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Australian Market Report of April 18, 2011: Conquest Mining (ASX:CQT) Report Strong Production At Pajingo Gold Mine In The March Quarter

April 18, 2011

Australian Market Report of April 18, 2011: Conquest Mining (ASX:CQT) Report Strong Production At Pajingo Gold Mine In The March Quarter

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IRS Gives $513M In Homebuyer Credits To Unqualified Taxpayers

April 15, 2011

WASHINGTON — The Internal Revenue Service has paid out more than a half-billion dollars in homebuyer tax credits to people who probably didn’t qualify, a government investigator said Friday. Most of the money – about $326 million – went to more than 47,000 taxpayers who didn’t qualify as first-time homebuyers, said the report by J. Russell George, the Treasury inspector general for tax administration. Other credits went to prison inmates, taxpayers younger than 18 and people who did not actually buy homes. “The IRS has taken positive steps to strengthen controls and help prevent the issuance of inappropriate homebuyer credits,” George said. “However, many of the actions occurred after hundreds of thousands of homebuyer credits had already been issued, including fraudulent and erroneous credits totaling millions of dollars.” The popular credit provided up to $8,000 to first-time homebuyers and up to $6,500 to qualified current owners who bought another home during parts of 2009 and 2010. The IRS said it worked hard to enforce a complicated tax credit that provided more than $27 billion to almost 3.9 million taxpayers. The agency said it corrected math errors on more than 370,000 returns and audited more than 400,000 taxpayers claiming the credit, denying hundreds of thousands of questionable claims. In all, the agency said its enforcement efforts saved more than $1.3 billion and identified more than 200 criminal schemes. The agency questioned some of the inspector general’s findings, but said it would follow up on the report and continue working to recoup any credits that were incorrectly paid out. The tax credit for first-time homebuyers was part of President Barack Obama’s economic recovery package enacted in 2009. In November 2009, Congress extended the credit and expanded it to longtime owners who bought new homes. Homebuyers qualifying for the credit had until April 30, 2010, to sign purchase agreements. They had until Sept. 30 to complete their purchases, after Congress extended the deadline. The extensions and expansion of the credit created a complicated system that made it hard for many taxpayers to determine which credit they qualified for, if any. There were also income requirements.

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Rating Agencies Repeatedly Caved To Banks’ Demands And Helped Cause Crisis, Report Finds

April 14, 2011

NEW YORK — The major credit rating agencies repeatedly sold out to Wall Street banks, so addicted to short-term profits that they repeatedly sacrificed the accuracy of their reports to maintain a competitive edge, a two-year government investigation has concluded. Rather than assess risk accurately, two major rating agencies sold their top seals of approval to their investment bank clients, blessing products that the agencies themselves knew to be undeserving, the Senate Permanent Subcommittee on Investigations concluded in a report released Wednesday. By repeatedly debasing their standards, these agencies helped banks sell shoddy securities to unsuspecting investors, inflating the value of assets that turned out to be worth far less, the report has found. The senate panel, led by Carl Levin (D-Mich.) and Tom Coburn (R-Okla.), levels a two-part charge against the rating agencies: Not only did these companies help inflate a dangerous bubble, the report says, but they also bear responsibility for popping it, as their abrupt downgrades of mortgage-linked securities in 2007 helped set off the panic that caused markets around the world to collapse. These downgrades, the report says, were the “most immediate trigger” to the financial crisis, forcing a parasitic financial apparatus of lenders, regulators, rating agencies and investment banks to reckon with the weak economic underpinnings of its profits. The basic outline of this catastrophe has been widely reported, but Wednesday’s release presents in vivid detail the roles of the key players, including those of Moody’s Investors Service and Standard & Poor’s Financial Services, the two leading rating agencies. Like the banks they served, these two rating agencies focused on short-term profits above the integrity and long-term health of their institutions, a trove of internal documents uncovered by the Senate panel show. “We are meeting with your group this week to discuss adjusting criteria for rating CDOs of real estate assets this week,” reads a 2004 email from an S&P manager, “because of the ongoing threat of losing deals.” Edward Sweeney, a spokesperson for S&P, said in an emailed statement that the company has worked to improve the independence of its ratings since the financial crisis, adding that the sudden downgrades in 2007 were a reflection rather than a cause of poor credit quality. A spokesperson for Moody’s Investors Service did not immediately respond to a request for comment. To a certain extent, the agencies were hamstrung by a system in which conflict of interest is seemingly endemic. The biggest rating agencies, whose assessments are to this day taken at face value by investors around the world, are paid by banks to rate the securities that the banks issue. Complicating matters further, these ratings have legal status: Banks and other institutional investors are required by law to hold a certain percentage of highly rated securities, which gives these institutions an additional incentive to encourage rating agencies to bestow their highest blessing. But despite the system’s flaws, the Senate panel accuses specific people of corrupting the credit rating business, leaving it a twisted version of what it had been years earlier. Brian Clarkson, who worked at Moody’s between 1990 and 2008 and eventually became the company’s president and chief operating officer, promoted this change, the report says. Starting around 2000, under Clarkson’s watch, the formerly “academically oriented” culture of Moody’s began to morph. Clarkson used intimidation tactics to encourage his employees to cooperate with the wishes of investment banks, according to testimony from Mark Froeba, a former senior vice president at Moody’s. “The fear was real, not rare and not at all healthy,” Froeba told the Senate panel. “You began to hear of analysts, even whole groups of analysts, at Moody’s who had lost their jobs because they were doing their jobs, identifying risks and describing them accurately.” People who worked at S&P and Moody’s during this time described a situation in which the companies’ independence eroded almost entirely, so that they perpetually granted the wishes of banks that requested high ratings. A 2006 email from an S&P employee cast the banks as kidnappers, saying the rating agencies “have all developed a kind of Stockholm syndrome,” meaning they sympathize with their captors. And the banks knew exactly how to play the agencies, emails suggest. In 2006, a UBS banker warned an S&P senior manager that if the rating agency didn’t go easy on it, the bank would take its business elsewhere. This habit, once it started, was nearly impossible to break. Bankers would point to precedent, saying that the agency had granted a concession in the past. With the threat of losing market share always looming, the agencies repeatedly capitulated. “I would rather not drop S&P from the upcoming deal,” a Nomura investment banker wrote in 2005, when it looked like the bank wouldn’t get the high rating it wanted. In at least one case, the two parties actually bargained for higher fees. Merrill Lynch wanted Moody’s to rate one of its securities in 2007, but the agency insisted on an unusually high fee, according to emails. Initially, there was hesitation. “Could you point us to a precedent deal where we have approved this?” a Merrill Lynch employee emailed. But after a brief email exchange, the two sides came to an agreement. “We are okay with the revised fee schedule for this transaction,” the Merill Lynch employee emailed. “We are agreeing to this under the assumption that this will not be a precedent for any future deals and that you will work with us further on this transaction to try and get to some middle ground with respect to the ratings.”

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Well Aware Of Bubble, WaMu Boosted Bad Loans, Report Finds

April 14, 2011

NEW YORK — Top executives at Washington Mutual actively boosted sales of high-risk, toxic mortgages in the two years prior to the bank’s collapse in 2008, according to emails published in a wide-ranging Senate report that contradicts previous public testimony about the meltdown. The voluminous, 639-page report on the financial crisis from the Senate Permanent Subcommittee on Investigations singles out Washington Mutual for its decision to champion its subprime lending business, even as executives privately acknowledged that a housing bubble was about to burst. “I have never seen such a high-risk housing market,” CEO Kerry Killinger wrote in a 2005 email to his chief risk officer. “This typically signifies a bubble.” Nonetheless, in a series of memos over the next two years, Killinger told board members that the bank should accelerate its subprime portfolio as part of a major growth strategy. The internal memos detailed in the report are a stark contrast to Killinger’s testimony last year before the same Senate subcommittee, where he said that by 2004 the company “quickly determined that the housing market was increasing in its risk, and we put most of those strategies for expansion on hold.” The report finds Washington Mutual continued its aggressive foray into high-risk lending because of the “gain on sale.” When repackaged and sold to investment banks as securities, higher-risk loans would yield more profits for the bank. One chart presented to the bank’s board in 2006 showed that selling subprime loans could generate eight times as much profit as lower-risk, government-backed loans. One of the largest and most aggressive issuers of subprime mortgages in the country, Washington Mutual eventually collapsed in September 2008 — the largest bank failure in U.S. history. It was eventually purchased by J.P. Morgan Chase as part of a deal brokered by the Federal Deposit Insurance Corporation. The FDIC last month sued Killinger and two other top executives at Washington Mutual, accusing them of reckless management of the company and seeking damages in the millions. An attorney for Killinger did not respond to an e-mail seeking comment. The report issued by Sen. Carl Levin (D-Mich.), chairman of the subcommittee on investigations, also excoriated the Office of Thrift Supervision, the government body tasked with regulating Washington Mutual and numerous other failed lenders that aggressively pushed shoddy loans. “Over a five-year period from 2004 to 2008, the (Office of Thrift Supervision) identified over 500 serious deficiencies at WaMu, yet failed to take action to force the bank to improve its lending operations,” the report noted. In several cases, the office impeded investigations by the backup regulator, the FDIC. In one case, in 2006, numerous banking regulators had determined that adjustable-rate mortgages, which had upfront low monthly payments that eventually increased dramatically, were at major risk for default. Regulators issued new guidance to banks, saying they needed to consider the higher interest rates — not the initial “teaser” rates — before approving borrowers for loans. But a summary of a meeting between Washington Mutual officials and regulators showed that the Office of Thrift Supervision viewed the rules as “flexible,” and emphasized “should” instead of “must.” By late 2006, the FDIC discovered that Washington Mutual was not complying with the new standards, but the Office of Thrift Supervision blocked any further FDIC review, refusing to give access to loan files. Using the delay to its advantage, the bank continued to issue billions of dollars of high-risk loans. A 2007 e-mail from Ron Cathcart, the bank’s chief enterprise risk officer, implied that the delay was strategic: new requirements for income verification would cut the volume of new adjustable-rate mortgages by a third. “When WaMu failed in 2008, it was not a case of hidden problems coming to light,” the report concludes. “The bank’s examiners were well aware of and had documented the bank’s high risk, poor quality loans and deficient lending practices.”

