Tuesday, February 05, 2008

Dozens of U.S. banks will fail by 2010: analyst

NEW YORK (Reuters) - Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction, an analyst said.

The surge would follow a placid 3-1/2 year period in which just four banks collapsed, all in the last year, RBC Capital Markets analyst Gerard Cassidy said in a Friday interview.

Between 50 and 150 U.S. banks -- as many as one in 57 -- could fail by early 2010, mostly those with no more than a couple of billion dollars of assets, Cassidy said. That rate of failure would be the highest in at least 15 years, or since the winding down of the savings-and-loan debacle.

"The initial round of failures will come from smaller banks with limited access to capital and overexposure to commercial real estate," Cassidy said.

"Could banks with $75 billion or $100 billion of assets fail? That's hard to say, but it depends on the severity of the economic downturn and the real estate decline," he added.

Banks are under pressure as a slowing economy, the housing crunch, weak job growth and rising energy costs make it harder for individuals and businesses to pay their bills.

Compounding the problem has been the seizing up of capital markets that has led to more than $130 billion of write-downs worldwide, including at lenders such as Citigroup Inc , Bank of America Corp and Washington Mutual Inc .

On Wednesday, Standard & Poor's said financial industry losses linked to mortgages may reach more than $265 billion.

Analyst Tanya Azarchs expects the pain to spread to regional banks, and especially "some of the smaller players that have yet to feel the full extent" of the credit crunch.

Cassidy said: "The regulatory focus is now acutely on commercial real estate. The problems are centered around construction loans in residential housing. Home prices and sales are declining. This leaves builders unable to carry the debt they took on because they can't sell their homes."

RESERVES MAY GROW, MERGERS MAY NOT

There are 8,553 banking institutions insured by the Federal Deposit Insurance Corp. Of these, 7,285 are commercial banks, 1,257 are thrifts and 11 are U.S. branches of foreign banks.

Twenty-six banks have failed since the last U.S. recession began in March 2001, the FDIC said.

The latest came last week, when Douglass National Bank of Kansas City, Missouri collapsed. Liberty Bank & Trust Co of New Orleans took over its $53.8 million of deposits. FDIC-insured institutions have about $8.19 trillion of deposits overall.

Cassidy expects the bank failure rate to be the worst since at least 1993, when 50 banks collapsed. That followed more than 2,000 failures in the previous decade, according to FDIC data.

Still, that pales in comparison with the more than 9,000 bank failures from 1930-1933, during the Great Depression, Federal Reserve data show.

A top U.S. bank regulator, Comptroller of the Currency John Dugan, said on Thursday that his office was prepared to intervene if banks with large real estate exposure maintained unreasonably low reserves for bad loans.

A tough credit and regulatory environment may make it hard for struggling banks to find suitors, Cassidy said.

On Thursday, Midwest banks Integra Bank Corp and Peoples Community Bancorp Inc called off their merger.

Integra Chief Executive Mike Vea lamented that the housing crunch "fundamentally changed the attitudes of the stock market, industry experts and regulators toward mergers."

Cassidy said: "Sellers are not going to receive the premiums they think they deserve. Merger activity is going to slow until the down leg in the credit cycle is past."

(Editing by Gary Hill)© Reuters 2008

Video: Alex Jones Interviews Willie Nelson on 9/11

YouTube
February 5, 2008


FBI wants palm prints, eye scans, tattoo mapping

Kelli Arena and Carol Cratty
CNN
Tuesday February 5, 2008

The FBI is gearing up to create a massive computer database of people's physical characteristics, all part of an effort the bureau says to better identify criminals and terrorists.

But it's an issue that raises major privacy concerns -- what one civil liberties expert says should concern all Americans.

The bureau is expected to announce in coming days the awarding of a $1 billion, 10-year contract to help create the database that will compile an array of biometric information -- from palm prints to eye scans.

