- - Wednesday, June 30, 2010


Ex-AIG exec: Risky investments tripled

A former top executive of American International Group, Inc. has acknowledged that his division more than tripled the amount of risky investments it insured in the three years leading up to the 2008 financial meltdown.

But Joseph Cassano, chief executive for AIG’s financial products division, rebuffed accusations from a special panel investigating the crisis that he relaxed standards to issue more credit default swaps.

AIG received a $182 billion taxpayer bailout - the biggest of the federal rescues - after it nearly collapsed and helped trigger the financial crisis.

In his first public comments since the crisis, Mr. Cassano told the Financial Crisis Inquiry Commission, a bipartisan panel created by Congress, that the company never diluted its underwriting standards “at any point in time.”


Obama to sign Iran sanctions

President Obama will sign a sweeping package of tough new energy and financial sanctions on Iran over its nuclear program on Thursday, the White House said.

Mr. Obama will sign the bill at 6:15 p.m. at the White House, his press secretary said.

The new congressional measures aim to choke off Iran’s access to imports of refined petroleum products, such as gasoline and jet fuel, and curb its access to the international banking system.

The Senate and House approved the legislation - aimed at forcing Tehran to halt its suspect nuclear program - last week by crushing 99-0 and 408-8 margins, respectively.

The new measures, which backers described as the toughest-ever unilateral U.S. sanctions against the Islamic republic, are piled atop new U.N. Security Council and European sanctions.


Layoffs of workers will distort data

For the first time in six months, the federal unemployment report to be released Friday will likely show a net loss of jobs.

But hold off on the panic button.

It’s true that employers are expected to have cut more than 100,000 jobs in June. But that figure, if accurate, will be deceptive. It will reflect the end of up to 250,000 temporary census jobs. The real focus Friday will be on how many net jobs private employers created.

“People are looking past the census effect,” said Alec Phillips, an economist at Goldman Sachs.

Analysts predict private businesses added 112,000 jobs in June, according to a survey by Thomson Reuters. That would be a healthy rebound from May’s 41,000 gain. But it’s far from enough to signal a roaring recovery or rapidly reduce the unemployment rate, now at 9.7 percent. It would take a net gain of around 200,000 jobs a month to quickly reduce that rate.

The plunge in census jobs comes just a month after the government added nearly a half-million people to conduct door-to-door visits and other tasks. The census began hiring more workers last year. It added about 500,000 this spring.

The rapid switch from hiring to firing reflects the short-term nature of census jobs. Most are part time and last six to eight weeks.


Candidate denies falsifying record

MONTGOMERY | A Republican candidate for governor in Alabama is facing criticism over a campaign ad about his military record during the Vietnam War.

In the ad, Robert Bentley talks about seeing military personnel injured in Vietnam, and the words “Hospital Commander Vietnam War” are shown on a military aircraft.

But Mr. Bentley didn’t serve overseas. He was an interim commander at the hospital at Pope Air Force Base in North Carolina.

Mr. Bentley said Wednesday he often saw patients at nearby Fort Bragg, where some injured soldiers from Vietnam were treated. He says the ad is not a distortion.

In Connecticut recently, Democratic Senate candidate Richard Blumenthal admitted he misspoke about his military service by saying he served in Vietnam when he actually served stateside.


Problems found in DEA cleanups of labs

The Justice Department’s inspector general on Wednesday cited significant problems in the Drug Enforcement Administration’s cleanup of clandestine drug laboratories - a program that has handled 70,000 cleanups in the past 21 years.

The IG said the shortcomings include missing documentation to confirm that hazardous-waste materials are properly handled at labs formerly used by criminals to manufacture drugs such as methamphetamine.

The DEA contracts with private companies for the cleanups.

Between 2004 and 2008, firms did not provide certificates of disposal for 1,747 cleanups, the DEA told Inspector General Glenn A. Fine.

One vendor was responsible for 1,132 - or 65 percent - of the missing certificates, omissions that have been referred to a U.S. attorney’s office for possible civil action, the IG’s report stated.

The IG said that in the remaining 615 cleanups without certificates, the DEA worked with the companies to get other legal assurance that the hazardous waste was not diverted for the manufacture of illegal drugs, nor illegally dumped.

The IG said the Drug Enforcement Administration has strengthened oversight of the cleanup program. In addition, DEA has agreed with the inspector general’s recommendations to withhold payments to private companies until they submit final manifests when they bill the government, the report stated. Manifests detail the quantity and types of hazardous materials removed from clandestine labs.


Panel backs ending Cuba travel ban

A congressional panel voted Wednesday to lift a decades-old ban on travel to Cuba and to remove other hurdles to food sales to the Caribbean island nation.

Supporters hope the 25-20 vote in the House Agriculture Committee will be followed by action this year in the full House and the Senate.

But opponents of easing the nearly 50-year-old U.S. embargo on communist-led Cuba have vowed to use every tool at their disposal to keep the measure from becoming law.


U.S. claims landmark victory in Airbus case

The United States won a landmark victory at the World Trade Organization in Boeing’s fight against European government subsidies for rival aircraft manufacturer Airbus, U.S. trade officials said Wednesday.

“These subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share,” U.S. Trade Representative Ron Kirk said in a statement. “Today’s ruling helps level the competitive playing field with Airbus.”

A WTO dispute settlement panel in Geneva was due Wednesday to release its long-awaited final ruling in a case the United States brought several years ago.

A second panel is expected to release a confidential preliminary decision in a EU countercomplaint against U.S. support for Boeing on July 16.

At the heart of the U.S. case was a complaint that European government “launch aid” loans were illegal subsidies.

“What emerges clear as day from this panel report is that Europe has never been able to provide launch aid in a manner that is consistent with its WTO obligations,” USTR General Counsel Tim Reif said.

“This panel report should, therefore, be a strong signal to the European Union and the member states to refrain from future launch-aid disbursements,” Mr. Reif said.

From wire dispatches and staff reports

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