August 2009

Philadelphia Inquirer Reorganization Includes Disposal of Center City Real Estate

August 26, 2009

Philadelphia Media Holdings LLC, publisher of The Philadelphia Inquirer, Daily News, and owner of philly.com, filed its reorganization plan in U.S. Bankruptcy Court for the Eastern District of Pennsylvania. The plan provides for the purchase by a new…

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Okun Sentenced to 100 Years for Defrauding Clients of Millions of Dollars Held in 1031 Exchange Trusts

August 26, 2009

Before there was Bernie Madoff, there was Edward H. Okun, the former owner of The 1031 Tax Group LLP. Now Okun, like Madoff, has been sentenced to a century in prison for his leading role in a scheme to defraud and obtain approximately $126 million in…

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Bank Watch: Two Repeat Bank Watch Institutions Fail

August 26, 2009

Colonial Bank Fails; BB&T Takes Over Colonial Bank in Montgomery, AL, (repeatedly mentioned in Bank Watch) was closed this past week by the Alabama State Banking Department, which appointed the Federal Deposit Insurance Corp. (FDIC) as receiver. To protect…

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Lease Cancellations: Bashas’ Lease Cancellations Surface

August 26, 2009

On July 12, Bashas’ Inc. filed Chapter 11 with the District Court of Arizona. At the time of the filing, America’s 15th-largest privately held supermarket chain said it would close 10 stores by July 21. The company is now asking courts for permission…

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Layoffs & Closures: Accenture Reducing Global Real Estate Footprint

August 26, 2009

Accenture a New York-based global management consulting, technology services and outsourcing company is taking steps to reduce excess real estate capacity and to realign its workforce. These actions will result in a pre-tax restructuring charge of approximately…

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REITs Are Poised to Pick Up the Pieces

August 26, 2009

While overleveraged private real-estate funds are gasping for money, public property companies are now poised to become more-dominant players.

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Rising Use of CT, Imaging Tests Poses Greater Radiation Risk, Report Says

August 26, 2009
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U.S. Dollar Likely to Gain Versus Canadian Counterpart: Technical Analysis

August 26, 2009

By Chris Fournier Aug. 26 (Bloomberg) — The U.S. dollar will likely extend its two-day advance against its Canadian counterpart after posting a “bullish daily reversal” yesterday, according to Citigroup Inc. A rally in the greenback to C$1.1126 against the Canadian dollar, nicknamed the loonie, “is expected,” technical analysts Tom Fitzpatrick in New York and Shyam Devani in London wrote in a note to clients today. “A close above there would be quite a bullish development over an extended period.” Canada’s currency dropped 1 percent to C$1.0974 per U.S. dollar at 4:43 p.m. in Toronto, after sliding 1 percent yesterday, its first loss in six days. One Canadian dollar buys 91.12 U.S. cents. A move to C$1.1126 would represent a 1.4 percent rise in the value of the U.S. dollar. Crude oil may have posted a “significant high” this week and is at risk of falling further, the strategists also wrote in the note. Crude is Canada’s biggest export. A $1 drop in oil prices lowers the Canadian dollar by about 0.3 cent against the U.S. dollar, according to TD Securities estimates. A bullish daily reversal occurs when a security falls below the previous day’s low, then closes above the previous day’s high. Technical analysis is the study of trading patterns for signals that may foreshadow price changes in a security, commodity, currency or index. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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`TurboTax’ Defense Used by Ohio Couple After Geithner Is Rejected by Court

August 26, 2009

By Cary O’Reilly Aug. 26 (Bloomberg) — A federal court rejected an attempt by two Ohio residents to use the so-called TurboTax defense that Timothy Geithner relied on to help win Senate confirmation as U.S. Treasury Secretary. The U.S. Tax Court in Washington rejected an appeal of accuracy-based penalties assessed by the Internal Revenue Service on Kenneth and Linda Hopson, who claimed they relied on tax-return preparation software that failed to detect income they had omitted from their 2006 federal tax returns. “Petitioners were not permitted to bury their heads in the sand and ignore their obligation to ensure that their tax return accurately reflected their income,” the court said in an opinion issued yesterday. “In the end, reliance on tax return preparation software does not excuse petitioners’ failure to review their 2006 tax return.” Geithner , who now oversees the IRS, testified during his confirmation hearing in January that he prepared his own returns when he worked at the International Monetary Fund in 2001 and 2002, using TurboTax, an Intuit Inc. product. He said his failure to pay taxes owed on some income during those years was not flagged by the software. He told the Senate Finance Committee he accepted responsibility for failing to pay almost $50,000 in taxes, saying his errors were “careless.” Geithner paid some of the money after being audited by the IRS and the rest shortly before he was nominated to the Treasury post. A Treasury spokeswoman, Nayyera Haq, didn’t immediately return a telephone call seeking comment. The case is Hopson v. Commissioner of Internal Revenue, 25584-08S, U.S. Tax Court (Washington). To contact the reporter on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net .

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Democratic Icon Edward Kennedy Dies at 77 After Life of Triumph, Tragedy