Kimberly Del Greco, the FBI's Biometric Services section chief, said adding to the database is "important to protect the borders to keep the terrorists out, protect our citizens, our neighbors, our children so they can have good jobs, and have a safe country to live in."

But it's unnerving to privacy experts.

"It's the beginning of the surveillance society where you can be tracked anywhere, any time and all your movements, and eventually all your activities will be tracked and noted and correlated," said Barry Steinhardt, director of the American Civil Liberties Union's Technology and Liberty Project.

The FBI already has 55 million sets of fingerprints on file. In coming years, the bureau wants to compare palm prints, scars and tattoos, iris eye patterns, and facial shapes. The idea is to combine various pieces of biometric information to positively identify a potential suspect.

A lot will depend on how quickly technology is perfected, according to Thomas Bush, the FBI official in charge of the Clarksburg, West Virginia, facility where the FBI houses its current fingerprint database. Watch what the FBI hopes to gain »

"Fingerprints will still be the big player," Bush, assistant director of the FBI's Criminal Justice Information Services Division, told CNN.

But he added, "Whatever the biometric that comes down the road, we need to be able to plug that in and play."

First up, he said, are palm prints. The FBI has already begun collecting images and hopes to soon use these as an additional means of making identifications. Countries that are already using such images find 20 percent of their positive matches come from latent palm prints left at crime scenes, the FBI's Bush said.

The FBI has also started collecting mug shots and pictures of scars and tattoos. These images are being stored for now as the technology is fine-tuned. All of the FBI's biometric data is stored on computers 30-feet underground in the Clarksburg facility.

In addition, the FBI could soon start comparing people's eyes -- specifically the iris, or the colored part of an eye -- as part of its new biometrics program called Next Generation Identification.

Nearby, at West Virginia University's Center for Identification Technology Research, researchers are already testing some of these technologies that will ultimately be used by the FBI.

"The best increase in accuracy will come from fusing different biometrics together," said Bojan Cukic, the co-director of the center.

But while law enforcement officials are excited about the possibilities of these new technologies, privacy advocates are upset the FBI will be collecting so much personal information.

Full article here.

White House Opposes Surveillance... Of Its Own Surveillance Policy

Techdirt
Tuesday February 5, 2008


Since it was formed in 2004, on the recommendation of the 9/11 Commission, The Privacy and Civil Liberties Oversight Board has been blasted by civil libertarians as a tool of the administration, more interested in whitewashing War on Terror�related privacy violations than serving as a genuine check on government intrusion. One of the board's five members even resigned in protest, citing among other things "the vast array of alphabet soup agencies and bureaucracies in the national security apparatus" that sought "to control and modify the Board's public utterances." So last year, Congress sought to give the board greater autonomy by moving it out from under the aegis of the White House and reconstituting itself as an independent boad within the executive branch. The response of the White House, Wired reports, has been to drag its feet in appointing a new board -- meaning there is no one on the board as of January 30th -- prompting bipartisan criticism from top members of the Senate's Homeland Security Committee.

The board's second annual report (pdf), released late last month, does not exactly inspire confidence in its assiduousness as a privacy watchdog -- even when staffed. After touting its excellent working relationship with the White House, it moves to a "nothing to see here" review of the post-9/11 use of the material witness statute (MWS) as a detention tool. Aside from one "terrible mistake," the report asserts the board "was not made aware of specific problems with the use of the MWS in the anti-terrorism context" and cites a claim by the Justice Department that "on only nine occasions since the attacks of September 11, 2001 has the MWS been used in terrorist-related investigations." That is hard to square with the findings of a joint report by Human Rights Watch and the American Civil Liberties Union, which found some 70 instances of 9/11-related detention, though the discrepancy may be explained by the frequent use of immigration violations as a pretext for detentions that were actually related to terror investigations. The board's analysis of the Protect America Act, passed last August, similarly reads like a compilation of White House talking points.

