Thursday, October 9, 2008

Special prosecutor appointed to investigate US attorney firings

Special prosecutor appointed to investigate US attorney firings

By Tom Eley
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Last week, US Attorney General Michael Mukasey announced the appointment of a special prosecutor to investigate the 2006 firings of nine US attorneys by former Bush administration Attorney General Alberto Gonzales. The appointment comes at the request of a Justice Department investigative report, which found that most of the attorneys were fired at least in part for political reasons.

Seven of the nine were sacked without explanation on one day, December 7, 2006, exactly one month after the midterm general elections. Two more were forced out earlier in the year. The nine dismissals represented about one tenth of the 93 US attorneys in the country. Fifteen more were considered for dismissal.

Though no official explanation was given for the purge, based on the timing and scale of the firings it was clear that the attorneys had been targeted for political reasons. Even though the attorneys were Republicans and Bush appointees, they were deemed insufficiently loyal to the White House. In most cases, they were fired for prosecuting Republican officials, and for failing to carry out “voter fraud” and corruption investigations with sufficient alacrity against Democratic officials.

“Voter fraud” is a charge Republican officials have used to block voter registration efforts and purge from the rolls sections of the electorate most likely to vote Democratic—the poor, students, minorities, the transient, the uneducated, the elderly. The firing of the US attorneys was thus but one element of a wide-ranging Republican effort to manipulate the outcome of elections.

The purge resulted in a political scandal and Congressional hearings that ultimately led to the resignation of Gonzales and a number of high-ranking Justice Department personnel in September 2007. It also contributed to the resignation of Karl Rove, Bush’s senior adviser.

US attorneys try cases on behalf of the federal government in federal, district and appeals courts. They are part of the Justice Department, but historically they have had practical independence from the executive branch of the federal government. Until 1986, they were appointed by district courts—that is, by the judiciary. After 1986, they were appointed by the attorney general, but with Congressional confirmation required. In 2006, a virtually unnoted statutory change was inserted into the USA Patriot Act, removing the requirement of Congressional approval of the nominees. The Bush administration had inserted this clause in preparation for a planned mass firing. The language was removed from the Patriot Act in 2007 with bipartisan support.

The 390-page Justice Department report, prepared under the direction of Justice Inspector General Glenn A. Fine and Office of Professional Responsibility Director H. Marshall Jarrett, determined that a special prosecutor was needed because former top Bush administration officials refused to cooperate with the internal investigation. It requests further investigation to determine whether “any criminal offense was committed with regard to the removal” of the attorneys or whether “the testimony of any witness” has been false. The special prosecutor has the power to subpoena witnesses and evidence.

Although it was an internal investigation, the Justice Department agents faced stonewalling from the White House, which refused to turn over potentially incriminating documents. The three figures perhaps most involved in the firings, furthermore, refused to speak to the investigators: Karl Rove, top political adviser to President Bush; Harriet Miers, the former White House counsel and Bush’s personal retainer who had advocated firing all 93 US attorneys; and Monica Goodling, a former liaison operating between the Justice Department and the White House. Republican Senator Pete Domenici of New Mexico, who is not seeking reelection, also refused to cooperate.

Mukasey appointed Nora Dannehy, acting United States Attorney of Connecticut, to head the probe. Mukasey has requested that she issue a report within 60 days. Dannehy has previously won criminal convictions of politicians in Connecticut, in one case landing a former Republican governor of the state, John G. Rowland, behind bars.

The Justice Department report drew particular attention to the case of David Iglesias, then US Attorney for New Mexico. According to the report, “complaints from New Mexico Republican politicians and party activists to the White House and the Department about Iglesias’s handling of public corruption cases led to his removal.” Iglesias faced retaliation after resisting requests from powerful New Mexico Republicans, including Domenici and Representative Heather A. Wilson, to expedite partisan-motivated investigations so that they would take place prior to the 2006 elections.

Pressure mounted on Gonzeles to remove Iglesias, himself a Republican and Bush appointee, with Domenici and Wilson making multiple attempts to have him removed beginning in October. The same month both Rove and Bush intervened with Gonzales to complain of lackluster efforts in New Mexico and elsewhere in the prosecution of “voter fraud” cases.

The report reveals not only political motivations in the firings, but mafia-style retribution and nepotism. For example, the decision to fire US Attorney Bud Cummins of Arkansas was taken to make the position available for Karl Rove protégé Tim Griffin. The Missouri US attorney, Todd Graves, a Bush supporter, was fired when Missouri Senator Kit Bond asked for his removal as retaliation for a feud between Graves’ brother, a Republican congressman from Missouri, and a Bond aide.

The report further concludes that the Bush administration attempted to thwart Congressional and media inquiries into the firings by insisting that the attorneys were sacked only after careful review concluded that their performance had been substandard. In fact only two of the nine had negative evaluations. Prior to his dismissal, Iglesias, though ostensibly fired for not pursuing voter fraud cases, had been held up as a model state’s attorney in the prosecution of precisely such cases.

The Bush administration, in justifying its refusal to cooperate with the investigation, claimed that emails and other documentation could not be released due to “confidentiality interests of a very high order,” the report states. But because the investigation was in fact carried out within the Bush administration, counsel to the president could not claim an expansive definition of “executive privilege,” which has been its preferred recourse in blocking Congressional and other outside inquiries. An October 6 US Court of Appeals decision cited just this argument when it ruled that Congress could not compel testimony of evidence from the Bush administration in the case.

The Justice Department report attempts to pin “primarily responsibility” for the firings on Gonzales. However, it points to a lack of oversight, and not political machinations, accusing Gonzales of having been “remarkably disengaged” from the process that led to the firings, that he “abdicated ... responsibility” in supervising his subordinates, and of making “misleading” statements regarding his involvement. Similarly, Mukasey concluded that the firings were “haphazard, arbitrary and unprofessional, and that the way in which the Justice Department handled those removals and the resulting public controversy was profoundly lacking.”

These conclusions skirt the obviously political nature of the firings. More than enough evidence has been built up—memos, emails, Congressional testimony, and evidence presented by the fired attorneys themselves—to demonstrate beyond a shadow of a doubt that the purge was carefully organized by high-ranking Bush administration officials, including Rove, Miers and Gonzales—three close Bush confidents—as well as by the president himself. It has been revealed that the White House had even devised a ranking chart, whereby the US attorneys were evaluated according to their political beliefs and their loyalty to Bush.