August 26, 2009

By Jonathan D. Salant Aug. 26 (Bloomberg) — Senator Edward Kennedy , whose life was marked by triumph and tragedy as he evolved from a dubious choice for high office into one of the most influential senators in U.S. history, has died. He was 77. A Massachusetts Democrat , Kennedy died late yesterday at home in Hyannis Port on Cape Cod, his family said in a statement. A malignant brain tumor was diagnosed in May 2008 and doctors operated on it the following month. “We’ve lost the irreplaceable center of our family,” the family said in the statement. “He loved this country and devoted his life to serving it.” The trajectory of his public life had many dramatic swings, spanning the civil rights movement in the U.S. to the election of the first black president. He gained entry into the Senate only because the seat opened up after his brother John was elected U.S. president. A family friend, Benjamin Smith, temporarily filled the seat until the younger Kennedy was old enough to run. Once elected in 1962, he never left. Barack Obama , when running for president, called him a “lion of the Senate” when he received his endorsement. President Obama said in a statement that he and his wife Michelle were “heartbroken” to learn of Kennedy’s death. “An important chapter in our history has come to an end,” Obama said from Martha’s Vineyard, Massachusetts, where he is vacationing. “Our country has lost a great leader, who picked up the torch of his fallen brothers and became the greatest United States senator of our time.” ‘Political Dexterity’ Kennedy showed “how much could be done on Capitol Hill with great skill and political dexterity,” said Sean Wilentz , a professor of history at Princeton University in New Jersey. “In a conservative age, he endured.” Kennedy’s funeral will be held Aug. 29 at a historic Boston church and he will be buried at Arlington National Cemetery, where his two slain brothers are interred, according to his office. The president will speak at the funeral mass, according to an administration official. President John F. Kennedy was assassinated in 1963, and Senator Robert Kennedy of New York was shot moments after claiming victory in the California presidential primary in 1968. Ted Kennedy, the youngest of nine children and the last surviving brother, gained a bully pulpit that he took advantage of with his booming voice, soaring rhetoric and legislative acumen. Presidential Bid His own bid for the nation’s highest office, challenging then-President Jimmy Carter for the Democratic nomination in 1980, failed, partly because of personal and political flaws. Over time, his political accomplishments in the Senate cemented his reputation as a lawmaker. “Politically, he has towered over his time,” Adam Clymer , a former New York Times reporter, wrote in his 1999 biography of Kennedy, “even if his failures outside the Senate have fascinated the supermarket tabloids.” Kennedy’s endorsement of Obama in January 2008 helped provide critical validation for the first-term senator, effectively conferring the family legacy to Obama’s candidacy. “I know what your support means,” Obama told Kennedy. “I know the cherished place the Kennedy family holds in the hearts of the American people.” Kennedy was the dominant congressional figure in shaping U.S. health care, civil rights and education policy for decades, working to raise the minimum wage, overhaul immigration laws and allow 18-year-olds to vote. Greatest Legacy Former Senator Birch Bayh , 81, an Indiana Democrat first elected with Kennedy in 1962, said his colleague’s greatest legacy might have been his successful battles to remove obstacles to blacks who wanted to vote. “Once they had the right to vote, they could take care of a lot of their grievances,” Bayh said. Kennedy wrote more than 2,500 bills throughout his more than 46 years in the Senate, with several hundred becoming law, and cast more than 15,000 votes. “One of the great senators in American history, whose career has had more impact on our national life than some of our presidents,” historian Michael Beschloss said in describing Kennedy. “His brother John, while a senator, was part of a committee assigned to select the most important senators in history, to be portrayed on a Capitol wall,” Bayh said. “If such a committee were meeting today, there’s no doubt that Ted Kennedy would be one of the first selections.” Chappaquiddick Accident His presidential campaign was shadowed by a 1969 accident in which a woman passenger died when he drove his car off a bridge at Chappaquiddick Island in Massachusetts. Also, early in his presidential campaign, Kennedy faltered in a national television interview with CBS News reporter Roger Mudd when he was asked to articulate why he was running. “Well, I’m, were I to make the announcement, and to run, the reasons that I would run is because I have a great belief in this country,” Kennedy said. After his defeat, he started to become a far more influential senator. He thwarted or reshaped some of the policies of Republican presidents Ronald Reagan and George H.W. Bush even as he reached across party lines to work with Republicans on legislation. He joined President George W. Bush in enacting the No Child Left Behind education law, though he later said the president wasn’t adequately funding the program. He worked with Republican Senator John McCain of Arizona to draft legislation that would have given undocumented immigrants a path to citizenship. ‘Deserves Recognition’ Kennedy played an active diplomatic role with the Soviet Union, China, Vietnam and Ireland. He supported airline deregulation and the denial of parole in federal prisons. He also opposed the wars in Vietnam and Iraq. “He deserves recognition not just as the leading senator of his time, but as one of the greats in its history, wise in the workings of this singular institution, especially in its demand to be more than partisan to accomplish much,” Clymer wrote in the biography. Kennedy’s speeches often started calmly and ended with a high-volume, arm-waving, red-faced defense of programs that benefited the poor or disabled. He would “literally blow you away with his rhetoric,” said Republican Senator Lindsey Graham of South Carolina. Major Fundraiser Caroline Kennedy , the late president’s daughter, described her “Uncle Teddy” as a “powerful force” for human rights and dignity around the world. “More than any senator of his generation, or perhaps any generation, Teddy has made life better for people in this country and around the world,” she said as she introduced the senator at the 2008 Democratic National Convention in Denver. “He’s been a senator for all who believe in a dream that’s never died.” He was a major fundraiser for his party, and for the Republicans as well, who spent a generation branding their opponents as “Ted Kennedy liberals.” “Nothing will bring a Republican audience to its feet faster than a speech against high taxes, against federal control, and against Ted Kennedy,” Lamar Alexander , a Tennessee Republican, said on the Senate floor during a 2007 tribute marking Kennedy’s 15,000th vote. Edward Moore Kennedy was born on Feb. 22, 1932, in Boston, the youngest of nine children to Joseph P. and Rose Kennedy. After serving in the Army from 1951 to 1953, Kennedy graduated from Harvard University in 1956 and the University of Virginia’s law school in 1959. Elected in 1962 He was an assistant district attorney in the Massachusetts county of Suffolk before winning election in 1962 to the Senate seat vacated by his brother John. In addition to his political triumphs, his history also included reckless behavior. In 1969, Kennedy was giving a political aide a ride home after a party when his car went off a bridge. The aide, Mary Jo Kopechne, died, and Kennedy didn’t immediately report the incident to authorities. He later pleaded guilty to a charge of leaving the scene of an accident and was given a suspended sentence of two months in jail. In a televised address , he apologized for his actions: “No words on my part can possibly express the terrible pain and suffering I feel over this tragic incident. This last week has been an agonizing one for me and for the members of my family, and the grief we feel over the loss of a wonderful friend will remain with us the rest of our lives.” William Kennedy Smith Later, in 1991, he accompanied nephew William Kennedy Smith to a nightclub in Florida, a night that ended with Smith accused of rape. Smith was later acquitted of the charges. Such incidents ended by the time Kennedy married Victoria Reggie in 1992. Kennedy had been urged to run for president ever since his brother Robert’s assassination. After his 1980 campaign failed, he gave a rousing speech at the Democratic National Convention in New York. “For all those whose cares have been our concern,” he said, “the work goes on, the cause endures, the hope still lives, and the dream shall never die.” Kennedy returned to the Senate and served longer than all but two members in history, Robert Byrd of West Virginia and the late Strom Thurmond of South Carolina. Bork Nomination A former chairman of the Senate panel that reviews U.S. Supreme Court nominees, Kennedy helped block President Ronald Reagan ’s 1987 bid to appoint Robert Bork to the court. Bork, as solicitor general under President Richard Nixon , carried out what was known as the “Saturday Night Massacre,” firing Watergate special prosecutor Archibald Cox in 1973, after Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus refused to act. Nixon resigned in 1974. In a speech on the Senate floor, Kennedy said that in Bork’s America, “women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids.” Biographer Clymer called it “the most important and most controversial floor speech of his career.” Kennedy opposed Bush’s war in Iraq from the beginning. He voted against the 2002 resolution allowing the president to use force, calling it the best vote he cast in the Senate. In a January 2007 speech at the National Press Club, Kennedy likened Iraq to another unpopular conflict. “Iraq is George Bush ’s Vietnam,” Kennedy said. “As with Vietnam, the only rational solution to the crisis is political, not military.” Senate Committees After serving as chairman of the Senate Judiciary Committee Kennedy later chaired the Senate Health, Education, Labor and Pensions Committee, where he helped push through an increase in the minimum wage. He was also a member of the Armed Services and Congressional Joint Economic committees. His son Patrick represents part of Rhode Island in the U.S. House, nephew Joseph represented a Massachusetts congressional district, and niece Kathleen Kennedy Townsend served eight years as lieutenant governor of Maryland. “We still believe in the importance of public service and the honor, the high honor that one has in elective office,” Kennedy said on the Senate floor in 2007. “There are many of those who dismiss that concept as an old-fashioned viewpoint, but I think any of us who have read the history of this nation and who understood its history know there is no higher personal honor than to have that opportunity.” Two Brothers Besides the loss of two brothers to assassins’ bullets, Kennedy himself narrowly missed death in a 1964 plane crash that killed the pilot and one of his aides. “You go through something like that and you think the man upstairs had us in the palm of his hand and there is some unfinished business we need to take care of,” said Bayh, who pulled Kennedy from the wreckage. In addition, his eldest son, Teddy Jr., lost a leg to cancer, and Patrick has fought drug addiction and depression. He was knighted by Queen Elizabeth II in March 2009, calling the honor “moving and personal.” Since he was not a British subject, he couldn’t be called “Sir Ted.” Kennedy’s first marriage, to Virginia Joan Bennett, ended in divorce after 24 years in 1982. He is survived by his second wife, Victoria; three children and two stepchildren. To contact the reporter on this story: Jonathan D. Salant in Washington jsalant@bloomberg.net