This should not be all that surprising given the composition of the old board, which consisted of such Republican stalwarts as President Bush's former solicitor general, Ted Olson. With debate over reforms to the Foreign Intelligence Surveillance Act raging in the Senate, the White House appears less than eager to have a less-friendly set of eyes reviewing its surveillance policies.

Lehman: Commission Purposely Set Up So that 9/11 Staff Had Conflict of Interest

George Washington's Blog
Tuesday February 5, 2008

We already knew that the 9/11 Commissioners had conflicts of interest. And we already knew that Philip Zelikow had huge conflicts of interest, which the new book The Commission explores.

But did you know that a 9/11 Commissioner recently said that all of the 9/11 Commission staff had a conflict of interest?

Specifically, 9/11 Commissioner and former Secretary of the Navy John Lehman just said on NBC Nightly news:
We purposely put together a staff that had � in a way - conflicts of interest" (3:48 into video)
He went on to say:
"All of the staff had, to a certain extent, some conflict of interest" (4:09 into video)

This is important because many people have assumed that -- even if Zelikow and the Commissioners had conflicts of interest -- the staff would at least do a thorough and unbiased job in investigating what happened on 9/11. We now know this is not true.

Indeed, Lehman strongly implies that the Commission was purposely set up so that every single person involved would have a conflict of interest which would prevent them from conducting an honest investigation.

Lehman himself is a textbook example of conflict of interest. In 1998, 9/11 Commission executive director Zelikow published an article in Foreign Affairs, the journal of the Council on Foreign Relations, entitled Catastrophic Terrorism: Imagining the Transformative Event. Some two years later, PNAC picked up the Zelikow language, saying that the campaign to convince the public to allow expanded use of U.S. military force around the world "is likely to be a long one, absent some catastrophic and catalyzing event -- like a new Pearl Harbor". Lehman was a member of PNAC, and a signatory to PNAC's plea for "a new Pearl Harbor". See this video and this essay.

When taken with
other facts undermining the Commission's credibility (and see this), Lehman's revelation should completely destroy the idea that there has been any real investigation into 9/11.

CIA shrugged off no-war reports

Press TV
Tuesday February 5, 2008

A key Iraqi nuclear scientist says he believed by telling the truth about Iraq's weapons, he was helping to stave off the invasion.

Saad Tawfiq, a key figure in Saddam Hussein's clandestine nuclear weapons program, said when he watched Colin Powell waving a vial of white powder and telling the UNSC on February 5, 2003, a story about Iraqi germ labs, he realized he had risked his life and those of his loved ones for nothing.

"When I saw Colin Powell I started crying. Immediately. I knew I had tried and lost," Tawfiq told AFP this week in the Jordanian capital Amman.

Tawfiq's sister got involved under pressure in one of the most successful attempts by the CIA to penetrate Saddam's Iraq, a program built up by agency veteran Charlie Allen to target Iraqi weapons technicians through their relatives.

"We don't have the resources to make anything anymore. We don't even have enough spare parts for our conventional military. We can't even shoot down an airplane. We don't have anything left. If the sanctions are ever lifted, then Saddam is certain to restart the programs. But there is nothing now," Tawfiq told his sister.

And yet, although all 30 recruited Iraqi weapons scientists said the same thing, that Iraq's programs to develop nuclear, chemical, and biological weapons had long been abandoned, the CIA ignored the results.

Then CIA national intelligence officer Paul R. Pillar said there were other indications that seemed to contradict what the individuals were saying.

But as Tawfiq laments five years later, "You don't have to destroy a country for that."

Three different versions of "suicide attack" in israel contradict each other

The Truth Will Set You Free
Tuesday February 5, 2008

Today, some poor Palestinian allegedly "blew himself up" in israel, "killing three israelis" and giving israel one more reason to bomb the shit out of Gaza.

Supposedly, he and his comrade, who was killed by israelis "before he could explode himself" crossed over from Gaza to Dimona - israel's 'Disney world for nukes'.