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Goldman Sachs Chief Could Face Criminal Prosecution For Role In Financial Crisis

April 14, 2011

WASHINGTON — Goldman Sachs executives deceived clients in order to profit off the brewing financial crisis and then misled Congress when asked to explain their actions, concluded a top lawmaker who led a two-year investigation into Wall Street’s role in the meltdown. Carl Levin, chair of the Senate Permanent Subcommittee on Investigations, will recommend that Goldman executives who testified before his panel, including chairman and chief executive Lloyd Blankfein, be referred to the Justice Department for possible criminal prosecution, the Michigan Democrat announced Wednesday. Members of the subcommittee will now deliberate Levin’s proposal. A Goldman spokesman said its executives were truthful in their testimony, adding that the firm disagreed with many of the panel’s conclusions. Two and a half years after a historic crisis that has yielded not a single criminal conviction of anyone who played a leading role in causing it, the prosecution of such a high-profile Wall Street executive may satisfy the public’s desire to see culprits brought to justice. Last year, the Securities and Exchange Commission settled a lawsuit it had brought against Goldman. But the firm was just one target of a sweeping, 639-page report by the Senate panel into the causes of the crisis. Hardly a fluke occurrence, the meltdown was the product of a deeply corrupt financial system, one fueled by profit-hungry banks that deceived their clients, and overseen by lax regulators who were complicit in the firms’ chronic abuse of the most fundamental rules of the game, the report concludes. The investigation found a “financial snake pit rife with greed, conflicts of interest, and wrongdoing,” Levin said. More than any other government report produced in the wake of the crisis, this account names names, blaming specific people and institutions: Goldman Sachs, Washington Mutual, Moody’s Investors Service, Standard & Poor’s, the Office of Thrift Supervision and others. It targets four types of institutions, all of which it says played key roles in causing the crisis: mortgage lenders that offered prospective homeowners booby-trapped loans; regulators that were paid by the institutions they were regulating and cooperated in widespread deception; rating agencies that gave seals of approval to products they knew to be especially risky, all in the pursuit of market share; and Wall Street banks that duped investors into buying securities that only the insiders knew were destined to go bad. “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight,” said the panel’s ranking member, Sen. Tom Coburn, an Oklahoma Republican. Eventually, as the falling housing market helped drag the broader economy into the most punishing recession since the 1930s, this parasitic apparatus began to crumble. At that point, the key players had already pocketed their profits and were poised to pocket more, while legions of investors and homeowners had been set up for ruin. The forces behind the economic collapse were multiple, with some causes likely originating decades before the crash. But this report exposes the people who, it says, most immediately caused the crisis — whose behavior, motivated by profit above seemingly anything else, trashed the financial system, and magnified the devastation from which the real economy has yet to recover. Wall Street banks magnified the crisis and its fallout. The Senate subcommittee singled out Goldman as a particularly representative case. Investigators pored over millions of pages of internal Goldman documents and correspondence. They found evidence of traders boasting about how they sold their clients “shitty” deals, and discovered documents that detailed how the storied investment bank — which has long maintained it didn’t make a firm-wide bet against American homeowners — reversed course over a three-month period in late 2006 through 2007, shedding bets that the value of subprime mortgage-linked investments would rise. Rather, the firm went “short,” the report exhaustively documents. In Wall Street parlance, shorting an investment means betting its value will fall. Levin said his investigators found 3,400 instances of Goldman officials using the phrase “net short” in the documents they reviewed. He intimated that Goldman likely used the phrase many more times in other documents not reviewed by his panel. As of December 2006, Goldman had $6 billion in bets that the value of its subprime assets would surge, according to the panel’s report. By February of the next year, its mortgage traders had $10 billion in bets that such securities would collapse. By June, the firm was net short on subprime borrowers to the tune of $13.9 billion, according to the report. As more borrowers fell behind on their payments and as the value of securities linked to their mortgages slid, Goldman stayed “net short.” Other banks suffered. But not this one. “Tells you what might be happening to people without the big short,” Goldman’s chief financial officer David Viniar wrote in a July 2007 email to the firm’s chief operating officer, Gary Cohn. Even when these documents came to light last year, Goldman maintained it never took the position that housing-linked securities would decline, particularly considering that it was selling its clients investments that were bullish on homeowners. Goldman, too, suffered losses from housing-related investments, the firm pointed out. But Levin’s investigators don’t dispute that Goldman took losses during the financial crisis. His team asserts that while Goldman salesmen were peddling investments linked to bonds backed by subprime mortgages, its traders were betting that those securities — and others like it — would fail, and that the two teams were in contact. The assertion raises a crucial question about whether the firm violated securities rules prohibiting double-dealing. Worse, Levin said, Goldman traders attempted to manipulate the market for derivatives linked to such investments, according to the report. Internal company documents show that in May 2007, Goldman traders tried to artificially drive down the price of certain bets it wanted to make — bets that borrowers would default on their home loans. The plan was for one group of Goldman traders to peddle such securities across Wall Street “at lower and lower prices, in order to drive down the market price [of the securities] to artificially low levels,” the report notes. Due to Goldman’s size and market power, that would have driven down prices across the Street, forcing holders of such securities to record losses. The firm wanted “to cause maximum pain,” Michael Swenson, a head mortgage trader at Goldman, wrote in a May 25, 2007 email documented in the report. By that point, many Wall Street players were betting on homeowners to default. The price of placing such bets was rising. Goldman wanted a cheaper way in. As part of the plan, another Goldman unit was to buy those positions at a lower price, enabling them not only to add to their growing bet that the American homeowner would eventually default, but to do so at a lower price. Goldman initiated this plan “despite the harm that might be caused to Goldman’s clients,” according to the report. Indeed, clients began to complain of a “sudden mark-down” of their positions. A Goldman representative who showed Swenson the complaints of one hedge fund client was met with a terse response: “We are ok with that,” Swenson wrote in another documented email. “They do not have much more gun powder.” In other words, Goldman didn’t have to worry about the client because the client didn’t have the resources — the “gun powder” — to compete with Goldman, according to the report. One of the traders Swenson oversaw, Deeb Salem, laid this all out in a self-evaluation of his performance in 2007 that he sent to Goldman’s senior management. “In May, while we were remain[ing] as negative as ever on the fundamentals in sub-prime, the market was trading VERY SHORT, and susceptible to a squeeze,” Salem wrote, emphasizing that traders across Wall Street were shorting the market. “We began to encourage this squeeze, with plans of getting very short again, after the short squeezed cause[d] capitulation of these shorts.” “This strategy seemed do-able and brilliant,” he wrote. Interviewed by investigators in October of last year, Salem denied that he had tried to squeeze the market. Investigators reading his self-evaluation put too much emphasis on “words,” according to the report. Goldman abandoned the plan the next month after a rival investment bank’s hedge funds collapsed. “While we disagree with many of the conclusions of the report, we take seriously the issues explored by the subcommittee,” Goldman said in a statement. A Goldman spokesman added that the firm recently overhauled its business standards to improve transparency and disclosure and to strengthen its client relationships. Levin, who briefly described the strategy during a Senate hearing last December, said Wednesday that it was the type of “disgraceful” behavior emblematic of Goldman’s attitude at the time: Goldman first, clients last. Deutsche Bank, Germany’s largest lender and one of the biggest in the world, also came under fire for its crisis-era activities. The panel caught one of its former traders, Greg Lippmann, referring to such securities over email as “crap” and “pigs,” according to the report. Lippmann was made semi-famous by author Michael Lewis for his prescient call to short subprime securities. His unit sold some of the very securities he criticized. The banker who oversaw Lippman’s unit, Michael Lamont, told a colleague at another firm how Deutsche was rushing to sell these financial instruments “before the market falls off a cliff,” according to a February 2007 email Lamont sent. Meanwhile, buyers of the securities were never told. At one point, Lippman described the creation and selling of such instruments as a “Ponzi scheme.” He also said he would “try to dupe someone” into buying a particularly risky mortgage-linked security he himself was being asked to purchase, according to the report. He later backed off some of those comments when interviewed by Senate investigators. Levin said the German bank engaged in “disturbing activities.” During this time, the now head of enforcement at the SEC, Robert Khuzami , served as a top lawyer at Deutsche , overseeing litigation and regulatory investigations. The panel said it didn’t find anything incriminating that would implicate Khuzami in the matters under investigation. Khuzami is now in charge of pursuing financial wrongdoers. He has pledged to recuse himself from investigations involving the German lender. Goldman, for its part, sold a collection of questionable securities. Levin’s investigators uncovered four securities — complex financial instruments with names like Hudson and Timberwolf — that Goldman recommended to customers without fully disclosing key information, or saying whether the firm was betting against them. For example, in the Hudson deal, Goldman told investors its interests were “aligned” with theirs when in reality the firm held “100 percent of the short side” of that security, according to the report. Goldman was betting on Hudson to fail. Also, Goldman said the assets in Hudson were “sourced from the Street.” But investigators said Goldman selected the assets and priced them itself. Wednesday’s disclosures are similar to a case from last year, in which Goldman Sachs allegedly helped set up a mortgage-linked investment for a favored client, designing it to fail, yet selling it anyway to its other clients, reaping the favored client nearly $1 billion. The deal, named Abacus, was also targeted in the Senate report. Goldman settled the accusations with the SEC last year for $550 million. “Goldman was sticking it to their own clients,” Levin told reporters. “Goldman gained at the expense of their clients, and used abusive practices to do it.” Goldman, though, has rejected such characterizations. “Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market,” Goldman chief Blankfein said in testimony before Levin’s panel last year. “The fact is, we were not consistently or significantly net-short the market in residential mortgage-related products in 2007 and 2008.” “We didn’t have a massive short against the housing market, and we certainly did not bet against our clients,” he added. Other Goldman executives made similar claims. “That is simply not true,” Levin said Wednesday. “They clearly misled their clients and they misled the Congress,” he added, announcing that he will recommend that his panel refer all of the Goldman executives who testified before the committee for possible criminal prosecution by the Justice Department and for sanctions by the SEC for violations of securities laws. Goldman disputed Levin’s characterizations. “The testimony we gave was truthful and accurate and this is confirmed by the subcommittee’s own report,” the firm said. “The report references testimony from Goldman Sachs witnesses who repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point.” The investigative panel must deliberate Levin’s recommendations before making any referrals to prosecutors or regulators. Coburn, the Republican, would have to agree with Levin in order for the referrals to be made. Asked about the general lack of prosecutions of high-powered Wall Street executives, Levin replied: “There is still time.” “Hope springs eternal,” he added with a smile.