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Woolworths Profit Rises 16% as Australian Government Handouts Boost Sales

August 26, 2009

By Robert Fenner Aug. 27 (Bloomberg) — Woolworths Ltd., Australia’s biggest retailer, increased second-half profit 16 percent as demand grew at the company’s supermarkets and Big W discount stores after government cash handouts aimed at skirting a recession. Net income rose to A$852.4 million ($705 million) in the six months ended June 28 from A$735.5 million a year earlier. Second-half figures were calculated by subtracting first-half earnings from the A$1.835 billion full-year profit the Sydney- based company reported today. Sales stoked by government payments to individuals and store refurbishments helped Woolworths extend three years of market-share gains from second-ranked Wesfarmers Ltd. Chief Executive Office Michael Luscombe this week announced plans to start a chain of home improvement stores, taking on his rival’s most profitable retail business. “This solid result was delivered in a difficult global economic climate and reflects increased acceptance of our retail offer,” Luscombe, 56, said in the statement. “Our investment has improved stores, created jobs, added services, delivered value.” Woolworths shares gained 7.6 percent this year, less than half the 20 percent rise in the benchmark S&P/ASX 200 index . The stock closed yesterday at A$28.70. Full-year profit rose 13 percent to A$1.835 billion, beating the A$1.8 billion average of 11 analyst estimates compiled by Bloomberg. 2010 Guidance Net income in 2010 will rise between 8 percent and 11 percent with sales increases in the “upper single digits,” the company said today. Revenue in the year ended June was A$47 billion. Second-half earnings before interest and tax from Australian supermarkets, the company’s biggest unit, rose 13 percent to A$1.038 billion. The Australian supermarkets unit widened its profit margin , which measures earnings as a proportion of revenue, to 5.98 percent from 5.52 percent a year earlier. Wesfarmers’ Coles’ chain has a margin of 3 percent. Earnings from Woolworths’ New Zealand supermarkets rose 3.5 percent to A$85.5 million. Profit from Big W discount department stores surged 81 percent to A$58 million. The hotels unit, Australia’s biggest owner of pubs, had a 1.6 percent drop in second-half earnings to A$92.9 million. The consumer electronics unit, which includes the Dick Smith brand stores, had an 1.8 percent fall in earnings to A$21.9 million. Australia’s Woolworths isn’t related to London-based Woolworths Group Plc , which collapsed last year, or Woolworths Holdings Ltd. based in Cape Town, South Africa. To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

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Dollar Gains as Most Stocks Decline on Durables Report; Crude Oil Falls