Only problem is - so far, I've seen three different versions of who's responsible for "the attack" and not one of them sounds credible.

    1. From ADN Kronos International:Police officials said a suicide bomber targeted a busy shopping centre in the town in the Negev desert and blew himself up on Monday morning.

      But they said there appeared to be two attackers, although only one managed to detonate his explosives belt.

      A second bomber did not detonate his explosives belt and was subsequently killed by a police officer.

      Palestinian sources claim the bombers Raji al-Kilani and Iman al-Haydan entered Israel from the Gaza Strip.

      [btw, Iman is a woman's name - though both are referred to as men]

      Several militant factions have claimed responsibility for the attack and according to a spokesman of the al-Qassam Brigades "The attack is a response to the massacres perpetrated by Israel in Gaza," reported Palestinian news agency Maan.

      The militant group Islamic Jihad praised the attack and called it a blow against "Israeli occupation".

      Hamas spokesman Ayman Taha said the attack was justified, and that "It shows the Palestinians can respond to the enemy and their crimes," reported Israeli daily Haaretz.

    2. From AP at 8:23am: Palestinian militants say two suicide bombers who entered a southern Israeli town today came in through Egypt after Gaza militants blew up Egypt's border wall with the territory last month.

      1 of the attackers killed an Israeli woman. The other attacker was shot dead before he could detonate his explosives.

      Israeli officials have feared the possibility of bombers from Gaza entering through Egypt since the border wall was breached.

      [what a coincidence, they're worst fear came true]

      Hundreds of thousands of Palestinians moved freely between Gaza and Egypt's Sinai desert. Egypt managed to reseal the border yesterday.

      The Al Aqsa Martyrs Brigade first claimed today's bombers came from the West Bank, but now says that statement was a diversionary tactic. They say they didn't know initially if the second bomber was still alive and wanted to confuse Israelis. Once they confirmed the second bomber was dead, they said he was from Gaza.

    3. From AP at 5:37am ET: "We heard a large explosion and people started to run. I saw pieces of flesh flying in the air," a witness identified only by her first name, Revital, told Army Radio.

      The Haaretz daily reported that the second attacker was shot dead before he could explode himself.

      Southern Israel has been on alert against militant attacks since the Gaza Strip's Islamic Hamas rulers breached the border with Egypt on Jan. 23. Egypt managed to reseal the border only on Sunday.

      The breach made Israel's Negev desert, where Dimona is located, more vulnerable to penetration by Palestinian militants who could enter through Egypt's Sinai desert. Dimona is about 40 miles northeast of the porous Egyptian border. Last week, Israel closed a number of popular hiking areas in the south for fear of militant attacks.

      There was no immediate claim of responsibility for Monday's attack.

      In Gaza, Hamas spokesman Ayman Taha said he did not know whether his group was involved but that the attack was justified. He also rejected suggestions that the bombing would hurt Hamas' chances of reopening the border with Egypt.

So, let me get this straight - at first, no one claimed responsibility for the attack, then three different groups clamored to claim rights to this 'glorious operation.'

One of the groups then initially claimed that the attackers were from the West Bank "as a diversionary tactic" but then retracted that and admitted that he was from Gaza, ONLY after they were sure that he was dead (so, he couldn't deny it).

Perfect sense. Not.

Clearly, this "operation" was planned and executed by israelis in an attempt to demonstrate that any breach in Gaza's border subjects them to deadly attacks from the "hordes of Arab suicide bombers" that the wall holds back.

Moreover, it gives israelis a cart blanche to kill as many Palestinians as they please in Gaza.

Finally, some accounts say one israeli was killed, others say three were killed. Which is it?

I'll bet the answer is closer to ZERO.

In fact, I challenge anyone to present a bona fide image from a bona fide UNBIASED news source of any of the so-called israelis that were killed today in the "suicide attack."

As usual, israelis are lying.

Indeed, another score for zionists.