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Senate Panel Slams Goldman Sachs

April 14, 2011

April 14, 2011 12:38:56 AM By Kevin Drawbaugh WASHINGTON (Reuters) – In the most damning official U.S. report yet produced on Wall Street’s role in the financial crisis, a Senate panel accused powerhouse Goldman Sachs of misleading clients and manipulating markets, while also condemning greed, weak regulation and conflicts of interest throughout the financial system. Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, one of Capitol Hill’s most feared panels, has a history with Goldman Sachs. He clashed publicly with its Chief Executive Lloyd Blankfein a year ago at a hearing on the crisis. The Democratic lawmaker again tore into Goldman at a press briefing on his panel’s 639-page report, which is based on a review of tens of millions of documents over two years. Levin accused Goldman of profiting at clients’ expense as the mortgage market crashed in 2007. “In my judgment, Goldman clearly misled their clients and they misled Congress,” he said, reading glasses perched as ever on the tip of his nose. A Goldman Sachs spokesman said, “While we disagree with many of the conclusions of the report, we take seriously the issues explored by the subcommittee.” The panel’s report is harder hitting than one issued in January by the government-appointed Financial Crisis Inquiry Commission, which “didn’t report anything of significance,” Republican Senator Tom Coburn said at the briefing. More than two years since the crisis peaked, denunciations of Wall Street misconduct are less often heard on Capitol Hill, with lawmakers focused on fiscal issues. But Coburn joined Levin at Wednesday’s bipartisan briefing, firing his own sharp attacks on the financial industry. “Blame for this mess lies everywhere — from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight,” said Coburn, the subcommittee’s top Republican. “It shows without a doubt the lack of ethics in some of our financial institutions who embraced known conflicts of interest to accomplish wealth for themselves, not caring about the outcome for their customers,” he said. The Levin-Coburn report criticized not only Goldman, but Deutsche Bank, the former Washington Mutual Bank, the U.S. Office of Thrift Supervision and credit rating agencies Moody’s and Standard & Poor’s. “We will be referring this matter to the Justice Department and to the SEC,” Levin said at the briefing, though he did not elaborate. A spokesman later said, “The subcommittee does not intend to reveal the specifics of any referral.” The report offered 19 recommendations for reform going beyond changes already enacted after the crisis in 2010′s Dodd-Frank Wall Street and banking regulation overhaul. Case studies from the go-go years of the real estate bubble formed the bulk of the report, which said a runaway mortgage securitization machine churned out abusive loans, toxic securities, and big fees for lenders and Wall Street. It cited internal emails by Wall Street executives that described mortgage-backed securities underlying many collateralized debt obligations, or CDOs, as “crap” and “pigs.” It said Washington Mutual — which became the largest failed bank in U.S. history in 2008 — embraced a high-risk home loan strategy in 2005 while its own top executives were warning of a bubble that “will come back to haunt us.” The U.S. Office of Thrift Supervision — which will be shut down and merged into another agency under 2010′s Dodd-Frank regulatory overhaul — logged 500 serious deficiencies at Washington Mutual from 2003-2008, but no crackdown followed, the report said. Mass downgrades of mortgage-related investments in July 2007 by Moody’s and Standard & Poor’s constituted “the most immediate cause of the financial crisis,” it said. Investment banks, it said, charged $1 million to $8 million in fees to construct, underwrite and sell a mortgage-backed security in the bubble, and $5 million to $10 million per CDO. As for Goldman, the subcommittee said, the firm “used net short positions to benefit from the downturn in the mortgage market.” It said Goldman designed, marketed, and sold CDOs in ways that created conflicts of interest with clients, while also at times providing the bank with profits “from the same products that caused substantial losses for its clients.” (Additional reporting by Lauren LaCapra and Kim Dixon; Editing Steve Orlofsky) Copyright 2011 Thomson Reuters. Click for Restrictions .

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UK Labour Report Comes in Mixed; Pound Unmoved

April 13, 2011

UK Labour Report Comes in Mixed; Pound Unmoved

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EUR/USD: Trading the Euro-Zone Consumer Price Report

April 13, 2011

EUR/USD: Trading the Euro-Zone Consumer Price Report

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BACKDOOR IPOs: SEC May Make It Easier For Startups To Raise Cash

April 8, 2011

U.S. securities regulators may ease constraints on share issues by private companies, making it easier for start-ups to raise money, the Wall Street Journal reported. The steps under consideration would help privately held companies like Facebook Inc, Twitter Inc and Zynga Inc to raise more money without going through increased reporting and other requirements of becoming a public company, the report said. Currently, companies can issue shares privately without incurring onerous reporting obligations if they have fewer than 500 shareholders. The U.S. Securities and Exchange Commission (SEC) is considering raising that limit, though it is unclear by how much, the Journal said. The move could potentially delay or derail initial public offerings by technology companies that want to grow but would rather avoid having to disclose vast amounts of information, the report said citing an SEC letter to a lawmaker. It could also shut out many ordinary investors from one of the fastest-growing market sectors, since shares in private companies are generally available only to investors whose individual net worth is at least $1 million. The SEC could not be reached for comment outside of business hours. (Reporting by Sweta Singh in Bangalore; Editing by Gopakumar Warrier) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Beach Energy Limited (ASX:BPT) Monthly Drilling Report Ended 6 April 2011