In spite of the report’s attempt to pin the blame on Gonzales, much of its own evidence suggests that Gonzales reacted to pressure from Rove, Miers, and even Bush himself. Gonzales has in fact based his entire career upon his unswerving fealty to Bush—overseeing dozens of state executions in Texas, helping to devise a pseudo-legal rationale for torture while White House Counsel, and endorsing the warrantless wiretapping and surveillance of millions of Americans as attorney general.

It is Bush, not Gonzales, who bears primary responsibility for these actions as well as the political purge of US attorneys.

That the attorney general’s office under Bush has produced a critical investigation into the firings, and appointed a special prosecutor to continue it, suggests that powerful sections of the political elite—including former Bush allies and elements within the Republican Party—are seeking the appearance of a clean break with Bush, thereby appeasing the widespread hatred that has made the current president the most unpopular in modern history.

It is possible that this and other investigations will reveal far more criminality than has thus far come to light, and that the investigation into the firings could lead to the criminal prosecution of not only Gonzales, but Miers, Rove, Vice President Dick Cheney, and perhaps Bush himself. It is just as likely that the issue will be intentionally forgotten under a Democratic-controlled Congress and an Obama administration.

In any case, no officially sanctioned investigation will acknowledge the central question arising from the attorneys’ firings—the attempt by the Bush administration to influence elections by disenfranchising working class, student and minority voters. In this, the firings were a crude manifestation of a far broader assault on basic democratic rights, which has had the active support of both major parties and the media, and which arises under conditions in which the policies of the ruling elite—imperialist war abroad and social plunder at home—promise to provoke increasing popular opposition.

Continuing US air strikes in Pakistan’s tribal agencies

Continuing US air strikes in Pakistan’s tribal agencies

By James Cogan
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US aircraft are attacking alleged militant targets inside Pakistan’s Federally Administered Tribal Agencies (FATA) at a growing rate. A strike on a housing complex in North Waziristan last Friday was the eighth since the beginning of September and the second last week.

The US military formally denied any knowledge of Friday’s air strike, in line with Washington’s claim that it “respects” Pakistan’s national sovereignty. Pakistani intelligence sources, however, told Western journalists that two missiles fired by a remotely-controlled Predator aircraft had destroyed several houses in Muhammad Khel, a village located not far from the Afghanistan-Pakistan border. The sources alleged that at least 24 people were killed, including 16 Arab Islamic militants, five supporters of Afghanistan’s former Taliban regime and two women and a child.

The US air strikes have killed and maimed dozens of people in the FATA. On at least two occasions Pakistani border guards and tribesmen have opened fire on approaching American aircraft. A series of formal protests by Pakistani authorities, however, have been little more than a smokescreen to obscure their complicity in the American military’s campaign of assassinations and terror.

In an interview with the Wall Street Journal last week, the newly-installed president of Pakistan, Asif Ali Zardari, all but admitted that the killings were taking place with his blessing and the agreement of the government headed by Prime Minister Yousuf Raza Gilani. “We have an understanding [with the US], in the sense that we’re going after an enemy together,” Zardari stated. Gilani’s defence secretary, Kamran Rasool, told a parliamentary committee on October 7 that the government had consented to US air strikes.

The autonomous and largely self-governed Federally Administrated Tribal Agencies are home to some three million ethnic Pashtuns who still adhere to tribal ways of life and have centuries-old ties with the Pashtun population over the border in Afghanistan. Since the US-led invasion seven years ago, the region has been a natural safe-haven for Afghan insurgents who are fighting a war of resistance against the foreign forces—as it was during the Soviet occupation of Afghanistan from 1979 to 1988.

North and South Waziristan are among the main staging bases for the large Pashtun tribal force led by Jalaluddin Haqqani, an ageing warlord who was one of the main commanders of the Afghan mujahaddin who fought the Soviets and served in the Taliban government from 1996 to 2001. He and his sons are believed to be commanding much of the Taliban resistance. The Waziristan tribal leader and head of the Pakistani Taliban movement, Baitullah Mehsud, has close links with Haqqani. Between them, they can mobilise thousands of fighters.

Haqqani and other leaders of his network appear to be the main target of the US air strikes. An attack on a housing complex and school on September 8 killed Haqqani’s wife and sister, several other women and at least four children who most likely had some blood relationship with the warlord. None of the male members of the family were present at the time. No information has been released by the Taliban regarding the identity of those killed in last Friday’s attack. However, locals told the Associated Press that the furious reaction by militants in the area suggested that a leading figure may have been among the dead.

The Pakistani Daily Times reported yesterday that tribesmen fired rocket propelled grenades at Predator drones on Tuesday, as the unmanned aircraft flew near the town of Miranshah in North Waziristan. A housing complex in the town was destroyed by US missiles on September 12, killing a number of civilians.

While the US steps up its air war inside Pakistan, Zardari and Gilani have essentially been pressured by the Bush administration to intensify Pakistani military operations against tribal and Afghan militants in return for desperately needed aid. As much as $4 billion may be required in coming months to avoid a total collapse of the currency and prevent Pakistan defaulting on its foreign debts. Last week, Washington assisted in brokering an emergency $US500 million loan from the Asian Development Bank.

The focus of the fighting at present is the Bajaur agency, which borders the Afghan province of Konar. Since August, a military offensive based on indiscriminate aerial and ground bombardments has forced an estimated 400,000 people—or more than two thirds of the population—to flee from their homes. Dozens of villages have been razed to the ground, along with the livestock and crops that the subsistence tribal communities depend upon.

Despite claiming to have killed as many as 1,000 “Taliban” in the Bajaur operation so far, the Pakistani military still only controls 60 percent of the tiny agency. Militants are dug into well-defended fortified positions and have allegedly been reinforced by hundreds of fighters from Afghanistan. The reinforcements are believed to be Afghan Taliban as well as the Hezb-e-Islami movement of Pashtun warlord Gulbuddin Hekmatyar.

Hekmatyar, a prominent mujahaddin commander who was Afghanistan’s prime minister at various times in the 1990s, was driven from the country by the Taliban in 1997. After initially supporting the US invasion, he quickly began voicing opposition to the occupation. He went into hiding and called for armed resistance after the US military attempted to assassinate him in May 2002. Over the past seven years, he has rebuilt a base of support and is believed to command the guerillas fighting American troops in Afghanistan’s eastern provinces.

Bajaur agency served as one of Hekmatyar’s bases during the Soviet war and is still used by Hezb-e-Islami fighters. In a vindictive move, the Pakistani government last week gave 50,000 Afghan refugees inside the agency three days to leave, on the grounds that the civilian population was aiding the insurgents. Pakistani troops have been ordered to destroy their businesses and houses. Thousands of people have reportedly streamed over the border or are attempting to move to other parts of Pakistan.