It's a truly terrifying paradox. In the name of freedom, Britain is becoming a police state

TOM BOWER
UK Daily Mail
Tuesday February 5, 2008

Successfully bugging Islamic terrorists ranks among the key weapons to defeat those secretly campaigning to destroy Britain's liberal civilisation.

Ever since suicide bombers caused 52 deaths on the London Underground in 2005, we have reluctantly accepted further encroachments on our liberties as a necessary evil.

Last week's prosecutions in Birmingham against extremists plotting to behead a Muslim soldier, as part of a campaign to wreck Britain's racial harmony, were possible only because listening devices had been planted inside the terrorists' homes.

The intelligence officers who masterminded that delicate operation deserve high praise.

But accolades turn rapidly to admonition when the line between intrusion to defend our civilisation and intolerable denial of our liberties is crossed.

That is why the news that MI5, the domestic intelligence service, and Scotland Yard had apparently mounted an eavesdropping operation against Sadiq Khan, a Muslim MP and government whip, is so alarming.

In defending British society, our guardians' vigilance appears to threaten the destruction of the very values we seek to protect.

Regardless of the financial wrongdoing by a handful of greedy politicians, Britain's 646 MPs are the ultimate guardians of our liberties.

Within the House of Commons, MPs are empowered to fearlessly expose corruption and oppression. Only their elected authority, threatening to shame ministers and public servants, protects Britain from dictatorship.

Rightly, our MPs jealously guard the rights and privileges afforded to their electorate since the signing of the Magna Carta in 1215.

Hence, the suggestion that the State's police and intelligence services secretly investigated Sadiq Khan arouses justifiable fears that our increasingly authoritarian Government is adopting powers familiar to the Nazi and Stalinist tyrannies.

Yes, it is possible that Khan's visit to a suspected terrorist awaiting extradition to the U.S. might have provided pertinent information for the intelligence services.

Full article here.

Ahmadinejad tells West: Accept Israel’s ‘imminent collapse’

Haaretz
January 30, 2008

Iranian President Mahmoud Ahmadinejad called on the West Wednesday to acknowledge Israel’s “imminent collapse.”

Speaking to a crowd on a visit to the southern port of Bushehr, where Iran’s first light-water nuclear power plant is being built by Russia, Ahmadinejad further incited his listeners to “stop supporting the Zionists, as [their] regime reached its final stage.”
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“Accept that the life of Zionists will sooner or later come to an end,” the Iranian president said in a televised speech.

He added, “What we have right now is the last chapter [of Israeli atrocities] which the Palestinians and regional nations will confront and eventually turn in Palestine’s favor.”

Iran does not acknowledge Israel and Ahmadinejad has in the past sparked international outcry by referring to the systematic murder of six million Jews in World War II as a “myth” and calling for Israel to be “wiped off the map.”

Iran is currently also mediating in the crisis over the Gaza Strip, where Israel has imposed a blockade on border crossings into the coastal territory, barring the entry of supplies into the already impoverished area. Last week, Palestinian militants blew holes in the barrier separating the Gaza Strip from Egypt, prompting hundreds of thousands of Gazans to pour into Egypt in search of supplies.

Ahmadinejad also urged the Western powers to help build nuclear power plants in his country saying it will be too late if they do not decide to do so immediately.

“If you will not come, this nation will build nuclear plants based on its own resources and when you come some four years later it will reject your request and not then give you any opportunity,” he said.

“I am addressing leaders of two or three powers; do you remember I sent you message and told you to stop be stubborn? If you think that you can block the movement of Iranian nation, you are wrong,” the Iranian president continued.

Also on Wednesday Ahmad Fayyazbakhsh, the deputy head of Iran’s Atomic Energy Organization told reporters the first Iranian-made light-water 360 megawatt nuclear power plant will go operational in 2016 in the southwestern Iranian town of Darkhovin.

The official also said that the Bushehr plant would go on test operation in October, though its precision instruments have yet to be delivered.