April 6, 2011

Beach Energy Limited (ASX:BPT) Monthly Drilling Report Ended 6 April 2011

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AUD/USD: Trading the Australia Employment Report

April 5, 2011

AUD/USD: Trading the Australia Employment Report

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AUD/USD: Trading the Australia Employment Report

April 5, 2011

AUD/USD: Trading the Australia Employment Report

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Avalon Rare Metals (TSE:AVL) Provides Progress Report on Metallurgical Testwork, Nechalacho Rare Earth Elements Deposit, Thor Lake, Northwest Territories, Canada

April 5, 2011

Avalon Rare Metals (TSE:AVL) Provides Progress Report on Metallurgical Testwork, Nechalacho Rare Earth Elements Deposit, Thor Lake, Northwest Territories, Canada

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U.S.’s Ten Most Endangered Industries

April 2, 2011

The recession has caused the failure of some formidable companies, Lehman Brothers and Circuit City among them. Not only individual businesses have suffered, however. The economic woes of the last decade have preyed upon entire industries. In a new report entitled “Dying Industries,” by Toon Von Beeck, research firm IBISWorld identifies 10 U.S. industries that have experienced severe, possibly irreversible drop-offs over the past decade, today remaining stuck in the decline phase of their business cycle. All mentioned industries — having already experienced significant decreases in revenue over the last decade — can be expected to experience further declines through 2016. The reasons for the suffering vary by industry, but IBISWorld attributes a significant amount of industry strife to three primary factors: new technology, foreign competition and industry stagnation. With the country still reeling from a housing crisis , manufactured home dealers may be in the most trouble, the report finds. Over 50 percent of manufactured home dealers closed their doors over the past decade, and revenue numbers for those still open are terrible: down 73.7 percent with a further 62 percent decline expected by 2016. And while the decline of some high-profile industries, like the newspaper and record businesses, have been well-documented for years, who knew that rental formal wear could soon be passé ? The apparel industry has suffered tremendously from foreign competition, with revenues down 77.1 percent since 2000. Photofinishers have largely been supplanted by digital camera as well. But maybe some can take solace in the fact that there likely won’t be a sequel forthcoming to 2002′s One Hour Photo . The slidshow below uses data compiled in the report “10 Dying Industries” by IBISWorld . Ranking is based on percentage decrease in revenue from 2000 to 2010:

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Layoffs Plunge — But Not For Government Workers

March 30, 2011

NEW YORK: The number of planned layoffs at U.S. firms fell in March, despite continued downsizing in the public sector, a report said on Wednesday. Employers announced 41,528 planned job cuts this month, down 18 percent from the 50,702 cuts announced in February, according to the report from consultants Challenger, Gray & Christmas, Inc. The March figure was down 39 percent from a year ago, when 67,611 job cuts were announced, the report said. Overall, 130,749 job cuts were announced in the first three months of the year, marking the lowest rate of downsizing since 1995, when employers announced 97,716 first-quarter job cuts, Challenger, Gray said. Announced first-quarter job cuts for 2011 were also down 28 percent compared with the same period of 2010, when there were 181,183 planned cuts, the report said. Government has led job reduction this year, with 19,099 planned cuts in March — the highest in 12 months, the report said. There were 41,929 government job cuts announced in the first three months of 2011 — a 33 percent drop from the 62,700 government layoffs announced in the first three months of last year. “Despite the decline from last year, it is difficult to be optimistic about the outlook for government workers,” Rick Cobb, executive vice president of Challenger, Gray & Christmas, said in a statement. “Most cities and states have only just begun to address their massive budget deficits and we have yet to see how budget cutbacks are going to impact workers at the federal level.” Downsizing activity in other sectors appears to be stabilizing, he said. “The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs,” Cobb said. Downsizing has slowed in the pharmaceutical, auto and telecommunications sectors, compared with a year ago, he said. The downsizing figures come ahead of the much-anticipated U.S. jobs report, which is due at 8:30 a.m. EDT (1230 GMT) on Friday. The U.S. economy is expected to have added 200,000 private jobs in March, and slightly fewer jobs overall for non-farm payrolls, according to a Reuters poll. For more, see (Reporting by Edith Honan; Editing by Dan Grebler) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Video: Swiss Luxury Watchmakers Under Strain From Rising Demand

March 30, 2011

March 30 (Bloomberg) — Bloomberg’s Olivia Sterns reports from Basel, Switzerland, on the impact of rising demand for luxury watches on Swiss manufacturers. Patek Philippe SA Chairman Thierry Stern speaks in this report.

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Video: Egypt’s Radwan Expects Stocks to Stabilize This Week

March 28, 2011

March 28 (Bloomberg) — Egyptian Finance Minister Samir Radwan spoke with Bloomberg’s Francine Lacqua on March 26 about the seven-week halt in trading on the country’s stock exchange. Linzie Janis introduces this report on Bloomberg Television’s “Countdown.”

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Japan Crisis Highlights U.S. Nuclear Safety Issues

March 18, 2011

The nuclear crisis in Japan has prompted a re-examination of the safety net for nuclear power in the United States, with former regulators and safety advocates warning that gaps in the nation’s regulatory armor could leave Americans similarly vulnerable to disaster. The Nuclear Regulatory Commission, the federal oversight body tasked with licensing and inspecting civilian nuclear facilities, too frequently relies on reports from the industry itself in monitoring for trouble, and is too lenient in meting out sanctions when it encounters violations, these critics say. Though the commission posts inspectors at every plant, several independent and government reports note that these on-site observers document only a fraction of the events they observe on a daily basis. “This co-dependent relationship between the industry and the NRC is stronger than the SEC and their relationship with Wall Street,” said Robert Alvarez, a former advisor in the Department of Energy, and now a senior scholar on nuclear policy at the Institute for Policy Studies in Washington. The SEC (Securities and Exchange Commission) is oft-blamed for failing to adequately police the financial system in the years before the recent banking crisis. A report released Thursday by the Union of Concerned Scientists, an environmental safety group, documents a series of inconsistent approaches used by the Nuclear Regulatory Commission when encountering major problems at plants over the last year, making enforcement appear haphazard. In one case, at the Indian Point Nuclear Power Plant in New York, NRC inspectors allowed a leaking water containment system to persist for more than 15 years despite documentation of the problem, according to the report. A spokesman for Entergy, the utility that runs Indian Point, said the leaking is not “ideal,” but that the water stays on site and does not pose a risk to the environment. At the Calvert Cliffs plant in Maryland, a leaking roof that workers had known about for eight years caused an electrical short in 2010, forcing a shutdown of two reactors. A spokeswoman for the NRC said that officials at the oversight agency were aware of the report, but had not been able to review it in depth because of attention to the events in Japan. “The NRC remains confident that our Reactor Oversight Program, which includes both on-site and region-based inspectors, is effectively monitoring the safety of U.S. nuclear power plants,” the spokeswoman wrote in an e-mailed statement. The report from the Union of Concerned Scientists asserts that the NRC is only able to audit about 5 percent of activities at nuclear plants across the country in any given year, and that regulators are often too focused on the minutiae of individual violations instead of addressing systemic problems at a plant that may have led to deficiencies. “The NRC must draw larger implications from narrow findings for the simple reason that it audits only about 5 percent of activities at every nuclear plant each year,” wrote David Lochbaum, a nuclear engineer who authored the report for the Union of Concerned Scientists. “Each NRC finding therefore has two important components: identifying a broken device or impaired procedure, and revealing deficient testing and inspection regimes that prevented workers from fixing a problem before the NRC found it.” The report looked at 14 “near-misses” over the past year – events that required a special investigations team from the NRC to do a detailed inspection after a problem occurred. Many of the issues involved electrical shorts or deficient equipment at various plants that led to fires or unplanned shutdowns of the reactors. One of the more egregious examples cited involved the HB Robinson plant in South Carolina, operated by Progress Energy, which had to shut down reactors twice in six months due to mechanical failures and electrical shorts. In the first case, an electrical cable that was not up to standards and had been installed in 1986 caused the power shortage leading to the shutdown. Nonetheless, the majority of the violations were classified as “green” – the lowest level of sanction – which typically do not result in any monetary fine and require only formal written responses. At the Brunswick Nuclear Power Plant in North Carolina, also operated by Progress Energy, the NRC’s report from the time documented confusion and delays in responses among the plant workers after a gas was inadvertently released at the plant. The release should have led workers to activate nearby emergency response shelters and issue warnings to local, state and federal government officials, but the personnel did not know how to activate such alarms. Eventually plant managers had to step in, and the alarms were only triggered after the federally mandated deadline. Despite the major failure in emergency response, the company was cited with only one potential monetary violation. A spokesman for Progress Energy said the company has since installed more modern notification systems and increased the number of drills to twice-a-year, up from once every two years. “We have taken specific actions to address each of the events last year that led to special inspections,” the spokesman said in a written statement. At the Honeywell Specialty Materials plant in Metropolis, Ill., the sole U.S. refinery that processes uranium for use in nuclear power plants, a union lockout has left temporary workers in charge of the facility. The locked-out members of United Steelworkers have erected 42 crosses in front of the Honeywell plant in memory of coworkers who succumbed to cancer in the past decade. Twenty-seven smaller crosses represent colleagues who survived a brush with cancer. When the plant began hiring replacement employees after the June lockout, the NRC found that management coached candidates on how to properly answer questions on a required examination to work there. According to the NRC, the temporary workers were given answers prior to questioning and were helped during the course of the evaluation process if they became confused. “The labor force was locked out and the Honeywell facility was trying to qualify as many operators as they could to make sure the plant could operate,” NRC inspector Joe Calle said. “The process got overwhelmed, so to speak.” The NRC slapped Honeywell with a violation, and stopped the hiring process. Last fall, the NRC noted in a report that all the temporary workers had been retrained at the plant. The commission expressed assurances that the plant is being safely run. But the commission has also cited the Metropolis Honeywell plant for a series of other violations since the lockout began, including an uncontrolled furnace ignition resulting when “operating procedures were not followed,” according to a letter from the NRC to Rep. Jerry Costello (D-Ill.) The NRC says it has no definitive proof that temporary workers were at fault, and that the violations were similar to earlier problems that were present when Union workers were working on site. But the locked-out union members pin the troubles on an inexperienced work force that was never fully vetted by the required examinations. “A lot of people could open up a manual and go by that manual, but in an actual emergency it takes knowledge and experience to be able to handle it correctly and quickly,” said a spokesman for the Steelworkers Local 7-669, John Paul Smith.