The devastation in areas of Bajaur has prompted tribal leaders in the agency and other agencies to form lashkars or tribal militias to expel the Taliban from their areas—in the hope it will prevent the destruction of their homelands by the government. Militias have been formed this month in Bajaur, Mohmand, Kyber, Orakzai and Kurram.

A tribal leader in Bajaur, Fazal Karim, told a correspondent for Deutsche Presse Agentur: “We have been told very clearly by the authorities that the only way to avoid ‘collateral damage’ is that we clear our areas of Taliban and bring stability here.”

There are widespread rumours that the US is pressuring Zardari and Gilani to order a military offensive against the Waziristan strongholds of the Pakistani Taliban and the Haqqani movement. Fuelling speculation, the Pakistani government this week officially denounced Baitullah Mehsud as a “terrorist” and issued an arrest warrant and orders for the confiscation of all his property.

The military operations in the FATA are deeply unpopular among Pakistanis who oppose the US occupation of Afghanistan and sympathise with the resistance of the Afghan people. Any move into the Waziristans—with the inevitable bloody and costly fighting for both sides—would provoke greater outrage. There are already serious rifts within the ranks of the armed forces. Ethnic Pashtuns from the North West Frontier Province make up a large proportion of the 600,000-strong volunteer army and many resent being used to repress and terrorise the tribal communities.

Anger in Pakistan will only be heightened by claims that secret negotiations have been taking place between Afghan officials and the Afghan Taliban led by Mullah Mohammad Omar.

CNN reported on Monday that a meeting took place in Saudi Arabia between September 24 and 27 in which the Saudi monarch personally presided over talks involving representatives of the Taliban, Gulbuddin Hekmatyar and the Afghan government of Hamid Karzai. The Taliban allegedly used the meeting to declare it had broken off all relations with the Al Qaeda network of Osama bin Laden and was prepared to negotiate an end to the war. No representative of the Pakistani government was invited.

All sides have denied the report. This month, however, figures ranging from top British and US generals to Karzai and US Defense Secretary Robert Gates have all suggested that a negotiated peace with the Taliban is possible. In Pakistan, the obvious question is: should lives and resources be squandered in a war with Taliban militants in the FATA, when Washington is preparing to do a political deal with them?

US election officials believe they have uncovered massive attempted voter fraud

Mass Fraud Fears In US Election

James Cheyne

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US election officials believe they have uncovered massive attempted voter fraud less than a month before the country goes to the polls to choose its new president.

Eleven separate investigations have now been launched into a voter registration group called the Association of Community Organisations for Reform – or Acorn.

The authorities believe they may have duplicated voter forms, employed convicts to register people and even stolen the names of the American football team the Dallas Cowboys in order to create fake voters.

The suspicions started when authorities in Las Vegas raided the organisation's offices, removing eight computer hard drives and several boxes of documents.

Acorn called the raid "a stunt that serves no useful purpose other than discredit our work".

They suggested the investigations into them were politically motivated.

But the concerns about dodgy election papers started to spread to other states.

Authorities in Indiana said they had concerns about roughly a thousand voters registered by the group there.

And Fox News reporters in the state of Missouri found 10 registration documents with the same name and signature.

Acorn has registered up to 1.3 million voters across the US so far.

They have offices in 41 states and Washington DC and focus on low income, African American and Latino communities.

They claim to be a politically neutral organisation but many commentators describe them as left wing.

And their workers have been found guilty of voter fraud in the past.

Last year five Acorn employees were sent to prison in Washington State after they went into the Seattle public library and used records to create 1,800 fake registration documents.

Before the raid in Las Vegas, lawyers acting for the state authorities tracked down former Acorn workers.

They found the group had employed 59 convicts from Nevada prisons who were supposed to be supervised and banned from using the phone or the internet.

One former prisoner named Jason Anderson described many of them as "lazy crack-heads who were not interested in working and just wanted the money".

He went on to say they were required to sign up 20 people to vote each day – but couldn't meet the quota – so they started to ask people in the street to fill out several applications.

In a bizarre twist to the tale, the lawyer who uncovered the evidence – Colin Haynes - is a British citizen and a former London policeman who worked as a detective for 11 years.

Fears over voter registration

The Nevada Secretary of State's department confirmed his past, telling Sky News: "Yep he's a Brit, he's one of our best."

In the town of Independence, Missouri, there was more evidence of dodgy election papers.

Fox news correspondent Eric Shawn obtained 10 voter registration papers filled out in the name of one person – Monica Ray.

He said: "She has three birthdays and four social security numbers."

And he warned the investigation would become even more serious, adding: "The voter registration forms here that are suspect, will be going to the FBI by the end of the week."

The concern over possible voter fraud may re-ignite the debate about voters being forced to bring identification to the polls.

Civil liberties groups have claimed in the past that such a rule would disadvantage poor and minority voters.

However, former Missouri Senator John Danforth offered a lighter side to the affair.

He explained that voter fraud had been a problem in his state before – but struggled to keep a straight face when he told how a dog had been signed up to vote in the presidential elections four years ago.

Russian stock exchanges shut down until Friday as prices plummet

Russian stock exchanges shut down until Friday as prices plummet

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The RTS and MICEX stock exchanges halted trading until Friday after opening for barely more than half an hour on Wednesday as prices plummeted in tune with the overall situation in the world's stock markets and falling oil prices.

The RTS stopped trading at 12:05 p.m. and the MICEX at 11:05 a.m., pending further instructions.

By the time trading was suspended, the stock indices had fallen to levels not seen since the early summer of 2005. The RTS was down 11.25% to 761.63 and the MICEX was off 14.35% to 637.87. Benchmark stocks had fallen 8%-18%.

The MICEX saw drops for Gazprom (RTS: GAZP) (-16.4%), VTB (RTS; VTBR) (-13.3%), Lukoil (RTS: LKOH) (-15.4%), MMC Norilsk Nickel (RTS: GMKN) (-12.6%), Rosneft (RTS: ROSN), Sberbank (RTS: SBER) (-17.8%), Tatneft (RTS: TATN) (-8.4%), Surgutneftegas (RTS: SNGS) (-15.5%), Polyus Gold (RTS: PLZL) (-10.2%) and Gazprom Neft (RTS: SIBN) (+17.4%).

Second- and third-tier stocks fell even harder, including Sistema (RTS: AFKS) - 23.1% and Avtovaz (RTS: AVAZ) - 20.4%.

RTS Classic Market trading volume was $2.239 million and MICEX volume was 3.43 billion rubles, led by Gazprom with 1.544 billion rubles.