August 26, 2009

By Matt Townsend Aug. 26 (Bloomberg) — The dollar strengthened and most stocks declined after a smaller-than-expected rise in orders for some durable goods raised concern an economic recovery will be weak. Oil dropped while government bonds were little changed. General Electric Co., 3M Co. and Caterpillar Inc. slumped more than 1.2 percent after bookings for items meant to last several years, excluding cars, trucks and airplanes, climbed less than economists projected. Oil fell as much as 1.9 percent after an unexpected rise in U.S. inventories. The dollar climbed 0.3 percent to $1.4255 versus the euro in New York, from $1.4296 yesterday. The U.S. currency was little changed at 94.26 yen, compared with 94.18. The yen advanced 0.2 percent to 134.36 per euro, from 134.65. “The risk trade is generally stalling and not being able to extend gains,” said Brian Dolan , chief currency strategist at FOREX.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey “The easy money and the easy rally in the summer has played out, and people are taking some bets off the table.” Most equities erased gains from yesterday, when better- than-estimated consumer confidence and home prices bolstered optimism the recession is ending. A proxy for future business investment contained in the durable goods orders report, bookings for non-defense capital goods excluding aircraft, fell 0.3 percent, damping optimism that the 52 percent rally in the Standard & Poor’s 500 Index since March foreshadowed improvement. The Conference Board’s index of leading economic indicators has risen four straight months. Restrictions in China About 11 companies fell for every 10 that rose on the New York Stock Exchange. The S&P 500 added 0.12 point, or less than 0.1 percent, to 1,028.12 after swinging between gains and losses at least 25 times, according to data compiled by Bloomberg. The Dow Jones Industrial Average gained 4.23 points, or less than 0.1 percent, to 9,543.52. Investors also sought safer assets after China’s cabinet said it’s studying restrictions on overcapacity in industries including steel and cement as policy makers seek to rein in investment growth fueled by a record credit expansion this year. ‘Supposed to Lead’ “China and Asia were supposed to lead us out of this mess, and now they are showing signs of pulling back,” FOREX.com’s Dolan said. “That’s another pillar being undermined in terms of the recovery outlook.” Crude dropped as the Energy Department said today in a weekly report U.S. inventories rose 128,000 barrels to 343.8 million. Supplies were forecast to drop by 1.15 million barrels. Oil also declined as the dollar strengthened, undermining demand for assets used to hedge against inflation. Crude for October delivery fell 68 cents, or 0.9 percent, to $71.37 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier it touched $70.67. “The fact that we are getting some strength in the dollar is certainly a contributing factor to the recent weakness we are seeing in oil,” said Stephen Schork , president of consultant Schork Group Inc. in Villanova, Pennsylvania. “There’s still a lot of supply in this market and not a lot of demand.” Treasuries were little changed after the U.S. sold a record-tying $39 billion in five-year securities, the second of three auctions of government notes this week totaling $109 billion. ‘Good Auction’ The notes drew a yield of 2.494 percent, compared with a forecast of 2.509 percent in a Bloomberg News survey of seven of the Federal Reserve’s 18 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.51, higher than an average of 2.2 at the past 10 auctions, indicating greater desire for the debt. “It was a good auction,” said William O’Donnell, U.S. government bond strategist at primary dealer RBS Securities Inc. in Stamford, Connecticut. “There is more than enough demand to get these auctions down, as hefty as they are.” Gold and silver futures declined as the dollar’s rebound reduced the appeal of commodities as alternative investments. Gold futures for December delivery slid as much as 0.5 percent to $941.20 an ounce on the Comex division of the New York Mercantile Exchange. They ended little changed at $945.80 an ounce. “If the dollar continues to strengthen and oil falls, gold could correct toward $930 an ounce,” said Sagiv Peretz , a senior dealer at Finotec Trading U.K. in London. To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net .

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Bearish Chinese Options Trading Surges in U.S. as Government Mulls Curbs

August 26, 2009

By Jeff Kearns and Allen K. Wan Aug. 27 (Bloomberg) — Traders boosted bearish bets on Chinese stocks , with put trading in the U.S. jumping to the highest in a month, after the government said it’s studying curbs on overcapacity in industries including steel and cement. Put option volume for the FXI , an exchange-traded fund tracking the FTSE/Xinhua China 25 Index, jumped to 92,369 contracts in U.S. trading, almost double the four-week average and nine times the number of calls changing hands. Puts give the right to sell a security for a certain amount by a given date. Calls convey the right to buy. The FXI retreated 0.7 percent to $40.26 in New York. “Angst regarding prospects in China has been heightened today given clear signs of excess capacity,” Caitlin Duffy , equity options analyst at Greenwich, Connecticut-based Interactive Brokers Group Inc., wrote in a note yesterday. The trading “indicates China pessimism.” The Shanghai Composite Index has gained 63 percent this year on optimism earnings will rise after China’s economy expanded 7.9 percent the second quarter, recovering from the slowest growth in almost a decade. Almost half of yesterday’s put volume was concentrated in a single trade of 40,000 contracts used in a so-called “put butterfly” strategy by an investor who expects the ETF to slide another 11 percent in the next two months. “It’s likely this was put on as a protective position by someone who owns the fund,” said Christopher Jacobson , chief options strategist at Susquehanna Financial Group LLP in Bala Cynwyd, Pennsylvania. “It affords the most protection if the FXI finishes around the $36 level at expiration.” October $36 Puts The trade involved the sale of 20,000 October $36 puts and the purchase of 10,000 October $39 puts and the same number of October $34 puts, according to the strategists. October contracts expire Oct. 16. “By utilizing a butterfly strategy the investor has risked just 61 cents per contract — the maximum potential loss on the trade — but stands to accumulate $2.39,” Duffy wrote. “This represents a risk-reward ratio of 4-to-1.” The Shanghai index briefly fell 20 percent on Aug. 19 from this year’s high, the threshold for a so-called bear market, on concern the government would stymie new lending. The China Banking Regulatory Commission sent draft rule changes to banks on Aug. 19 requiring them to reduce record lending, three people familiar with the matter said. Chinese stocks trading in the U.S. fell the most a week yesterday, led by commodity producers, after China’s cabinet said it’s studying curbs on overcapacity. “China is signaling that overcapacity within some industries do exist and that they won’t be demanding as much as people expect,” said Jeff Papp , senior analyst at Lisle, Illinois-based Oberweis Asset Management Inc., which manages $700 million including China stocks. “Some of the world’s biggest commodity producers will continue to see a sell-off.” To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Allen Wan in New York at awan3@bloomberg.net .

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Now Malibu Finally Has a City Hall

August 26, 2009

Many communities have been laid low by the financial crisis and housing bust, but in Malibu, Calif., it has presented a golden opportunity.

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US Gold Corporation: El Gallo Initial Metallurgical Results

August 26, 2009

US Gold Corporation: El Gallo Initial Metallurgical Results

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Thailand leaves key interest rate unchanged at 1.25%

August 26, 2009

Thailand leaves key interest rate unchanged at 1.25%

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Gene Mix in Monkeys Fixes Birth Defects in Study, Opens New Ethics Debate

August 26, 2009
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Kennedy Will Be Buried at Arlington Near Brothers Following Boston Funeral

August 26, 2009

By Nicholas Johnston Aug. 26 (Bloomberg) — Senator Edward Kennedy’s funeral will be held Aug. 29 at a historic Boston church and he will be buried at Arlington National Cemetery, where his two slain brothers are interred, a Democrat familiar with the arrangements confirmed. The funeral mass for Kennedy will be at Our Lady of Perpetual Help Basilica, according to the Catholic church’s Web site. President Barack Obama will speak at the service, according to the Democratic official. Before the funeral, his body will lie in repose at the John F. Kennedy Presidential Library and Museum in Boston, the official said. The Boston Globe reported the arrangement earlier. The Kennedy family has yet to announce details. The senator died late yesterday at age 77 at his home in Hyannis Port, Massachusetts. The Massachusetts Democrat was diagnosed in May 2008 with a malignant brain tumor. Kennedy will be buried near his two brothers — former President John F. Kennedy , assassinated in 1963, and former Senator Robert F. Kennedy , killed by a gunman in 1968 — at the cemetery just outside Washington, the official said. To contact the reporter on this story: Nicholas Johnston in Oak Bluffs, Massachusetts, at 1264 or njohnston3@bloomberg.net