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Video: Roach, El-Erian, Geithner Own Words on Japan Economy

March 17, 2011

March 17 (Bloomberg) — Stephen Roach, non-executive chairman of Morgan Stanley Asia Ltd., Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., and U.S. Treasury Secretary Timothy Geithner speak about the economic impact of the March 11 earthquake and tsunami in Japan on the country and the rest of the world. This report also includes comments from Joao Vale de Almeida, the European Union’s ambassador to the U.S., Citigroup Inc.’s Willem Buiter and Credit Suisse Asset Management’s Stefan Keitel. (Source: Bloomberg)

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Avinash Kaushik: A New Way For Small Businesses To Track Mobile Ads

March 11, 2011

Over the past two years, mobile search queries have increased by 500 percent. And yet we’re slow to catch up to this trend. It’s estimated that nearly 80 percent of all websites are not yet mobile-enabled. Building a mobile website requires a significant time and money investment, two resources not readily available to small business owners. So in the meantime, we recommend enabling the click to call extension on your AdWords ads. With this feature, you can display your business’ phone number and allow potential customers to call you directly from their mobile devices. I think this feature is especially fascinating because of the exciting measurement possibilities (and accountability) for these interactions via standard reports within AdWords and Analytics. To do so, all you have to do is ensure that you’ve enabled the call metrics option in your click to call ads. You can then analyze the performance of your mobile campaigns within your AdWords account. I’ve detailed several reports you can run to analyze your click to call campaigns below. Just by enabling call metrics, you can get useful information on the performance of your click-to-call ads. The best place to start is the campaigns tab of your AdWords account. By running a Click Type report , you can immediately access information to understand if the click-to-call ads are performing well for you. Click-to-call campaigns allow your customers to click on a link to visit your website, or click on the link to place a phone call to you. For both these actions, you’ll be able to see CPC (cost per click) and CTR (click-through rate) with no extra work at your end. Now you are ready to drill down even further and begin to optimize the campaign with a Keyword Report . This report allows you to see impressions, clicks/phone calls, and average CPC for your click-to-call campaigns. If certain keywords have good performance, you can experiment with variations/expansions of the well-performing terms. You can also look at how certain keywords perform on mobile versus other channel. Maybe some keywords perform better on mobile. Additionally you can also measure the mobile part of these mobile campaigns by enabling the Dimensions tab . Once you’ve done so, you’ll be able to track placed calls, missed calls, received calls, call duration, and average call duration. We are used to analyzing clicks and bounces and conversions. Now we get to analyze something we never could easily (phone call data), and we can use metrics like call duration and received calls etc. You’ll quickly be able to see which mobile campaigns result in more calls made, which have high call duration (leading to higher conversions), and which campaign deliver value. Using that as context, you can place preliminary judgment on how well or badly your mobile campaigns are doing. Mobile presents a unique opportunity to reach the right person with the right message at the right time (the ultimate holy grail in marketing through any channel). After all, what other ad medium is there in the world where you can literally “own the entire shelf” instantly. It is straightforward to experiment with mobile ads, and it is easy to bring accountability to your ads with the reports and metrics outlined above. It is the ultimate expression of data-driven marketing.

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Video: Eni’s Scaroni Warns of Risk of Failed State in Libya

March 11, 2011

March 11 (Bloomberg) — Eni SpA Chief Executive Officer Paolo Scaroni spoke yesterday with Bloomberg’s Olivia Sterns in London about the disruption to oil production in Libya. Rome-based Eni is the biggest energy producer in Africa. Mark Barton also speaks in this report on Bloomberg Television’s “On The Move.”

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USD/CAD: Trading the Canada Employment Report

March 10, 2011

USD/CAD: Trading the Canada Employment Report

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USD/CAD: Trading the Canada Employment Report

March 10, 2011

USD/CAD: Trading the Canada Employment Report

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AUD/USD: Trading the Australian Employment Report

March 8, 2011

AUD/USD: Trading the Australian Employment Report

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FOREX: Major Currencies Consolidate as Markets Brace for US Jobs Report

March 4, 2011

FOREX: Major Currencies Consolidate as Markets Brace for US Jobs Report

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Crude Oil Outlook Mixed, Gold and Silver May Fall on US Jobs Report

March 4, 2011

Crude Oil Outlook Mixed, Gold and Silver May Fall on US Jobs Report

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Beach Energy Limited (ASX:BPT) Monthly Drilling Report Ended 2 March 2011

March 2, 2011

Beach Energy Limited (ASX:BPT) Monthly Drilling Report Ended 2 March 2011

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State Budget Woes Unlikely To Be Fixed In Washington

February 28, 2011

Even as widening state budget deficits are becoming a potential stumbling block for economic recovery, Federal assistance seems unlikely. With Washington lawmakers focused on getting the Federal budget in order, the prospect of aid for struggling states has all but left the conversation, the Washington Post reports. States and local governments face a fiscal crisis, experts say, since the Great Recession withered their revenue. Finding it increasingly difficult to meet their basic obligations, governments across the nation have had to lay off thousands of workers and will likely have to lay off many more, just to keep their fiscal houses in order. With the unemployment rate around 9 percent, the economic recovery remains fragile. State budget cuts could make the situation worse, the Associated Press reported. As governments cut spending on education, jobs and safety net programs, average Americans, who are already contending with rising fuel prices , could see their economic situation worsen. The present state budget dilemma would likely be far more severe without the Federal dollars that are currently propping up state budgets. As part of the stimulus package, states received Federal money to compensate for weakened revenue streams. Currently, that assistance covers about a third of state budget shortfalls, according to a recent report from the Center on Budget and Policy Priorities . Federal assistance is quickly running dry. Next fiscal year, a total of about $6 billion will remain. State budget deficits will have grown to a combined $125 billion, according to the report. As spending outpaces revenue, states have few solutions. State tax collection is currently 12 percent below pre-recession levels, according to another report from the Center on Budget and Policy Priorities. As the appetite for tax hikes remains virtually non-existent, savings will come from the other side of the ledger. Already, states have cut 400,000 workers since 2008, the Washington Post notes. If they were to balance their budgets solely by laying off employees, another 850,000 workers would be dismissed. State pain impacts budget troubles on the municipal level. Newark, New Jersey, for instance, has seen aid from the state drop by 40 percent between 2008 and 2010. As a result, Newark has had to make some difficult cuts, including laying off 13 percent of its police force. New Jersey is expected to have a budget shortfall equal to about 37.4 percent of its current budget, according to the Center on Budget and Policy Priorities. Other states face bigger deficits: Illinois’ projected shortfall is 44.9 percent of its current budget. Nevada’s is 45.2 percent. Federal lawmakers deprived states of one potential source of revenue when they allowed the Build America Bonds program — which used Federal money to make it cheaper for states to borrow money — to expire in December.