With the Russian stock markets out of action, American Depositary Receipts (ADR) are the only means of tracking Russian equities. Russian ADRs slid 15%-20% when trading opened in London, but they started to recover by 12:30 p.m. Moscow time and some were even trading above the equivalent levels for their shares when the MICEX stopped trading.

Converted into rubles, ADR for shares in VTB were trading at 3.08 kopecks in London (down 6.75%, closing level on MICEX - 3.12 kopecks); Norilsk Nickel - 1,630.96 rubles (down 5.32%, 1,524 rubles); Gazprom - 113.86 rubles (-17.55%, 116.9 rubles); Lukoil - 991.93 rubles (-10.38%, 940 rubles); Rosneft - 87.7 rubles (-18.89%, 91.29 rubles); Polyus Gold - 471.747 rubles (-14.19%, 426 rubles) and Surgutneftegas - 8.9 (-10.53%, 8.7 rubles).

U.S. Security Firm Indicted for Fraud in Afghanistan

U.S. Security Firm Indicted for Fraud in Afghanistan

By Bernard Hibbitts
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U.S. Department of Justice officials announced Friday that a private security company contracted by the U.S. Agency for International Development (USAID) and four of its executives and employees have been charged with conspiracy, major fraud and wire fraud in connection with alleged efforts to interfere with U.S. military and reconstruction efforts in Afghanistan. Delmar Dwayne Spier, Barbara Edens Spier, William Felix Dupre, and Behzad Mehr all worked for United States Protection and Investigation (USPI) based in Houston. Commenting on the charges, Assistant Inspector General for Investigations Adrienne R. Rish said that:

USAID and the American companies it relies upon to deliver development programs throughout the world must always be steadfast protectors of U.S. taxpayer funds. As highlighted by this indictment, the USAID Office of Inspector General will vigorously pursue the investigation and prosecution of fraudulent activities and hold accountable those who would attempt to violate the provisions of this integral component of the U.S. foreign assistance program.

The indictment against the USPI staffers alleges they defrauded the United States "by obtaining reimbursement for inflated expenses supposedly incurred by USPI for rental vehicles, fuel and security personnel." If convicted of major fraud the defendants could face up to 10 years and a $1 million fine. The Associated Press has more.

U.S. officials and lawmakers have recently expressed growing concern over allegations of fraud by U.S. subcontractors working in both Afghanistan and Iraq. In May, the Department of Defense Inspector General's Office concluded in a report that the U.S. military had failed to ensure that over $8 billion dollars in Iraq reconstruction contracts awarded between 2001 and 2006 complied with federal anti-fraud laws.

Is Posse Comitatus Dead?

Is Posse Comitatus Dead?

By Amy Goodman
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Amy Goodman: In a barely noticed development last week, the Army stationed an active unit inside the United States. The Infantry Division's 1st Brigade Team is back from Iraq, now training for domestic operations under the control of U.S. Army North, the Army service component of Northern Command. The unit will serve as an on-call federal response for large-scale emergencies and disasters. It's being called the Consequence Management Response Force, CCMRF, or "sea-smurf" for short.

It's the first time an active unit has been given a dedicated assignment to USNORTHCOM, which was itself formed in October 2002 to "provide command and control of Department of Defense homeland defense efforts."

An initial news report in the Army Times newspaper last month noted, in addition to emergency response, the force "may be called upon to help with civil unrest and crowd control." The Army Times has since appended a clarification, and a September 30th press release from the Northern Command states: "This response force will not be called upon to help with law enforcement, civil disturbance or crowd control."

When Democracy Now! spoke to Air Force Lieutenant Colonel Jamie Goodpaster, a public affairs officer for NORTHCOM, she said the force would have weapons stored in containers on site, as well as access to tanks, but the decision to use weapons would be made at a far higher level, perhaps by Secretary of Defense, SECDEF.

I'm joined now by two guests. Army Colonel Michael Boatner is future operations division chief of USNORTHCOM. He joins me on the phone from Colorado Springs. We're also joined from Madison, Wisconsin by journalist and editor of The Progressive magazine, Matthew Rothschild.

We welcome you both to Democracy Now! Why don't we begin with Colonel Michael Boatner? Can you explain the significance, the first time, October 1st, deployment of the troops just back from Iraq?

Col. Michael Boatner: Yes, Amy. I'd be happy to. And again, there has been some concern and some misimpressions that I would like to correct. The primary purpose of this force is to provide help to people in need in the aftermath of a WMD-like event in the homeland. It's something that figures very prominently in the national planning scenarios under the National Response Framework, and that's how DoD provides support in the homeland to civil authority. This capability is tailored technical life-saving support and then further logistic support for that very specific scenario. So, we designed it for that purpose.

And really, the new development is that it's been assigned to NORTHCOM, because there's an increasingly important requirement to ensure that they have done that technical training, that they can work together as a joint service team. These capabilities come from all of our services and from a variety of installations, and that's not an ideal command and control environment. So we've been given control of these forces so that we can train them, ensure they're responsive and direct them to participate in our exercises, so that were they called to support civil authority, those governors or local state jurisdictions that might need our help, that they would be responsive and capable in the event and also would be able to survive based on the skills that they have learned, trained and focused on.

They ultimately have weapons, heavy weapons and combat vehicles and another service capability at their home station at Fort Stewart, Georgia, but they wouldn't bring that stuff with them. In fact, they're prohibited from bringing it. They would bring their individual weapons, which is the standard policy for deployments in the homeland. Those would be centralized and containerized, and they could only be issued to the soldiers with the Secretary of Defense permission.

So I think, you know, that kind of wraps up our position on this. We're proud to be able to provide this capability. It's all about saving lives, relieving suffering, mitigating great property damage to infrastructure and things like that, and frankly, restoring public confidence in the aftermath of an event like this.

AG: So the use of the weapons would only be decided by SECDEF, the Secretary of Defense. But what about the governors? The SECDEF would have -- Secretary of Defense would have -- would be able to preempt the governors in a decision whether these soldiers would use their weapons on U.S. soil?

MB: No, this basically only boils down to self-defense. Any military force has the inherent right to self-defense. And if the situation was inherently dangerous, then potentially the Secretary of Defense would allow them to carry their weapons, but it would only be for self- and unit-defense. This force has got no role in a civil disturbance or civil unrest, any of those kinds of things.

AG: Matt Rothschild, you've been writing about this in The Progressive magazine. What is your concern?