The United Nations Security Council has been trying to pressure Iran to freeze uranium enrichment, but it has repeatedly refused, and officials from the International Atomic Energy Agency have privately said Tehran is expanding the program.

The Security Council is considering a new draft resolution that calls for additional sanctions against Iran, including bans on travel. Two sets of sanctions have already been imposed on Iran for refusing to halt enrichment.

The five veto-wielding members of the council - the U.S., Britain, France, China and Russia - along with Germany, agreed last week on the basic terms of the new resolution. Diplomats have said the full, 15-nation Security Council will likely approve it next month.

Iran insists its enrichment activities are intended only to produce fuel for nuclear reactors that would generate electricity, but the U.S. and others suspect Tehran’s real aim is to produce nuclear bombs.

A U.S. intelligence report released last month, however, concluded Tehran had stopped its nuclear weapons program in late 2003 and had not resumed it since.

Iranian officials have said they plan to generate 20,000 megawatts of electricity through nuclear energy in the next two decades.

10-city home price drop a record

Reuters
January 29, 2008

Home prices in 10 major metropolitan areas fell a record 8.4 percent in the year through November, suggesting the housing slump is worsening, according to a Standard & Poor index released on Tuesday.

The decline in the S&P/Case-Shiller Home Price Index topped the 6.7 percent annual drop for October and was deeper than predicted by economists at Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. The consensus was for a 7.1 percent fall, Goldman economists said.

Home prices across big cities have now declined for 11 consecutive months and show little sign of bottoming, said economists, including Robert Shiller, a founder of the index and chief economist at MacroMarkets LLC. The decline in the index accelerated to 2.2 percent in November over October, from 1.4 percent in the previous month, S&P said.

The index “confirms our outlook that the housing shock is by no means over,” said Michelle Meyer, an economist at Lehman Brothers in New York. “Home prices are falling in response to weak demand, which is a function of buyer sentiment and tight credit conditions.”

Falling U.S. home prices in the past year have fueled rising delinquencies and foreclosures, with homeowners unable to get out of costly loans. Banks and investors, throttled by losses in risky mortgages, have sharply curtailed financing for all but the most credit-worthy borrowers.

A surprise cut in the Federal Reserve’s target interest rate last week and another probable one on Wednesday is one ray of hope for the housing market by pulling down most mortgage rates, economists said. The Fed, in cutting its federal funds rate by 0.75 percentage point, cited concerns of deteriorating financial markets and reduced credit for homeowners.

Rate cuts “could give housing a boost but I’m guessing they won’t be enough to stop a decline” in prices, Shiller said. “The best that we could hope for is a slower pace of declines.”

A broader but newer index of 20 cities recorded an annual decline of 7.7 percent in November, S&P said. Miami and San Diego led with annual declines of 15.1 percent and 13.4 percent, respectively.

Other double-digit year-over-year declines were in Las Vegas, Detroit, Phoenix, Tampa and Los Angeles.

Total declines in U.S. home prices will be at least 15 percent from the peak to the trough, Meyer said. The 10-city composite S&P/Case-Shiller index at 205.09 in November is down 9.4 percent from a high of 226.29 in June 2006.

Test To Track Traffic Using GPS Cell Phones

East Bay Business Times
February 1, 2008


Researchers at UC-Berkeley will join in a field test Feb. 8 to study how traffic flow can be monitored using data from driver’s GPS-enabled cell phones.

The researchers will look at the potential of using cell phone data instead of the road sensors currently used, while at the same time preserving phone users’ privacy.

The experiment, dubbed Mobile Century, will involve a fleet of 100 cars with drivers carrying Nokia cell phones. They will travel a loop along a 10-mile stretch of Interstate 880 between Hayward and Fremont.

The experiment is a joint project between researchers at the UC-Berkeley’s California Center for Innovative Transportation and the Nokia Research Center in Palo Alto.