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Clear Front-Runner Fails to Emerge in Massachusetts for Kennedy’s Seat

August 26, 2009

Aug. 26 (Bloomberg) — A lack of obvious successors to Senator Edward Kennedy , who died yesterday, likely will set off a fight in Massachusetts for the seat held by a member of his famous family for 55 of the last 57 years. The usual contest for a prized Senate seat is further complicated by Kennedy’s longtime dominance of state politics as well as uncertainty over the procedure for replacing him. Massachusetts Democrats, not wanting to let a Republican governor appoint a senator, changed the law in 2004 to require a special election within 145 to 160 days of a vacancy. Before he died, Kennedy wrote a letter asking that the law be amended to allow for an interim officeholder so the seat doesn’t sit vacant before the special election. At least eight political figures in the state may emerge as realistic candidates for the seat. They include House lawmakers Stephen Lynch , Michael Capuano , Edward Markey , James McGovern and William Delahunt , as well as state Attorney General Martha Coakley and former Representative Martin Meehan , all Democrats. Republicans including former lieutenant Kerry Healey could also contend. The special election is likely to increase the number of competitors and create a political “domino” that could reach the precinct level of the Bay State, says Fred Bayles , director of Boston University ’s statehouse program. “It has a profound impact on Massachusetts politics and elected office,” he said. “Everything’s going to fall down because everyone will start moving around either jockeying for his seat or for the other positions that could open up.” Patrick Backs Change Kennedy, 77, who died late Tuesday night, according to a statement from his family, had been a U.S. senator since November 1962. His brother, the late President John F. Kennedy , held the seat from 1953 to December 1960. Governor Deval Patrick , a Democrat, today said he backs a change in the current law to allow for an interim senator. “The senator’s request to appoint someone to serve for the five months until a special election was entirely reasonable,” he said in an interview on Boston radio station WBUR. “Particularly now, when you think about the momentous change legislation that is pending in the Congress today, Massachusetts needs two voices.” A Democratic appointee would help keep the party’s 60-vote majority needed to maintain support for health-care legislation. Passage of a health-care bill has been a lifelong pursuit for Kennedy. Several veteran politicians have been mentioned as temporary replacements, including former Governor Michael Dukakis , who is traveling in Greece and didn’t immediately respond to an e-mail seeking his comment. Family Members Another issue is whether a member of the Kennedy family will try to claim the seat. The senator’s wife, Victoria, has told friends she doesn’t want it, the Boston Globe reported . Other relatives, including Kennedy’s nephew Joseph P. Kennedy , a former congressman, haven’t indicated their intentions. The Kennedys have helped make incumbency a de facto lifetime proposition, making openings extremely rare. This opportunity, combined with the current law, will encourage several potential contestants . Massachusetts lawmakers in the House such as Barney Frank , 69, who heads the Financial Services Committee and Edward Markey , 63, who heads the Subcommittee on Energy and the Environment, would have to give up their chairmanships to become a freshman senator. Too Young When Kennedy’s older brother was elected president in 1960, Ted Kennedy was too young to hold the seat. Five days after John Kennedy ’s Dec. 22 resignation, the Massachusetts governor appointed a caretaker lawmaker, Benjamin Smith, until Ted Kennedy reached the minimum age under the Constitution for serving in the Senate. Kennedy turned 30 and won the seat in a special election in 1962, almost two years after his brother’s inauguration. Since then, the younger Kennedy helped shape the national discourse on everything from wars to health care and led the transformation of Massachusetts to one of the most Democratic states in the country. In Massachusetts, 92 percent of state legislators are Democrat, and the congressional delegation is Democrat, as are all statewide officials except the treasurer, who has no party affiliation. At the heart of the race to succeed Kennedy is the 2004 Massachusetts law requiring a special election. When John Kerry , the junior senator from Massachusetts, was running for president, the governor was Mitt Romney , 62, a Republican. The law at the time empowered the governor to appoint a replacement. Changed Law In July of that year, the Democrat-controlled legislature changed the law to require a special election to keep Romney from appointing a Republican. Then Kerry lost the election to incumbent President George W. Bush , 63. In his July 2 letter, Kennedy said he supports the current law and asked that Patrick choose an interim replacement who has made “an explicit personal commitment not to become a candidate in the special election.” A special election opens the door for a political free-for- all because any House member who wants to run can avoid a conflict with the next official congressional election in 2010. Massachusetts also may lose a House seat during the next census, providing another incentive. “All of them could run without risking their current spots,” said Democratic Party Chairman John Walsh . Regardless of what happens with the law, the race for Kennedy’s seat will turn into a “mad scramble,” said Paul Watanabe , political science professor at the University of Massachusetts in Boston. “There is little turnover in the Massachusetts delegation and therefore, for those who want to move up, there are going to be a lot of suitors,” Watanabe said. Advantage for Lawmakers Massachusetts law prohibits state election funds being used for federal campaigns, giving the congressmen an upper hand over potential candidates such as Coakley. Still, Coakley has other advantages, said Tufts University political scientist Jeffrey Berry . “She hits the trifecta,” he said. “She has high name recognition, proven fundraising abilities and high favorables.” Republicans, who represented about 12 percent of registered Massachusetts voters in 2008, haven’t elected a U.S. senator in the state since 1972, when incumbent Edward Brooke won. Their only chance may be a Democratic divide. Walsh said the Kennedy family still would be a big factor with voters. ‘Strong’ With Voters “The Kennedys probably have as strong or stronger a relation with voters than they do with politicians,” he said. “Massachusetts voters have had a very long and productive and positive experience with electing members of the Kennedy family, and what that’s meant for our state is real.” Kennedy’s Senate legacy includes more than 300 bills, from the No Child Left Behind Act of 2002 to the Comprehensive Anti- Apartheid Act of 1986. He delivered two of the 20th century’s most pivotal speeches: a eulogy for his brother Robert in 1968 and a concession speech at the 1980 Democratic National Convention . For decades he had been a leading advocate for universal health care. “There’s nobody who’s going to replace Kennedy in the iconic position that he holds,” Bayles said. “It’s the last of the clan, the last of the brothers, he’s the unapologetic liberal lion.” For Related News and Information: Edward Kennedy Profile: BBDP 13387610 Massachusetts news: NI MA Boston news: NI BOSTON Political news: NI POL