Matthew Rothschild: Well, I'm very concerned on a number of fronts about this, Amy. One, that NORTHCOM, the Northern Command, that came into being in October of 2002, when that came in, people like me were concerned that the Pentagon was going to use its forces here in the United States, and now it looks like, in fact, it is, even though on its website it says it doesn't have units of its own. Now it's getting a unit of its own.

And Colonel Boatner talked about this unit, what it's trained for. Well, let's look at what it's trained for. This is the 3rd Infantry, 1st Brigade Combat unit that has spent three of the last five years in Iraq in counterinsurgency. It's a war-fighting unit, was one of the first units to Baghdad. It was involved in the battle of Fallujah. And, you know, that's what they've been trained to do. And now they're bringing that training here?

On top of that, one of the commanders of this unit was boasting in the Army Times about this new package of non-lethal weapons that has been designed, and this unit itself is going be able to use, according to that original article. And in fact, the commander was saying he had even tasered himself and was boasting about tasering himself. So, why is a Pentagon unit that's going to be possibly patrolling the streets of the United States involved in using tasers?

AG: Colonel Boatner?

MB: Well, I'd like to address that. That involved a service mission and a service set of equipment that was issued for overseas deployment. Those soldiers do not have that on their equipment list for deploying in the homeland. And again, they have been involved in situations overseas. And having talked to commanders who have returned, those situations are largely nonviolent, non-kinetic. And when they do escalate, the soldiers have a lot of experience with seeing the indicators and understanding it. So, I would say that our soldiers are trustworthy. They can deploy in the homeland, and American citizens can be confident that there will be no abuses.

AG: Matt Rothschild?

MR: Well, you know, that doesn't really satisfy me, and I don't think it should satisfy your listeners and your audience, Amy, because, you know, our people in the field in Iraq, some of them have not behaved up to the highest standards, and a lot of police forces in the United States who have been using these tasers have used them inappropriately.

The whole question here about what the Pentagon is doing patrolling in the United States gets to the real heart of the matter, which is, do we have a democracy here? I mean, there is a law on the books called the Posse Comitatus Act and the Insurrection Act that says that the president of the United States, as commander-in-chief, cannot put the military on our streets. And this is a violation of that, it seems to me.

President Bush tried to get around this act a couple years ago in the Defense Authorization Act that he signed that got rid of some of those restrictions, and then last year, in the new Defense Authorization Act, thanks to the work of Senator Patrick Leahy and Kit Bond of Missouri, that was stripped away. And so, the President isn't supposed to be using the military in this fashion, and though the President, true to form, appended a signing statement to that saying he's not going to be governed by that. So, here we have a situation where the President of United States has been aggrandizing his power, and this gives him a whole brigade unit to use against U.S. citizens here at home.

AG: Colonel Michael Boatner, what about the Posse Comitatus Act, and where does that fit in when U.S. troops are deployed on U.S. soil?

MR: It absolutely governs in every instance. We are not allowed to help enforce the law. We don't do that. Every time we get a request -- and again, this kind of a deployment is defense support to civil authority under the National Response Framework and the Stafford Act. And we do it all the time, in response to hurricanes, floods, fires and things like that. But again, you know, if we review the requirement that comes to us from civil authority and it has any complexion of law enforcement whatsoever, it gets rejected and pushed back, because it's not lawful.

AG: Matthew Rothschild, does this satisfy you?

MR: No, it doesn't. One of the reasons it doesn't is not by what Boatner was saying right there, but what President Bush has been doing. And if we looked at National Security Presidential Directive 51, that he signed on May 9th of 2007, Amy, this gives the President enormous powers to declare a catastrophic emergency and to bypass our regular system of laws, essentially, to impose a form of martial law.

And if you look at that National Security Presidential Directive, what it says, that in any incident where there is extraordinary disruption of a whole range of things, including our economy, the President can declare a catastrophic emergency. Well, we're having these huge disturbances in our economy. President Bush could today pick up that National Security Directive 51 and say, "We're in a catastrophic emergency. I'm going to declare martial law, and I'm going to use this combat brigade to enforce it."

AG: Colonel Michael Boatner?

MB: The only exception that I know of is the Insurrection Act. It's something that is very unlikely to be invoked. In my 30-year career, it's only been used once, in the LA riots, and it was a widespread situation of lawlessness and violence. And the governor of the state requested that the President provide support. And that's a completely different situation. The forces available to do that are in every service in every part of the country, and it's completely unrelated to the -- this consequence management force that we're talking about.

AG: You mentioned governors, and I was just looking at a piece by Jeff Stein -- he is the national security editor of Congressional Quarterly -- talking about homeland security. And he said, "Safely tucked into the $526 billion defense bill, it easily crossed the goal line on the last day of September.

"The language doesn't just brush aside a liberal Democrat slated to take over the Judiciary Committee" -- this was a piece written last year -- it "runs over the backs of the governors, 22 of whom are Republicans.

"The governors had waved red flags about the measure on Aug. 1, 2007, sending letters of protest from their Washington office to the Republican chairs and ranking Democrats on the House and Senate Armed Services committees.

"No response. So they petitioned the party heads on the Hill."

The letter, signed by every member of the National Governors Association, said, "This provision was drafted without consultation or input from governors and represents an unprecedented shift in authority from governors … to the federal government."

Colonel Michael Boatner?

MB: That's in the political arena. That has nothing to do with my responsibilities or what I'm -- was asked to talk about here with regard to supporting civil authority in the homeland.

AG: Matthew Rothschild?

MR: Well, this gets to what Senator Patrick Leahy of Vermont was so concerned about, that with NORTHCOM and with perhaps this unit -- and I want to call Senator Leahy's office today and ask him about this -- you have the usurpation of the governor's role, of the National Guard's role, and it's given straight to the Pentagon in some of these instances. And that's very alarming. And that was alarming to almost every governor, if not every governor, in the country, when Bush tried to do that and around about the Posse Comitatus Act. So, I think these are real concerns.

AG: Matt Rothschild, the Democratic and Republican conventions were quite amazing displays of force at every level, from the local police on to the state troopers to, well, in the Republican convention, right onto troops just back from Iraq in their Army fatigues. Did this surprise you?

MR: It did. It surprised me also that NORTHCOM itself was involved in intelligence sharing with local police officers in St. Paul. I mean, what in the world is NORTHCOM doing looking at what some of the protesters are involved in? And you had infiltration up there, too. But what we have going on in this country is we have infiltration and spying that goes on, not only at the -- well, all the way from the campus police, practically, Amy, up to the Pentagon and the National Security Agency. We're becoming a police state here.

AG: Colonel Michael Boatner, a tall order here, could you respond?

