FBI says 14 companies under investigation for possible fraud in connection with subprime loans

WASHINGTON (AP) The Federal Bureau of Investigation on Tuesday said it is investigating 14 companies for possible fraud or insider trading violations in connection with loans made to risky borrowers, and investments spun off of those loans.

Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, involves companies across the industry, from mortgage lenders to financial firms that bundle home loans into securities sold to investors.

The FBI is working in conjunction with the Securities and Exchange Commission, Neil Power, chief of the FBI's economic crimes unit in Washington, said during a briefing with reporters.

The development comes as authorities in New York and Connecticut investigate whether Wall Street banks hid crucial information about high-risk loans bundled into securities that were sold to investors.

Power said federal authorities are looking into the practices of so-called subprime lenders, as well as potential accounting fraud committed by financial firms that hold subprime loans on their books or securitize them and sell them to other investors.

Referring to certain bankrupt subprime lenders, Power said there are "some irregularities there that we're looking into."

Judge grants states' request to extend antitrust oversight of Microsoft to November 2009 r

WASHINGTON (AP) Federal oversight of Microsoft Corp.'s market power, which began in 2002 after a landmark antitrust settlement, has been extended by 18 months.

The court's ruling "should not be viewed as a sanction against Microsoft," U.S. District Court Judge Colleen Kollar-Kotelly said late Tuesday. She said her decision was based on delays by Microsoft in filing technical documents related to the licensing of its software.

Ten states, led by New York and California, urged the court last year to extend its oversight until 2012. The Bush administration did not join the states' request. The Justice Department said Microsoft had complied with the settlement and it should be allowed to expire.

Microsoft's shares fell 8 cents to $32.52 in after-hours trading, after dropping 12 cents to close at $32.60.

Citing bankruptcy filing, judge removes Duke lacrosse prosecutor from players' lawsuit

DURHAM, N.C. (AP) A federal judge has removed the disgraced Durham County prosecutor from a lawsuit filed by three Duke University lacrosse players falsely accused of rape.

Former District Attorney Mike Nifong filed for bankruptcy two weeks ago, citing more than $180 million in liabilities. Almost all of that amount is the estimated damages from pending litigation.

U.S. District Judge James Beaty left open the possibility that Nifong could again become a defendant in the suit.

Nifong won indictments against the three players after a stripper hired to perform at a March 2006 team party reported being raped, but the case unraveled in the face of the accuser's changing story and a lack of evidence.

The state prosecutors who eventually took over the case dropped all charges and declared the players innocent victims of Nifong's "tragic rush to accuse." He was later disbarred for his handling of the case and spent a night in jail for lying to a judge.

Attorneys for players Reade Seligmann, Collin Finnerty and Dave Evans later sued Nifong, the city of Durham, police investigators and others. The suit accuses them of conducting "one of the most chilling episodes of premeditated police, prosecutorial and scientific misconduct in modern American history."

Nifong's bankruptcy filing lists liabilities of $90 million $30 million for each of the cleared players as potential damages in their lawsuit. The paperwork also said Nifong could potentially face $90 million in liabilities in a second lawsuit $30 million each for three not-indicted players who allege emotional distress in their suit. His bankruptcy court petition also lists about $300,000 in other debts.

WASHINGTON (AP) The Federal Bureau of Investigation on Tuesday said it is investigating 14 companies for possible fraud or insider trading violations in connection with loans made to risky borrowers, and investments spun off of those loans.

Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, is ongoing and involves companies across the industry, from mortgage lenders to financial firms that bundle home loans into securities sold to investors.

The FBI is working in conjunction with the Securities and Exchange Commission, said Neil Power, chief of the FBI's economic crimes unit in Washington.

SAN FRANCISCO (AP) Yahoo Inc.'s financial funk deepened at the end of 2007, prompting the slumping Internet icon to draw up plans to lay off 1,000 workers.

The Sunnyvale-based company disclosed the upcoming 7 percent reduction in its 14,300-employee work force during a Tuesday conference call to review a 23 percent decline in its fourth-quarter profit.

Yahoo didn't specify which areas of its operations will be trimmed. Yahoo jettisoned 650 workers in the wake of the dot-com bust seven years ago. Management indicated further details will be released by mid-February.

WASHINGTON (AP) The House, seizing a rare moment of bipartisanship to respond to the economy's slump, overwhelmingly passed a $146 billion aid package Tuesday that would speed rebates of $600-$1,200 to most taxpayers.

The plan, approved 385-35 after little debate, would send at least some rebate to anyone with at least $3,000 in income, with more going to families with children and less going to wealthier taxpayers.

It faced a murky future in the Senate, though, where Democrats and some Republicans backed a larger package that adds billions of dollars for senior citizens and the unemployed, and shrinks the rebate to $500 for individuals and $1,000 for couples.