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J&J Wins Appeal Reviving Patent on Ultracet Drug as It Fights Teva Generic

August 26, 2009

By Susan Decker and William McQuillen Aug. 26 (Bloomberg) — Johnson & Johnson won an appeals court ruling that it can try to use its patent on the Ultracet painkiller to block generic-drug makers including Teva Pharmaceutical Industries Ltd. from selling copies of the drug. The U.S. Court of Appeals for the Federal Circuit in Washington overturned a finding that the patent was invalid and sent the case back to a lower court for trial. The court did affirm that one aspect of the patent was invalid. Teva’s Barr unit and Caraco Pharmaceutical Laboratories Ltd. have been selling copies of the medicine for more than three years. New Brunswick, New Jersey-based J&J, the world’s largest health-products company, was trying to get the generic medicines pulled from the market. Ultracet combines acetaminophen, the main ingredient in Johnson & Johnson’s Tylenol, with tramadol hydrochloride, a compound used in the painkiller Ultram. The patent, which expires in August 2011, covers the ratio between the two components. The Federal Circuit, in a 2-1 ruling, said there were “material questions of fact” as to whether the combination would have been obvious to researchers. Circuit Judge Haldane Robert Mayer disagreed, saying the patent “does nothing more than combine two well-known pain relievers” into a single tablet. Detroit-based Caraco is owned by Sun Pharmaceutical Industries Ltd. of Mumbai. Teva, based in Petah Tikva, Israel, is the world’s biggest generic-drug maker. The case is Ortho-McNeil Pharmaceutical Inc. v. Teva Pharmaceutical Industries Ltd., 2008-1549 and 2008-1550, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Ortho-McNeil Pharmaceutical Inc. v. Kali Laboratories Inc., 6cv3533, U.S. District Court for the District of New Jersey (Newark). To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net ; William McQuillen in Washington at bmcquillen@bloomberg.net .

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Fed’s Lockhart Says Low Rates Are Needed to Maintain a `Fragile’ Recovery

August 26, 2009

By Steve Matthews Aug. 26 (Bloomberg) — The U.S. economy needs the stimulus from low interest rates for some time as it begins a “fragile” recovery from the worst recession since the 1930s, said Dennis Lockhart , president of the Federal Reserve Bank of Atlanta. “Overall, the U.S. economy is improving but still fragile,” Lockhart said today in remarks prepared for a speech in Chattanooga, Tennessee. “The FOMC has stated its intention to keep the policy interest rate low for an extended period. I agree that this approach is needed.” Fed Chairman Ben S. Bernanke said last week that the U.S. economy “appears to be leveling out” and may resume growth “in the near term.” A government report today showed purchases of new homes rose 9.6 percent in July, the most since February 2005, adding to evidence the housing slump that triggered the recession is hitting bottom. “My forecast envisions a return to positive but subdued gross domestic product growth over the medium term weighed down by significant adjustments to our economy,” said Lockhart, a voting member on monetary policy this year. “Among these are the rewiring of the financial sector and the need for households to save more to repair their balance sheets. My forecast for a slow recovery implies a protracted period of high unemployment.” Bernanke, nominated to a second four-year term yesterday, has expanded the central bank’s balance sheet by $1 trillion, providing emergency funding for banks and credit markets, and lowered the Fed’s target rate almost to zero. Extending Plan The Fed will probably consider extending its plan to buy mortgage-backed securities beyond the current expiration date of Dec. 31, Lockhart said. The central bank is pursuing a program to buy $1.25 trillion in agency MBS. “This is going to be considered further in coming meetings,” Lockhart said. “At this time, I am biased toward more of a stay-the-course approach” of not increasing the amount of purchases, he said. While credit is “loosening,” efforts by small businesses to obtain loans will remain “a challenge,” Lockhart said in response to an audience question. The ability of the central bank to set interest rates free from political pressure is “very, very important,” Lockhart said, adding that audits of monetary policy wouldn’t be a “good idea.” Economic Growth Economic growth will average 2.1 percent in the July-to- December period, according to a Bloomberg News survey of economists this month. “No policy is without risks,” Lockhart said at the annual meeting of the Chattanooga Area Chamber of Commerce. “The challenge my colleagues and I face is navigating between the risk that early removal of monetary stimulus snuffs out the recovery and the risk that protracted monetary accommodation stokes inflation expectations that could ultimately fuel unwelcome inflationary pressures,” he said. Among the obstacles to recovery are falling commercial real estate values, which pose a risk to the banking system, Lockhart said. Inflation is less of a worry, he said. “Firms have very little pricing power,” Lockhart said. “Looking ahead, I expect inflation will remain contained.” Fed policy makers said they expect inflation to be “remain subdued for some time” because of slack in the U.S. and global economies, according to their statement in August. The consumer price index fell 2.1 percent in the year ended in July, the biggest 12-month decrease since 1950. To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net ;

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Taylor Bean Mortgage Bonds Miss Scheduled Principal Payments to Investors

August 26, 2009

By Jody Shenn Aug. 26 (Bloomberg) — At least some securities backed by home loans serviced by Taylor, Bean & Whitaker Mortgage Corp. failed to pay scheduled principal payments to investors. The cash flows were disclosed in monthly reports to bondholders dated yesterday. Ocala, Florida-based Taylor Bean, the 12th-largest U.S. mortgage lender, filed for bankruptcy protection on Aug. 24 after being suspended from doing business with U.S. agencies and Freddie Mac, the government-supported mortgage company. David Dantzler, a spokesman for Taylor Bean, didn’t immediately return a telephone message. Terri Schrettenbrunner, a spokesman for San Francisco-based Wells Fargo & Co., the so-called master servicer for the bonds, said that she couldn’t immediately comment. The bank plans to provide information soon, she said. To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

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Most U.S. Stocks Drop After Some Orders for Durable Goods Miss Forecasts