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FX Headlines: EURUSD Remains Capped by 1.36 Ahead of U.S. Inflation Report

February 17, 2011

FX Headlines: EURUSD Remains Capped by 1.36 Ahead of U.S. Inflation Report

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Sterling Pounded Following Much Less Hawkish Inflation Report

February 16, 2011

Sterling Pounded Following Much Less Hawkish Inflation Report

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Bank of England Inflation Report

February 16, 2011

Bank of England Inflation Report

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Will a Better Than U.S. University of Michigan Confidence Report Fuel the Dollar’s Recent Rally?

February 10, 2011

Will a Better Than U.S. University of Michigan Confidence Report Fuel the Dollar’s Recent Rally?

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Canadian Dollar Vulnerable as Markets Digest US Jobs Report

February 5, 2011

Canadian Dollar Vulnerable as Markets Digest US Jobs Report

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Investors Turn to the U.S. Jobs Report, as Egypt Remains on the Back of their Heads

February 4, 2011

Investors Turn to the U.S. Jobs Report, as Egypt Remains on the Back of their Heads

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FOREX: Dollar Trend in the Balance as Markets Look to US Jobs Report

February 4, 2011

FOREX: Dollar Trend in the Balance as Markets Look to US Jobs Report

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U.S. Stocks Struggle for Direction at Opening after Mixed Jobs Report

February 4, 2011

U.S. Stocks Struggle for Direction at Opening after Mixed Jobs Report

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Investigators Accused Of ‘Malpractice’ In Report On For-Profit Colleges

February 2, 2011

A lobbying group representing the for-profit college industry filed a lawsuit today accusing federal government investigators of “professional malpractice” after issuing a report last summer that documented aggressive and misleading recruitment at several for-profit institutions. The undercover investigation by the Government Accountability Office, which involved four investigators posing as fictitious prospective students, found numerous examples of deceptive statements made by admissions officers and other employees at 15 for-profit colleges. The findings included overstated promises of potential salaries after graduation and high-pressure tactics that pressed applicants to enroll before receiving information about financial aid. The for-profit college industry in recent months has seized on revisions made to the report in November – changes that in many cases represent technical tweaks and elaborations, but that the industry says have “cast serious doubt on the credibility and objectivity of the GAO’s analysis.” The report garnered great attention when it was released last August, causing stock prices to plunge at many of the publicly-traded corporations that own for-profit schools. The for-profit college sector includes a diverse array of schools, ranging from specialized institutions such as ITT Technical Institute to mostly-online colleges such as the University of Phoenix and Kaplan University. Chuck Young, a spokesman for the GAO said the revisions in no way undermine the overall message of the report, and that the agency stands by its findings. According to Young, an independent GAO review team examined the report after it was published and “found no material flaws in the evidentiary support for the overall message.” The lawsuit — filed by the Coalition for Educational Success, represented by Washington lobbyist Lanny Davis — is the latest example of an intense campaign the for-profit colleges are waging against new federal regulations that could restrict their access to lucrative federal student aid dollars. Industry groups have filed a flurry of lawsuits against the Department of Education and conducted an advertising blitz accusing the government of trying to prevent students from going to college. Davis, a former special counsel to President Bill Clinton, began representing the for-profit college sector last year. He has faced criticism in recent years over his paid representation of controversial international figures, including Laurent Gbagbo, the Ivory Coast dictator who refused to step down after losing an election last year. Davis dropped Gbagbo as a client soon after taking him on in December, following complaints from human rights groups. The for-profit college industry faces increased scrutiny as evidence mounts of its students leaving with debts they cannot afford to pay, given the low-wage jobs they tend to attain after graduation. For-profit schools enroll about 12 percent of students nationwide, yet the sector takes in nearly 25 percent of all student aid dollars and is responsible for 43 percent of student loan defaults. A number of the alterations to the GAO report cited in the lawsuit involved wording changes and statements made by recruiters to the fictitious students that were omitted from the first report. For example, in the original report, the GAO noted how a representative at a two-year college in California told the undercover applicant getting a job is a “piece of cake” and graduates of the computer drafting program could make more than $120,000 per year. The revised report added that the employee also said in the current economic environment, the job applicant could expect a job earning $15 per hour, if lucky. However, during the same interview, the representative also encouraged the student to falsely fill out a federal student aid form in order to qualify for Pell Grants. There were no revisions to that conclusion. In another case, the original report said a recruiter at a publicly-traded four-year college in Pennsylvania told an applicant she “should” take out the maximum in federal student loans, even if she didn’t need all of the money for tuition. The revised version of the report changed the wording to “could.” The lawsuit names a series of other tweaks made to the report, suggesting that “pervasive and one-sided errors resulted from the intentional bias driving the investigation, in violation of the GAO’s protocols.” GAO has not discounted any of the conclusions of its report, and the vast majority of the findings required no tweaks or revisions. Some of the more misleading statements included a recruiter in Washington, D.C., telling an applicant a barber can earn between $150,000 and $250,000 per year, even though the Bureau of Labor Statistics pegs 90 percent of barbers’ salaries below $43,000 per year. Another employee at a college in Florida sat coaching an undercover applicant while she took a proficiency test. The same recruiter implied a student did not have to pay back student loans, even though federal student aid is a debt that often cannot be discharged even in bankruptcy. The lawsuit notes that the GAO’s “malpractice and negligence” with the report forced the group to take on “substantial costs and expenses” to set the record straight. The Coalition for Educational Success has been pursuing a separate lawsuit against the Department of Education over access to e-mail records discussing proposed industry regulations. Another group representing the industry, the Association for Private Sector Colleges and Universities, filed a lawsuit last month against the Department of Education seeking to undo consumer protection regulations approved last fall. The disputed rules included guidelines meant to prevent misleading and deceptive pitches by recruiters and measures prohibiting bonuses awarded to recruiters based on the number of student enrollments they secure.

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For-Profit Colleges Selling Students On High-Risk Loans, Consumer Group Says