MB: Well, that's incorrect. We did not participate in any intelligence collection. We were up there in support of the U.S. Secret Service. We provided some explosive ordnance disposal support of the event. But I'd like to go back and say that, again, in terms of --

AG: Could you explain what their -- explain again what was their role there?

MB: They were just doing routine screens and scans of the area in advance of this kind of a vulnerable event. It's pretty standard support to a national special security event.

AG: And are you saying there was absolutely no intelligence sharing?

MB: That's correct. That is correct. … We're very constrained--

MR: But even that, Amy, now the Pentagon is doing sweeps of areas before, you know, a political convention? That used to be law enforcement's job. That used to be domestic civil law enforcement job. It's now being taken over by the Pentagon. That should concern us.

AG: Why is that, Colonel Michael Boatner? Why is the Pentagon doing it, not local law enforcement?

MB: That's because of the scale and the availability of support. DoD is the only force that has the kind of capability. I mean, we're talking about dozens and dozens of dog detection teams. And so, for anything on this large a scale, the Secret Service comes to DoD with a standard Economy Act request for assistance.

AG: Boatner, in the Republican Convention, these troops, just back from Fallujah -- what about issues of, for example, PTSD, post-traumatic stress disorder?

MB: Well, my sense is that that's something that the services handled very well. There's a long track record of great support in the homeland. If those soldiers were National Guard soldiers, I have no visibility of that. But for the active-duty forces, citizens can be confident that if they're employed in the homeland, that they'll be reliable, accountable, and take care of their families and fellow citizens in good form.

AG: Last word, Matthew Rothschild?

MR: Well, this granting of the Pentagon a special unit to be involved in U.S. patrol is something that should alarm all of us. And it's very important to the Army.

Predatory Lenders' Partner in Crime How the Bush Administration Stopped the States From Stepping In to Help Consumers

Predatory Lenders' Partner in Crime

How the Bush Administration Stopped the States From Stepping In to Help Consumers

By Eliot Spitzer

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Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

AIG Gets More Government Bailout Cash

AIG Gets More Government Bailout Cash

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Only one day after it was revealed that AIG had sprung for a $440,000 spa vacation shortly after getting an $84 billion government-loan bailout comes this report: The government is loaning AIG another $38 billion.

AIG, the world's largest insurer, said it has already drawn down $61 billion on its $84 billion line of credit from the government. AIG's financial products division got into the mortgage-backed securities market and incurred billions in losses, sending the entire company teetering toward bankruptcy. The $84 billion loan was meant to help prop up AIG.

The New York branch of the Fed Reserve will borrow $37.8 billion in investment-grade securities from AIG in exchange for the cash.

During a hearing before the House Oversight committee on Tuesday, it was revealed that just last week, about 70 of the company's top performers were rewarded with a week-long stay at the luxury St. Regis Resort in Monarch Beach, Calif., where they ran up a tab of $440,000, The Post's Peter Whoriskey reported today.

Oversight committee Henry Waxman (D-Calif.) showed a photograph of the resort, which overlooks the Pacific Ocean, and reported expenses for AIG personnel including $200,000 for rooms, $150,000 for meals and $23,000 for the spa, Whoriskey wrote.

Today, AIG chief executive Edward Liddy defended the vacation by pouring gasoline on the fire.

Such trips "are standard practice in our industry," Liddy said, no doubt thrilling every other major insurance company.

In a letter to Treasury Secretary Hank Paulson, obtained by ABC News, Liddy said the vacationers were largely independent insurance agents who had sold well for AIG.

"Let me assure you that we are re-evaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating," Liddy wrote. "We understand that our company is now facing very different challenges -- and that we owe our employees and the American public new standards and approaches."

Surveillance's Reach Revealed: Md. Police Put Activists' Names On Terror Lists

Md. Police Put Activists' Names On Terror Lists

Surveillance's Reach Revealed

By Lisa Rein

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The Maryland State Police classified 53 nonviolent activists as terrorists and entered their names and personal information into state and federal databases that track terrorism suspects, the state police chief acknowledged yesterday.

Police Superintendent Terrence B. Sheridan revealed at a legislative hearing that the surveillance operation, which targeted opponents of the death penalty and the Iraq war, was far more extensive than was known when its existence was disclosed in July.

The department started sending letters of notification Saturday to the activists, inviting them to review their files before they are purged from the databases, Sheridan said.

"The names don't belong in there," he told the Senate Judicial Proceedings Committee. "It's as simple as that."

The surveillance took place over 14 months in 2005 and 2006, under the administration of former governor Robert L. Ehrlich Jr. (R). The former state police superintendent who authorized the operation, Thomas E. Hutchins, defended the program in testimony yesterday. Hutchins said the program was a bulwark against potential violence and called the activists "fringe people."

Sheridan said protest groups were also entered as terrorist organizations in the databases, but his staff has not identified which ones.

Stunned senators pressed Sheridan to apologize to the activists for the spying, assailed in an independent review last week as "overreaching" by law enforcement officials who were oblivious to their violation of the activists' rights of free expression and association. The letter, obtained by The Washington Post, does not apologize but admits that the state police have "no evidence whatsoever of any involvement in violent crime" by those classified as terrorists.

Hutchins told the committee it was not accurate to describe the program as spying. "I doubt anyone who has used that term has ever met a spy," he told the committee.

"What John Walker did is spying," Hutchins said, referring to John Walker Jr., a communications specialist for the U.S. Navy convicted of selling secrets to the Soviet Union. Hutchins said the intelligence agents, whose logs were obtained by the American Civil Liberties Union of Maryland as part of a lawsuit, were monitoring "open public meetings." His officers sought a "situational awareness" of the potential for disruption as death penalty opponents prepared to protest the executions of two men on death row, Hutchins said.

"I don't believe the First Amendment is any guarantee to those who wish to disrupt the government," he said. Hutchins said he did not notify Ehrlich about the surveillance. Ehrlich spokesman Henry Fawell said the governor had no comment.

Hutchins did not name the commander in the Division of Homeland Security and Intelligence who informed him in March 2005 that the surveillance had begun. More than a year later, after "they said, 'We're not getting much here,' " Hutchins said he cut off what he called a "low-level operation."

But Sen. James Brochin (D-Baltimore County) noted that undercover troopers used aliases to infiltrate organizational meetings, rallies and group e-mail lists. He called the spying a "deliberate infiltration to find out every piece of information necessary" on groups such as the Maryland Campaign to End the Death Penalty and the Baltimore Pledge of Resistance. When Hutchins called their members "fringe people," the audience of activists who filled the seats in the hearing room in Annapolis sighed.