NEW YORK (AP) Wall Street advanced sharply Tuesday as the Federal Reserve opened a two-day meeting expected to bring another interest rate cut to revitalize the U.S. economy.

The Fed's rate decision is clearly the market's focus this week, and trading has been marked by investors' conjectures about policymakers' thoughts on the weak economy and crunched financial industry.

With an announcement not expected until Wednesday afternoon, the market in the meantime digested data on earnings, consumer spending and durable goods.

PARIS (AP) Jerome Kerviel, the trader at the center of a massive banking scandal in France, told investigators that his spiral of trades that ended in a loss of about $7 billion for Societe Generale began with a 2005 bet that markets would fall which proved true after the London bombings that July.

Perhaps more damaging for Societe Generale, Kerviel also claimed to investigators that his bosses at France's second-largest bank must have been aware of his massive risk-taking on markets but turned a blind eye as long as he was earning them money.

LOS ANGELES (AP) The $422 million loss Countrywide Financial Corp. reported Tuesday didn't appear to scare off Bank of America.

Bank of America Corp. Chief Executive Ken Lewis said the deal is still ongoing at an investor conference in New York.

Countrywide's fourth-quarter earnings fell far short of Wall Street estimates, with a loss more than double what analysts predicted. But investors didn't run away from the nation's mortgage lender; instead, they sent Countrywide shares up 36 cents, or 6.5 percent, to close at $6.31.

Stock in Bank of America which has offered $4.1 billion in stock for Countrywide rose 74 cents, or 1.8 percent, to close at $41.94 Tuesday.

NEW YORK (AP) Orders to factories for big-ticket manufactured goods jumped unexpectedly in December, good news amid signs that the U.S. economy may be tipping toward a recession.

Still, analysts said the 5.2 percent growth in orders while potentially boosting industrial output in coming months likely came from overseas demand and that domestic growth faced continuing threats from tight credit and mortgage markets that have forced consumers to retrench.

The Conference Board report Tuesday that consumer confidence fell sharply in January on worries over deteriorating business conditions and a weakening job market gave another sign of consumer angst.

MINNEAPOLIS (AP) Northwest and JetBlue lost less money in the fourth quarter than expected, even in the face of high fuel prices, and JetBlue shares jumped more than 20 percent on the possibility of a passenger-sharing deal with Lufthansa.

It would have been a break-even quarter for Northwest Airlines Corp. if not for a loss on its stake in Pinnacle Airlines.

Discounter JetBlue Airways Corp. reported its first full-year profit in three years, and its shares soared on the news that it is negotiating with Deutsche Lufthansa AG over a "commercial agreement," which could include booking passengers on one another's planes. The German airline recently paid $300 million for 19 percent of JetBlue, giving the Forest Hills, N.Y., carrier much-needed cash but so far no code-sharing arrangements.

ST. LOUIS (AP) The U.S. Department of Energy, frustrated by ballooning costs for an ambitious plan to build a virtually emissions-free power plant, told federal lawmakers Tuesday it plans to pull its support for the $1.8 billion project in Illinois, lawmakers said.

The Energy Department would not publicly divulge its intentions about the plant, dubbed FutureGen, or discuss what was said during the private meeting with lawmakers, saying only that it planned an announcement within days.

But some lawmakers who attended the briefing later insisted that any departure from building the coal-fired, 275-megawatt prototype power plant anywhere other than the central Illinois town of Mattoon would be unacceptable and grounds for a possibly nasty congressional fight.

WASHINGTON (AP) Individuals and businesses are likely to see their borrowing costs drop further as the Federal Reserve weighs another interest-rate reduction to bolster a sagging economy.

Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon to plot their next move on interest rates. The closed-door gathering comes amid growing fears the country is either on the brink of a recession or has already started slipping into one given the strains from a housing market collapse, a global credit crunch and turbulence on Wall Street. The country's last recession was in 2001.

By The Associated Press

The Dow Jones industrial average rose 96.41, or 0.78 percent, to 12,480.30. The blue chip index closed near its high of the day.

Broader indexes also rose. The Standard & Poor's 500 index rose 8.34, or 0.62 percent, to 1,362.30, and the Nasdaq composite advanced 8.15, or 0.35 percent, to 2,358.06.

Light, sweet crude for March delivery rose 65 cents to settle at $91.64 a barrel on the New York Mercantile Exchange after falling as low as $90.33 earlier.

February heating oil futures rose 1.53 cents to settle at $2.5418 a gallon on the Nymex while February gasoline futures rose 0.42 cent to settle at $2.3295 a gallon.

February natural gas futures fell 9.9 cents to settle at $7.996 per 1,000 cubic feet.

In London, March Brent crude rose 62 cents to settle at $92 a barrel on the ICE Futures exchange.