February 1, 2011

Many of the large corporations that own for-profit colleges are increasingly issuing their own in-house private loans to students — even though some schools expect more than 50 percent of such loans to go into default, according to a report released this week by the National Consumer Law Center. Through the eyes of those who run for-profit schools, the risky sideline lending business enables them to satisfy a federal law that requires at least 10 percent of a school’s revenue to come from sources other than federal financial aid. By complying with the 10-percent requirement, schools can then access the lucrative 90 percent of revenue that comes from the federal government. Federal student-aid dollars have been the lifeblood of the for-profit education sector, allowing the industry to more than triple the number of student enrollments over the past decade — far outpacing the growth of private and public traditional universities. That growth has come amid questionable outcomes for its students, who default on student loans at twice the rate of their counterparts at public universities. Several of the schools in the for-profit sector derive more than 85 percent of their revenues from federal student aid, putting them perilously close to the 90-percent threshold and placing schools at risk of losing access to the wellspring of federal aid. Executives at for-profit colleges are often quizzed about compliance with the rule during conference calls with investors, and schools take great pains to satisfy the 10-percent requirement. Private loans have traditionally offered a way for schools to beef up the 10 percent of revenue in the non-federal category, according to the report. But since the credit crisis began in 2007 and ’08, third-party lenders such as traditional banks and student lending giants like Sallie Mae have been largely unwilling to lend to for-profit school students, citing the high default rates and bad credit scores for the typically lower-income students who attend such institutions. So several schools have stepped in with their own loan programs, many of which lack the fixed-interest rates and more flexible repayment options that come with federal student loans, according to the report. “School executives could have viewed the pull-out of the third-party creditors as a warning sign that lending without regard to repayment caused significant harm to their students,” reads the report by the National Consumer Law Center, an advocacy group that works with low-income populations. “Instead, many proprietary school executives chose to create or expand institutional loan products … even though their students were already struggling with student loan debt.” Most federal student loans are capped at rates of 6.8 percent or lower. For a newly created private loan program at ITT Technical Institute, rates can range anywhere from 4.75 percent to 14.75 percent interest, depending on a student’s credit score. Interest rates can adjust over time, and can range as high as 25 percent, according to ITT documents in the report. DeVry offers loans with 12 percent annual interest that require students to make payments while they are enrolled, according to the company’s loan documents. The remainder of the balance is due within a year after graduation, and cannot be deferred. Supporters of the for-profit sector don’t dispute that internal lending has increased since the credit crisis. But they argue that such loans are necessary to fill in the financial gap for students who cannot afford the cost of school on their own. “We believe that students should have an option to go to school,” said Harris Miller, president and chief executive of the Association of Private Sector Colleges and Universities, a lobbying group for the industry. “We’re willing to take a chance on students. Unfortunately, many private lenders are not willing to do that today, unless you’re already upper-middle-class, which is not where most of our students are.” The so-called “90/10 rule” has been a flashpoint in the debate on the for-profit education sector. Critics of the industry argue that the regulation creates incentives for schools to game the system by increasing tuition to a point where students will have to come up with out-of-pocket expenses to satisfy the 10-percent category. The Consumer Law Center report asserts that schools are satisfying the non-federal income by increasing such institutional loans, even though some institutions expect more than 50 percent of the loans to eventually default. “The schools seem to view these loans more as ‘loss leaders’ to keep the federal dollars flowing,” the report states. “However, the view from the student perspective is much different. Students do not care if the high default rates help the companies maintain high tuitions and present a more attractive front to investors. Each charge-off represents an individual who cannot repay a debt and who may be facing aggressive collection tactics.” Scrutiny of the for-profit education sector has increased in recent years, as evidence mounts that many institutions are leaving students with debts they cannot afford to pay, given the low-wage jobs they tend to attain after graduation. For-profit schools enroll about 12 percent of students nationwide, yet the sector takes in nearly 25 percent of all student aid dollars and is responsible for 43 percent of student loan defaults. Average tuition at for-profit schools is nearly twice that of the in-state tuition at four-year public colleges, and more than five times the average tuition at community colleges, according to a Senate report released last year. For-profit schools have argued that the higher proportion of student loan defaults is an outgrowth of the students they tend to attract: a lower-income population that, according to the industry, is often overlooked by traditional nonprofit colleges. Critics point to the extraordinary growth of the industry, largely at the expense of taxpayers, despite the questionable outcomes and high debt loads for students. Average annual profits for the for-profit sector grew 81 percent between 2005 and 2009, according to a report last year by the Senate Health, Education, Labor and Pensions Committee. Schools in the for-profit sector run the gamut from specialized course offerings such as Le Cordon Bleu College of Culinary Arts, run by the publicly traded Career Education Corp., to the mostly online University of Phoenix, owned by the Apollo Group. Deanne Loonin, the staff attorney at the National Consumer Law Center who wrote the report, noted that much of the information on private loans to students granted by colleges was difficult to obtain. Most of the data was limited to what was disclosed in quarterly reports filed with the Securities and Exchange Commission and in earnings calls with investors. The report mentioned Corinthian Colleges Inc., which runs Everest College, which has more than 100 campuses across the U.S. and Canada. In 2007, the company took in 13 percent of its revenues from private loans – mostly from Sallie Mae, one of the nation’s largest student lenders. But Sallie Mae shut down lending to students at Corinthian and many other for-profit schools in 2008, because most of the potential borrowers did not represent good bets. So the school has ramped up internal student lending ever since, even though executives at the company in 2009 told investors on an earnings conference call that they expected default rates of more than 50 percent on such loans. Despite the anticipated high default rates, schools are still able to count some revenues from internal loans toward the 10 percent category to comply with federal rules. Congress passed a temporary measure in 2008 that allowed schools to count a portion of such loans as non-federal revenues through July 2012. Corinthian executives have also mentioned the possibility of increasing tuition to comply with the 90/10 rule. The idea is that increasing tuition would create a larger gap between the total cost of the program and what students are eligible for from federal financial aid programs — thus driving students toward the college’s in-house loans. In a November conference call, former chief executive Peter Waller said the company was “calmly evaluating whether to institute a substantial price increase in the third quarter of fiscal 2011.” He noted that “we do not believe such a price increase is in the best interest of our students,” according to a transcript of the call. Waller resigned later in November as chief executive. A spokesman for Corinthian, Kent Jenkins, said the loans offered by the company have the same interest rates as federal student loans – a maximum of 6.8 percent interest – and are intended to allow low-income students with very few other borrowing options to attend school. He called the report from the National Consumer Law Center “an advocacy document” and noted that the group has supported tighter regulations on for-profit colleges. Jenkins also noted that the 90/10 rule created a “catch-22″ for for-profit schools, discouraging schools from lowering tuition in order to comply with the 10 percent requirement. “We can’t lower tuitions because we would simply be in further violation of the requirement,” Jenkins said. “We’re in a position where our program may be about the cost of a year’s worth of financial aid for some students. So in fact, the amount of student loans may be 100 percent of the cost of the program.” A spokesman for DeVry, which was also mentioned in the report, said the company’s loan programs are a “valuable service” for students, and that less than a third of DeVry’s students carried a balance after the first year. Miller, who heads the lobbying group for the for-profit sector, said he agreed that the 90-percent regulation often created “perverse incentives” for schools to raise tuition in order comply with the rule. “It’s creating a disincentive to control costs,” Miller said. “You’re incentivizing a school to raise tuition, not because they actually need to raise tuition but because they need to create a gap between the maximum student aid a student is eligible for, and the tuition.”

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Largest Nevada Casinos Lose $3.4B During Fiscal 2010

January 31, 2011

LAS VEGAS — Nevada’s largest casinos lost $3.4 billion during the fiscal year that ended June 30, cutting costs by nearly $4.5 billion to help narrow losses from an even worse stretch in late 2008 and early 2009, state gambling regulators said Monday. During the year that ended June 30, 2009, the largest casinos in the Silver State lost nearly $6.8 billion. The Nevada Gaming Control Board said in its Gaming Abstract on Monday that the 256 casinos that grossed at least $1 million in gambling revenue combined for nearly $21 billion in total revenue, including money earned from hotel rooms, restaurants, bars and other sources. That was down more than 5 percent compared with just over $22 billion taken in by 260 large casinos in fiscal 2009, regulators said. The report said 76.2 percent of the total gambling revenue came from 68 casinos owned by publicly-traded companies. The casinos paid $777.6 million in taxes – 7.8 percent of their gambling revenue, the report said. Gambling revenue made up nearly $10 billion, 47.5 percent of casinos’ total revenue. Most of the cost cuts – nearly $4 billion – came from general and administrative expenses, which were 25.8 percent less in fiscal 2010 than in fiscal 2009. Casino, food and other expenses were also down, while room and bar expenses rose. The largest 148 casinos in Clark County, Nevada’s most populous county which includes Las Vegas, lost $3.36 billion and generated $18.2 billion in total revenue, the report said. On the Las Vegas Strip, casinos lost $2.57 billion on revenue of $13.3 billion. In Washoe County, which includes Reno, 31 casinos combined to lose $27.5 million on revenue of $1.5 billion. Only large casinos in Elko County, Laughlin – a Colorado River resort town 100 miles south of Las Vegas near the Arizona border – and other places not classified by region showed profits.

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FOREX TREND MONITOR: Dollar Outlook Clouded on US Jobs Report, Egypt Turmoil

January 31, 2011

FOREX TREND MONITOR: Dollar Outlook Clouded on US Jobs Report, Egypt Turmoil

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Lisa Madigan: Horrible Lessons of the Great Recession Remind Us How Much More Needs to Be Done