Some activists said yesterday that they have received letters; others said they were waiting with anticipation to see whether they were on the state police watch list.

Laura Lising of Catonsville, a member of the Baltimore Coalition Against the Death Penalty, received her notification yesterday. She said she wants a hard copy of her file, because she does not trust the police to purge it. "We need as much protection as possible," she said.

Both Hutchins and Sheridan said the activists' names were entered into the state police database as terrorists partly because the software offered limited options for classifying entries.

The police also entered the activists' names into the federal Washington-Baltimore High Intensity Drug Trafficking Area database, which tracks suspected terrorists. One well-known antiwar activist from Baltimore, Max Obuszewski, was singled out in the intelligence logs released by the ACLU, which described a "primary crime" of "terrorism-anti-government" and a "secondary crime" of "terrorism-anti-war protesters."

Sheridan said that he did not think the names were circulated to other agencies in the federal system and that they are not on the federal government's terrorist watch list. Hutchins said some names might have been shared with the National Security Agency.

Although the independent report on the surveillance released last week said that it was part of a broad effort by the state police to gather information on protest groups across the state, Sheridan said the department is not aware of any surveillance as "intrusive" as the spying on death penalty and war opponents.

The police notified the protesters at the recommendation of former U.S. attorney and state attorney general Stephen H. Sachs, who was appointed by Gov. Martin O'Malley (D) to review the covert monitoring. In a report last week, Sachs also recommended regulations that forbid such spying on protest groups unless the state police chief believes it is justified.

"I can't imagine getting a letter that says, 'You've been classified as a terrorist; come in and we'll tell about it,'" said Sen. Bryan W. Simonaire (R-Anne Arundel). Two senators noted that they had been arrested years ago for civil disobedience. Sen. Jennie Forehand (D-Montgomery) asked Sheridan, "Do you have any legislators on your list?" The answer was no.

Documents say American detainee near insanity in a U.S. military brig

Documents say detainee near insanity

A U.S. military officer warned Pentagon officials that an American detainee was being driven nearly insane by months of punishing isolation and sensory deprivation in a U.S. military brig, according to documents obtained by The Associated Press.

While the treatment of prisoners at detention facilities at Guantanamo Bay, Cuba, and in Afghanistan and Iraq have long been the subject of human rights complaints and court scrutiny, the documents shed new light on how two American citizens and a legal U.S. resident were treated in military jails inside the United States.

The Bush administration ordered the men to be held in military jails as "enemy combatants" for years of interrogations without criminal charges, which would not have been allowed in civilian jails.

The men were interrogated by the CIA and Defense Intelligence Agency, repeatedly denied access to attorneys and mail from home and contact with anyone other than guards and their interrogators. They were deprived of natural light for months and for years were forbidden even minor distractions such as a soccer ball or a dictionary.

"I will continue to do what I can to help this individual maintain his sanity, but in my opinion we're working with borrowed time," an unidentified Navy brig official wrote of prisoner Yaser Esam Hamdi in 2002. "I would like to have some form of an incentive program in place to reward him for his continued good behavior, but more so, to keep him from whacking out on me."

Yale Law School's Lowenstein International Human Rights Clinic received the documents through a Freedom of Information Act request filed by two attorneys Jonathan Freiman and Tahlia Townsend, representing another detainee, Jose Padilla. The Lowenstein group and the American Civil Liberties Union said the papers were evidence that the Bush administration violated the 5th Amendment's protections against cruel treatment. The U.S. military was ordered to treat the American prisoners the same way prisoners at Guantanamo were treated, according to the documents.

However, the Guantanamo jail was created by the Bush administration specifically to avoid allowing detainees any constitutional rights. Administration lawyers contended the Constitution did not apply outside the country.

"These documents are the first clear confirmation of what we've suspected all along, that the brig was run as a prison beyond the law. There was an effort to create a Gitmo inside the United States," Jonathan Hafetz of the ACLU's National Security Project in New York said, using the slang word for the U.S. naval facility in Cuba.

The 91 pages of e-mails and documents produced by U.S. Fleet Forces Command, which runs the military brigs in Norfolk, Va., and Charleston, S.C., detail daily decisions made about the treatment of Hamdi and Padilla, then both American citizens, and Ali Saleh Kahlah al-Marri, a legal resident. All were designated as by the White House as "illegal enemy combatants."

The paperwork show uniformed officials at the military brigs growing increasingly uncomfortable and then alarmed that they were being directed to handle their prisoners under the rules that governed Guantanamo.

The authors and recipients of the e-mails are censored from the documents. They appear to be going to either military or Pentagon legal counsel and policy offices.

The documents show that some officials at the Charleston brig were deeply skeptical about the mandate that Guantanamo rules should apply in the United States, a decision made by the defense secretary's office, according to the documents.

"You have every right to question the 'lash-up' between GTMO and Charleston — it was the first thing I ask (sic) about a year ago when I checked on board," wrote one official to another in 2006. "In a nutshell, they gave the Charleston detainee mission to (Joint Forces Command) who promptly gave it to (Fleet Forces Command) with a 'lots of luck' and nothing else."

An officer was still raising alarms about Hamdi's mental state after 14 months of jail with no contact with lawyers, his family or even other prisoners.

"I told him the last thing that I wanted to have happen was to send him anywhere from here as a 'basket case,' of use to no one, to include himself," the officer wrote in an e-mail to undisclosed government officials in June 2003. "I fear the rubber band is nearing its breaking point here and not totally confident I can keep his head in the game much longer."

The frustrated officer wrote that he had "to have the ability to exercise some discretion when I believe it best for the health and welfare of those assigned to my facility ... Know ... we are to remain consistent with the procedures that were/are in place at Camp X-Ray" a reference to the Guantanamo jail. He pointed out that imposing those conditions in the brig had a far harsher effect on his prisoners because they had no contact with any other detainees, which was allowed at Guantanamo.

Scores of pages of once-secret legal opinions regarding detainee rights and treatment have been released under the Freedom of Information Act. At least two apparently crucial memos about enemy combatant treatment inside the U.S. have yet to be made public.

Hamdi was captured in Afghanistan in 2001, shipped to Guantanamo and then moved to the U.S. after his citizenship was discovered. He was held and interrogated for three years without charges. The Supreme Court in 2004 rejected the government's attempt to hold him indefinitely without charge. He was released to Saudi Arabia on the condition he give up his U.S. citizenship.