August 26, 2009

By Elizabeth Stanton Aug. 26 (Bloomberg) — Most U.S. stocks declined as a smaller-than-estimated rise in orders for some durable goods and possible curbs on raw-materials suppliers in China were offset by a surge in new-home sales. General Electric Co., 3M Co. and Caterpillar Inc. slumped more than 1.2 percent after U.S. bookings for items meant to last several years, excluding cars, trucks and airplanes, climbed less than economists projected. U.S. Steel Corp. dropped 2.4 percent as China said it may seek to reduce overcapacity among steel and cement producers. Home Depot Inc. rose 0.9 percent after the 9.6 percent jump in home purchases last month. About 11 companies fell for every 10 that rose on the New York Stock Exchange. The Standard & Poor’s 500 Index added 0.12 point, or less than 0.1 percent, to 1,028.12 at 4 p.m. after swinging between gains and losses at least 25 times, according to data compiled by Bloomberg. The Dow Jones Industrial Average gained 4.23 points, or less than 0.1 percent, to 9,543.52. “Capital spending is not likely to recover as quickly as in past cycles,” said Stanley Nabi , New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8 billion. “Investors are inclined to harvest some profits.” Most equities pared gains from yesterday, when better-than- estimated consumer confidence and home prices bolstered optimism the recession is ending. A proxy for future business investment contained in the durable goods orders report, bookings for non- defense capital goods excluding aircraft, fell 0.3 percent, damping optimism the S&P 500’s 52 percent rebound since March foreshadowed improvement. The Conference Board’s index of leading economic indicators has risen four straight months. ‘Talk the Market Down’ GE, 3M and Caterpillar led industrial companies in the S&P 500 to a 0.9 percent drop, the biggest among the index’s 10 industries, following the Commerce Department’s report on durable goods. GE, the world’s biggest maker of locomotives and medical imaging equipment, fell 1.3 percent to $14.11. 3M, the maker of 55,000 products from Post-It notes to electronic road signs, dropped 1.7 percent to $71.42. Caterpillar, the world’s largest maker of construction equipment, slumped 1.2 percent to $47.25. U.S. Steel fell 2.4 percent to $43.24. China’s cabinet said it’s studying curbs on overcapacity in industries including steel and cement as policy makers seek to rein in investment growth fueled by a record credit expansion this year. “A lot of people are trying to talk the market down, but the news has been pretty good,” said William Dwyer , chief investment officer at MTB Investment Advisors, which manages $13 billion in Baltimore. “The market will keep trending up.” Home Improvement Home Depot, the largest home-improvement retailer, gained 0.9 percent to $27.57. The July increase in new home sales was the biggest since February 2005, and compared with a median economist estimate of 1.6 percent. D.R. Horton Inc. led homebuilders in the S&P 500 to a 3.4 percent advance. The group rose 3.2 percent yesterday after the S&P/Case-Shiller home-price index for 20 U.S. cities dropped by the smallest amount since April 2008. The index of builders’ stocks is at the highest level since October. U.S. stocks are “a tad overpriced by historical standards,” Robert Shiller , chief economist at MacroMarkets LLC and an economics professor at Yale University, said in a Bloomberg Radio interview. Equities traded for 18.35 times earnings yesterday after falling to 13.32 in March, the cheapest since 1986, based on a monthly analysis by Shiller, whose 2000 book “Irrational Exuberance” predicted the market’s collapse. The valuation was 27.31 in October 2007, when the S&P 500 climbed to a record 1,565.15. His methodology uses a decade of earnings to smooth out short-term fluctuations. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net .

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FDIC Cuts Required Capital Ratio to 10% for Buyers of Failed U.S. Lenders

August 26, 2009

By Alison Vekshin Aug. 26 (Bloomberg) — The Federal Deposit Insurance Corp. approved guidelines for private-equity firms to buy failed banks, opening a growing pool of failing lenders to new buyers and limiting costs to the agency and the industry. The FDIC board approved the rules today at a meeting in Washington, agreeing to lower to 10 percent from the proposed 15 percent the Tier 1 capital ratio private-equity investors must maintain after buying a bank. “The FDIC recognizes the need for additional capital in the banking system,” FDIC Chairman Sheila Bair said at the meeting. “We want to maximize investor interest in failed institutions.” The agency is seeking to encourage private-equity investors to bid on assets of collapsed banks as the pace of failures reaches a 17-year high with 81 so far this year, draining the agency’s insurance fund by more than $21 billion. The surge has forced the FDIC to enter loss-sharing arrangements and absorb other costs to unload the assets of failed lenders. The FDIC has twice brokered deals with private-equity groups this year. In March, California-based IndyMac Federal Bank, split off from IndyMac Bancorp Inc., was sold to investors led by Steven Mnuchin , an ex-Goldman Sachs Group Inc. investment banker, and including buyout firm J.C. Flowers & Co. Florida’s BankUnited Financial Corp. was sold in May to firms including Blackstone Group and WL Ross & Co. U.S. Senator Jack Reed , a Rhode Island Democrat who leads a Banking Committee panel overseeing the securities industry, wrote to Bair in May asking her to spell out rules for private- equity firms investing in banks. The FDIC proposed the rules in July and released them for 30 days of public comment, prompting complaints from private- equity firms that the rules were too onerous and would discourage industry participation. To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net .

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General Electric Said to Seek Sale of Security Unit, May Fetch $2 Billion

August 26, 2009

By Aaron Kirchfeld and Zachary Mider Aug. 26 (Bloomberg) — General Electric Co. is seeking to sell its security unit, which builds surveillance cameras and alarms, and may fetch about $2 billion, three people with knowledge of the matter said. GE hired JPMorgan Chase & Co. to find a buyer for most of GE Security, said the people, who declined to be identified because the talks are confidential. Fairfield, Connecticut-based GE asked potential buyers to submit preliminary bids about a month ago, the people said. Possible acquirers include Tyco International Ltd. and United Technologies Corp. , which also sell security equipment, the people said. GE may sell the unit in parts if it can’t find a buyer for the whole business, one of the people said. “The security industry is extremely fragmented, and that is clearly different from GE’s typical vision of being in a strong market-leadership position,” said Joel Levington, director of corporate credit for Hyperion Brookfield Asset Management Inc. in New York. GE Chief Executive Officer Jeffrey Immelt built the division through acquisitions of security and fire companies starting in 2002. GE Security projected $3 billion in sales by 2011, up from about $1.8 billion in 2007, Dean Seavers , the unit’s chief executive officer, said in an interview in September 2008. Michelle May , a GE spokeswoman, declined to comment, as did Paul Fitzhenry of Schaffhausen, Switzerland-based Tyco; John Moran at United Technologies, based in Hartford, Connecticut, and JPMorgan’s Brian Marchiony . GE fell 15 cents, or 1 percent, to $14.15 at 2:18 p.m. in New York Stock Exchange composite trading after earlier dropping as much as 2 percent. The shares declined 12 percent this year through yesterday. Security Sales GE Security forecast an increase in sales, driven by demand in emerging markets and new offerings that bundle video surveillance, alarms and fire systems, the unit’s top executive said in September. About 30 percent of the division’s revenue comes from outside of North America, Seavers said. That should rise to about 50 percent by 2011, led by faster-growing regions such as the Middle East and India. GE agreed to sell an 81 percent stake in a part of its security division, the Homeland Protection unit that sells technology for airports, to Paris-based Safran SA for $580 million in April. GE, the world’s biggest maker of power-plant turbines, had sales of about $183 billion in 2008. To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net ; Zachary R. Mider in New York at zmider1@bloomberg.net .