January 28, 2011

The Great Recession is far from over. Millions of Americans are without jobs or much hope of finding adequate employment anytime soon. Millions more have lost their homes and a new wave of foreclosures is set to sweep the country. The sad truth – this epic disaster didn’t have to happen. This was a devastating financial hurricane fueled by carelessness, incompetence and greed. The release of the Financial Crisis Inquiry Commission’s final report confirms what some of us have been shouting for the past several years: It did not have to happen, and it must not happen again. This financial crisis – described by Fed chairman Ben Bernanke as “the worst financial crisis in global history, including the Great Depression”- could have been avoided had Wall Street and federal regulators acted responsibly. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public,” reads the report. If we choose to ignore the lessons that should be learned from this crisis, then we choose future peril. Two years after this crisis began, millions of Americans are still suffering. People are wondering if today’s high unemployment and lower expectations are a new normal. Yes, we have the Dodd-Frank financial regulations and a foundling Consumer Financial Protection Bureau. But we also remain in crisis. Some of us anyway. I am incensed by the reaction of some to the FCIC’s report. Already those who created this unprecedented global crisis are eager to move on – and to do so brazenly without learning any lessons. Wall Street is smiling again as the stock market steadily climbs. It is easy for financial titans to whistle a happy tune as they collect their obscene bonuses once again, but those on Main Street remain mired in the aftermath of the storm. The narrative, according to those who caused this mess, is that despite the report’s conclusion, no one could really have foreseen or prevented the financial calamity. And anyway, this report is too late to make a difference. Time to move on. Dodd-Frank is already law. Happy days are here again. But they aren’t. The abuse continues. Just ask anyone trying to negotiate a loan modification to save their home from foreclosure. Much of the blame for the Great Recession lies with abuses in the housing market – namely the creation of risky and unsustainable home loans that were packaged and sold as quality investments around the globe. And then the same people who created and sold these loans, bet against them to make even more money because they knew what they really were – financial toxic waste. The Treasury’s Home Affordable Modification Program (HAMP) was created to mitigate some of the financial abuse and give homeowners a chance to renegotiate terms of their loans and save their homes – and our economy. That was a good goal for all of us – even if you can steel your heart against the human tragedy involved in people losing their homes, large tracts of vacant, foreclosed homes are a cancer on our economy that creates problems far beyond the front yard of the foreclosed house. But HAMP hasn’t worked for most people. The Congressional Oversight Panel says HAMP may prevent 700,000 foreclosures – not the 3 to 4 million promised and certainly a small fraction of the 8 to 13 million foreclosures predicted to occur by 2012. The banks and lenders who put people into risky and unsustainable mortgages in the first place have gotten caught filing fraudulent, fly-by-night foreclosures as carelessly as they originated the loans. The banks are in such a hurry to foreclose rather than to save homes that in many cases they could not even be bothered to follow basic rules of reviewing documents – instead thousands are fraudulently robo-signed out of their homes. So how can anyone say with a straight face that the status quo is A-OK, and that it’s time we move on? Because these foreclosures – while devastating to individual families and horrible for our overall economy – make money for a few at the top of the rotten process. On a daily basis, my office receives correspondence from homeowners desperately trying to renegotiate their loans and save their homes. The hoops these people are forced to jump through are maddening – especially when so many are shunted into foreclosure regardless of their best attempts to please the banks. From one homeowner who knows from firsthand experience: “Don’t let ANYONE tell you the banks ‘don’t want your house’ YES they do,” wrote one frustrated homeowner. “I can’t tell you how hard it is to see this happen and be helpless. To be told to ‘take my emotion out of it’ by attorneys. I’ve tried my hardest and the truth just didn’t work. This country will never rebound when people with good credit can’t get a loan and people with good experience can’t get jobs.” And, “We’re in an abyss,” wrote another consumer who contacted my office. “We just want to resume our mortgage payments!” The pain remains for far too many. The lessons from the financial meltdown certainly should not include: “It’s too late now to do anything” or “It’s time to move on.” Taxpayers invested over a trillion dollars in bailing out those who created this disaster. We should expect more from our investment than a cavalier attitude and a quick return to giant corporate bonuses. It is never too late to correct our mistakes. And if we do not, we risk repeating them. The FCIC report should serve as a wake up call. It details much of what caused this crisis, but reading the report doesn’t fix the problem. The fact is that despite a near total collapse of our economy, far too little has changed to prevent a future implosion. We are far from finished protecting our country’s or our individual financial futures.

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Video: ElBaradei, Annan, Obama’s Own Words on Egyptian Protests

January 28, 2011

Jan. 28 (Bloomberg) — President Barack Obama, former U.S. president Bill Clinton and Egyptian government opponent Mohamed ElBaradei talk about the clashes on the streets of Cairo demanding the end of President Hosni Mubarak’s regime. This report also includes comment from former United Nations Secretary General Kofi Annan, Organization of Economic Cooperation and Development Secretary General Angel Gurria, International Monetary Fund Middle East Adviser Masood Ahmed and Bahraini banker Khalid Abdulla-Janahi. This report contains some video provided by APTN.

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Video: Herrmann Says U.S. Economy Poised for Growth in 2011

January 28, 2011

Jan. 28 (Bloomberg) — John Herrmann, senior fixed-income strategist at State Street Global Markets, discusses the report on U.S. fourth-quarter gross domestic product and the outlook for the economy. The U.S. economy accelerated in the fourth quarter of 2010, driven by the biggest gain in consumer spending in more than four years and rising exports. Herrmann speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (This is an excerpt of the full interview. Source: Bloomberg)

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FOREX: Dollar Gains Ahead of US GDP Report, Yen Rebounds on Jobs Data

January 28, 2011

FOREX: Dollar Gains Ahead of US GDP Report, Yen Rebounds on Jobs Data

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FX Headlines: EURUSD Under Pressure Ahead of the U.S. GDP Report

January 28, 2011

FX Headlines: EURUSD Under Pressure Ahead of the U.S. GDP Report

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Crisis Panel Finds Wall Street Appeared To Violate Federal Law

January 28, 2011

Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages, a bipartisan panel created by Congress to investigate the root causes of the financial crisis concluded. Banks that sold home loan bonds often didn’t disclose key details that would have helped investors accurately judge the quality of the investments. For example, investors were rarely told whether the mortgages failed to meet the banks’ own standards. That failure raises “the question of whether the disclosures were materially misleading, in violation of the securities laws,” the panel said. The claim of allegedly widespread securities law violations is among the more explosive findings in a sweeping report released Thursday by the Congressionally-appointed Financial Crisis Inquiry Commission. Those details help explain why the panel opted to refer several financial industry figures to state or federal law enforcement agencies for potential prosecution, as The Huffington Post reported Monday . The report, the result of a year-long investigation, finds fault with nearly every every cog in the financial system: Wall Street investment banks, government regulators, the Federal Reserve, hedge funds and credit rating agencies. The crisis panel blamed Wall Street for taking excessive risks and creating exotic financial instruments that even bank chiefs didn’t understand. It criticized federal regulators for ignoring clear warning signs that the meteoric rise in home prices was unsustainable and the bubble would one day pop. Credit rating agencies were faulted for telling investors that mortgage-linked investments based on sketchy home loans deserved to be rated as highly as Treasuries. And government officials were taken to task for allowing bloated mortgage giants Fannie Mae and Freddie Mac to help inflate the bubble, then resisting calls to rein them in because it threatened political goals of maximizing the national homeownership rate. The worst financial crisis since the Great Depression was avoidable, the report concludes. Yet while much of the commission’s findings simply reiterate what many already know to be true — government officials watched and did nothing as Wall Street took ever bigger risks — the plight of investors possibly being duped into buying dubious securities has largely been ignored. The multi-trillion mortgage bond market was rife with poor data, an overall lack of information, and little oversight, the crisis commission found. Many of these instruments were sold by Wall Street giants like Morgan Stanley, Goldman Sachs, and Citigroup. Big investors like pension funds and German banks bought them without knowing all the risks. The commission’s report concludes that sellers of mortgage bonds didn’t tell buyers enough about the underlying mortgages they were purchasing. The crisis panel found that firms routinely failed to disclose basic facts that would have helped investors properly evaluate what they were buying. The finding appears to bolster claims by investors suing Wall Street firms for selling them now-toxic mortgage bonds. Giant lenders like JPMorgan Chase and Bank of America face billions of dollars in lawsuits and potential losses over such allegations. JPMorgan set aside nearly $6 billion last year to cover legal costs “predominantly for mortgage-related matters,” it said on January 14. Bank of America is facing almost $8 billion in claims to buy back soured mortgages from aggrieved investors, the firm said on January 21. In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation’s biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added. Last April, the commission heard from Richard Bowen, a whistleblower and former chief underwriter for Citigroup’s consumer-lending unit. Bowen told the panel that in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were “defective,” meaning they did not satisfy the bank’s own lending criteria. On November 3, 2007, Bowen sent an e-mail to top Citi officials, including Robert Rubin, a former Treasury Secretary. Bowen’s warnings appear to have been ignored. Thanks to their testimony — especially Johnson’s — the commission’s final report found that investors weren’t adequately told what they were actually buying. “Such disclosures were insufficient for investors to know what criteria the mortgage they were buying actually did meet,” the report states. Christopher Whalen, a bank analyst and managing director at Institutional Risk Analytics, said the crisis commission’s findings on behalf of investors will help them in their fight against securities issuers, but only slightly. “It’ll help the plaintiffs to have more evidence in the public domain,” Whalen said, in reference to the commission’s report. “But the real place where the rubber hits the road is when the investor alleges fraud. Basic, plain vanilla fraud.” “Whether disclosure was there or not doesn’t matter,” he added. The crisis panel, hobbled by staff turnover and partisan infighting throughout the year, produced the report after a year-long investigation in which it reviewed millions of pages of documents, interviewed more than 700 witnesses and held 19 days of public hearings across the country. The six Democratic commissioners voted for the report’s findings; the four Republicans voted against, producing two separate, dissenting reports. The Republicans largely looked at global forces, like savings from Asia flooding the U.S. financial system, and the role played by government housing goals. ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Gold Anomaly Limited (ASX:GOA) Release Technical Report For SAO Chico Project In Brazil

January 27, 2011

Gold Anomaly Limited (ASX:GOA) Release Technical Report For SAO Chico Project In Brazil

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USDJPY Enters the Spotlight As Traders Await the U.S. GDP Report

January 27, 2011

USDJPY Enters the Spotlight As Traders Await the U.S. GDP Report

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