wednesday to the Stonewall Democratic Club of New York, Mr. Ford was interrupted numerous times by protesters. They said they don’t trust him and shouted that he is “anti-gay.”

Mr. Ford said all he can do is explain that he was wrong and has changed his mind.

Mr. Ford is considering challenging Sen. Kirsten Gillibrand in the Sept. 14 Democratic primary. He moved to New York after losing the 2006 U.S. Senate race in Tennessee.

NEW YORK

Governor urged to drop out of race

ALBANY | A congressman from New York is urging Gov. David A. Paterson to drop his run for election this year after a report about a domestic abuse complaint against a top aide.

Rep. Steve Israel of Long Island told the Associated Press that he suggested to his fellow Democrat on Thursday that it has become apparent he should not seek election and should announce it soon.

Mr. Israel wouldn’t discuss Mr. Paterson’s response. The Paterson administration declined to comment.

Mr. Israel made the call after the New York Times published a report linking a top Paterson aide to a claim of domestic violence involving a former girlfriend.

The congressman said he was speaking to the governor as a friend and told him there was life after Albany.

Mr. Paterson got little support from his party even before his recent official announcement that he would seek a full term.

From wire dispatches and staff reports

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