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Obama Lauds Kennedy as Great Senate Leader and Friend

August 26, 2009

By Nicholas Johnston Aug. 26 (Bloomberg) — President Barack Obama today called Senator Edward M. Kennedy “one of the greatest senators of our time,” an “extraordinary leader” who pursued civil rights and helped elect the nation’s first black president. Kennedy’s powerful voice for social causes allowed people to “pursue their dream in an America that is more equal and more just, including myself,” Obama said in a statement at Martha’s Vineyard in Massachusetts, where his family was vacationing. “His ideas and ideals are stamped on scores of laws and reflected in millions of lives.” Kennedy, the 77-year-old Massachusetts Democrat, died at home in Hyannis Port on Cape Cod after a lengthy battle with brain cancer. Flags at the U.S. Capitol and the White House were flown at half-staff in Kennedy’s honor. Obama, in an earlier statement today, said he and first lady Michelle Obama were “heartbroken” to learn of his death. Kennedy, who led battles in the Senate to advance civil rights, health care and economic programs for the poor, forged a bond with Obama when the young Illinois senator served in the chamber. Kennedy gave a boost to Obama’s quest for the presidency when he endorsed him in January 2008 over other rivals. It became a turning point in Obama’s campaign, giving it legitimacy and credibility, campaign aides later said. ‘Humility, Warmth’ Kennedy’s dogged purpose as a legislator was matched by “humility, warmth and good cheer,” Obama said in the statement broadcast live on television. “He could passionately battle others, and do so peerlessly on the Senate floor for the causes that he held dear, and yet still maintain warm friendships across party lines.” Obama said. “And that is one reason why he became one of the greatest senators of our time” and “one of the most accomplished Americans ever to serve our democracy,” he said. Even as Kennedy’s stalwart views made him an inviting target of partisan attacks, “I can think of no one who engendered greater respect or affection from both sides of the aisle,” the president said. White House aides anticipate that Obama will deliver a eulogy at Kennedy’s funeral. While the president is scheduled to return to Washington on Aug. 30, aides were waiting for details of the funeral and other events. To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net

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Crossroads Systems Announces Board-Level Appointments

August 26, 2009

AUSTIN, TX–(Marketwire – August 26, 2009) – Crossroads Systems, Inc. ( PINKSHEETS : CRDS ), a global leading provider of solutions to connect, protect, secure and restore data, today announced the appointment of Don Pearce as the Company’s new Chairman of the Board of Directors and Elliott Brackett as Chairman of the Compensation Committee. Alan Howe remains as Chairman of the Audit Committee. About Don Pearce Don Pearce provides a wealth of experience and a global network of active industry contacts from a successful career focused on sales. A recognized leader in sales management, Pearce brings a significant track record of delivering revenue generating strategies within the high-tech sector. Beginning his career at IBM in Dallas with positions in systems engineering, sales and sales management, he continued achieving consistent corporate growth results for more than 20 years at Amdahl Corp., Tarantella, St

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Two Norfolk board members step away from housing agency

August 26, 2009

Two Norfolk board members step away from housing agency

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Siemens acquires two Chinese metal firms

August 26, 2009

Siemens acquires two Chinese metal firms

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Swiss Life to cut 520 jobs as profits sink 91%

August 26, 2009

Swiss Life to cut 520 jobs as profits sink 91%

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S. Korea’s President says still too early for economic exit plans

August 26, 2009

S. Korea’s President says still too early for economic exit plans

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Russia deploys S-400 air defense systems in Far East

August 26, 2009

Russia deploys S-400 air defense systems in Far East

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Recovery on track for the world’s housing markets

August 26, 2009

Recovery on track for the world’s housing markets

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LegalNewsline | Oregon AG takes aim at home foreclosure scams

August 26, 2009

LegalNewsline – Oregon AG takes aim at home foreclosure scams.

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Thrifts Post First Profit Since 2007 as Reserves Fall, U.S. Regulator Says

August 26, 2009
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Sales Rise, But Las Vegas Can’t Shake Home Price Declines

August 26, 2009

Associated Press They say what happens in Vegas, stays in Vegas. It certainly is holding true for home price declines, which Las Vegas can’t seem to shake. The latest Case-Shiller home price figures show that Las Vegas has now edged out Phoenix has the city with the steepest decline from the housing peak. Prices in Las Vegas are down 54.3% from the August 2006 peak, compared to a 53.9% decline for Phoenix from its June 2006 peak.  Phoenix posted a 1.1% monthly gain in the three-month period ending in June, compared to the equivalent period ending in May. Las Vegas, on the other hand, declined by 2% in June from May. Prices continue to take big hits in Las Vegas even as sales rise.  The number of sales rose for the 11th straight month in July, with a 29% increase from a year ago (though sales were off by 4% in July from June). Nearly seven in 10 homes purchased in Las Vegas last month had been foreclosed upon in the past 12 months, and more than four in 10 sales were all cash purchases, according to MDA DataQuick, a real-estate research firm. The reason for brisk sales and falling prices prices: the majority of homes selling are foreclosures, which are selling at greater discounts. Many homeowners can’t easily sell their homes because they don’t have any equity left. Two-thirds of Nevada mortgage holders owe more than their homes are worth, according to First American CoreLogic. Meanwhile, the number of foreclosures purchased has exceeded the number of foreclosures added to the market for five straight months, according to SalesTraq, a local real-estate research firm. Bank-owned inventory is down to around 12,900, down from a peak of 16,000 in February and from 13,400 one year ago. Overall, the number of homes listed for sale fell below 12,000 in July, down from 20,000 last year. “There’s no inventory for the buyers,” says Steve Hawks, a local real-estate agent. He says it’s becoming common for properties priced under $200,000 to draw multiple bids, but sales from buyers who aren’t in a distressed situation remain “pretty much non-existent out here.”

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