Al-Marri, a citizen of Qatar, was a legal resident studying for a master's degree in Illinois when he was arrested in December 2001 by the FBI as a material witness to the Sept. 11, 2001, attacks. He was charged with credit card fraud in 2002. A month before his trial in 2003, President Bush declared him an enemy combatant and al-Marri was transferred to the consolidated naval brig in Charleston. There he was held in isolation for 16 months, denied shoes and socks for two years, and was not allowed any contact with his family for five years. He remains in the military brig but is appealing his detention to the Supreme Court.

Padilla was arrested in 2002 under suspicion he was collaborating with al-Qaida to build a radioactive or "dirty" bomb. He was held as an enemy combatant for more than three years. He was held totally incommunicado for 21 months. His mother was only allowed to see Padilla after she agreed not to alert the media to the visit, according to the documents.

The government dropped the dirty bomb charges and Padilla's case was moved to civilian court where in 2007 he was convicted of supporting terrorism in Kosovo, Bosnia and Chechnya.

US government may take part ownership in banks

US government may take part ownership in banks

By MARTIN CRUTSINGER and JEANNINE AVERSA

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News that the Bush administration is considering taking part ownership in a number of U.S. banks helped restore a relative calm over global financial markets Thursday.

The aim of such a move would be to thaw the lending freeze that threatens to push the world's economy into recession. It comes after rampant fear about the global economy sent investors scurrying on Tuesday for safety in U.S. government securities despite an orchestrated round of rate cuts by the world's central banks.

Investors also were hoping that selling, which gave the Dow its sixth straight day of losses, was overdone. Wall Street began the day higher, but then slid after declines in some blue chip names like General Motors Corp. weighed on the markets.

In an effort to show that governments around the world were focusing intently on ways to resolve the crisis, the administration announced that President Bush would meet with finance officials from the Group of Seven major industrial countries at the White House on Saturday.

"The president will have the opportunity to hear directly from the finance ministers about how the financial crisis is affecting their respective economies and the steps they are taking to deal with these challenges both individually and collectively," presidential press secretary Dana Perino told reporters.

Perino said Bush would stress "the importance of nations working in a coordinated way to address the crisis while respecting the different conditions in each economy."

An administration official, who spoke late Tuesday on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.

Treasury Secretary Henry Paulson told reporters that Treasury was moving quickly to implement the $700 billion rescue effort and he specifically mentioned reviewing ways to bolster the capital of banks.

"We will use all the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size," Paulson said at a Wednesday news conference.

His statements came on the heels of Britain's move to pour cash into troubled banks in exchange for stakes in them — a partial nationalization.

Asked whether he would try something like the British plan, Paulson said: "We have a broad range of authorities and tools. ... We've emphasized the purchase of liquid assets, but we have a broad range of authorities. And I'm confident we have the authorities we need to work with going forward."

The Federal Reserve on Wednesday cut its target for the benchmark rate on overnight loans between banks to 1.5 percent. The cut from 2 percent took the rate to its lowest level in more than four years.

In an unprecedented coordinated move, central banks in England, China, Canada, Sweden and Switzerland and the European Central Bank also cut rates after a series of high-stakes phone calls over several days between Fed Chairman Ben Bernanke and his counterparts.

The Fed acted in concert with the European Central Bank to make emergency interest rate cuts after the Sept. 11 terror attacks in 2001. But Wednesday's cuts were unique in the number of nations that participated, the Fed said.

On Thursday, rates in South Korea, Hong Kong and Taiwan were also trimmed and Asian markets appeared to find their feet after a brutal round of selling Wednesday.

Tokyo's benchmark Nikkei 225 index rose more than 1 percent but fell back to close down 0.5 percent to 9,157.49, a five-year low. That followed a 9.4 percent plunge Wednesday, its biggest one-day drop since the 1987 market crash.

Hong Kong's Hang Seng index gained 3.6 percent to 15,985.39, while South Korea's key index rose 0.6 percent after earlier rising as much as 2.9 percent.

European markets shed some early gains Thursday ahead of Wall Street's opening, but remained in positive territory, with British banking stocks in particular enjoying a strong rally in the wake of the government's $865 billion plan to buy stakes in banks .

But all eyes are on now on Wall Street, where investors hope markets are getting closer to finding a bottom after the worst five-day rout since 1987. On Wednesday, the Dow gave up 189 points to close at 9,258.10 — and is now down about 35 percent from its high of 14,164.53 reached exactly one year ago.

In midmorning trading, the Dow Jones industrial average fell almost 1 percent. GM was the biggest decliner in the Dow.

Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 1.2 percent and the Nasdaq composite index rose 0.2 percent.

The tentative move back into stocks Thursday siphoned some money away from safe haven investments like government bonds and gold.

Demand for short-term Treasurys waned, with the yield on the three-month Treasury bill, which moves opposite its price, rising to 0.69 percent from 0.63 percent late Wednesday. Longer term debt also fell, with the yield on the 10-year note rising to 3.74 percent from 3.65 percent late Wednesday.

For millions of Americans, the Fed's cut means borrowing money becomes cheaper. Home equity loans, credit cards and other floating-rate loans all fluctuate depending on what the Fed does.

Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent, also the lowest in more than four years, after the Fed announced its decision early Wednesday.

Fed watchers believe the central bank might cut rates further when it meets later this month, and perhaps again in December, in hopes of cushioning the blow if the United States falls into recession.

Even the coordinated action may not break the fear that has gripped investors across the world as jobs evaporate and retirement savings dry up. Banks may still be inclined to hoard cash, and until they decide to lend again the crisis is not likely to let up.

If anyone needed evidence, major American retailers turned in dismal sales figures for the third quarter — further proof that consumer spending, the lifeblood of the economy, is sputtering.

The government reported Thursday that jobless claims fell by 20,000 to 478,000 last week, within economists' expectations. The claims still remain at elevated levels due to the struggling economy, though.

The Fed's interest rate cut was a change in course. It had held rates steady because of inflation concerns. Since the Fed had put a stop to interest-rate cuts in June, the economic outlook has deteriorated.

"The pace of economic activity has slowed markedly in recent months," the Fed said. "Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

Although inflation has been running higher, the Fed believes the recent drop in prices for oil and gas, and the weaker prospects for economic activity, have reduced the threat it poses to the economy.

The credit markets, which have been remarkably tight for weeks, showed only small signs of loosening. Rates on commercial paper, the short-term debt companies issue to raise cash for everyday expenses, went down. But the rate banks charge each other for loans went up.

The Fed also reduced its emergency lending rate to banks by half a percentage point, to 1.75 percent. Given the intense credit crisis, banks have been borrowing more under what is known as the discount window.