DealBook: Leniency Denied, UBS Unit Admits Guilt in Rate Case

UBS on Wednesday became the first big global bank in more than two decades to have a subsidiary plead guilty to fraud.

UBS, the Swiss bank, scrambled until the last minute to avoid that fate. A week ago, in a bid for leniency over interest-rate manipulation, the bank’s chairman traveled to Washington to plead his case to the Justice Department, according to people briefed on the matter. Knowing the long odds, the chairman, Axel Weber, asked the criminal division for a lighter punishment.

But the government did not budge. With support from Attorney General Eric H. Holder Jr., the agency’s criminal division decided the bank’s actions were simply too egregious, people briefed on the matter said.

On Wednesday, UBS announced it would plead guilty to one count of felony wire fraud as part of a broader settlement. With federal prosecutors, British, Swiss and American regulators secured about $1.5 billion in fines, more than triple the only other rate-rigging case, against Barclays. The Justice Department also filed criminal charges against two former UBS traders.

The guilty plea and the individual charges provide the Justice Department with a long-awaited case to prove it is taking a hard line against financial wrongdoing.

Since the financial crisis, the government has faced criticism that it has not brought significant criminal actions. The money-laundering case against HSBC, which averted indictment when it agreed instead last week to pay $1.9 billion, raised more concerns that the world’s largest and most interconnected banks were too big to indict.

With UBS, prosecutors wanted to send a warning.

The Justice Department’s decision stops short of imperiling the broader financial system because it shields UBS’s parent company from losing its charter, among other major repercussions. But by securing a guilty plea against a subsidiary, the department has shown that it is willing to punish severely one of the world’s most powerful banks. It was the first guilty plea from a major financial institution since Drexel Burnham Lambert admitted to six counts of fraud in 1989.

“We are holding those who did wrong accountable,” Lanny A. Breuer, the head of the Justice Department’s criminal division, said at a news conference on Wednesday. “We cannot, and we will not, tolerate misconduct on Wall Street.”

The rate-rigging inquiry, which has ensnared more than a dozen big banks, is focused on major benchmarks like the London interbank offered rate, or Libor. Such rates are central to determining the borrowing rates for trillions of dollars of financial products like corporate loans, mortgages and credit cards.

The fallout from the UBS case is expected to increase pressure on some of the world’s largest financial institutions and spur settlement talks across the banking industry. The Royal Bank of Scotland has said it expects to pay fines before its next earnings statement in February, while American institutions, including JPMorgan Chase, also remain in regulators’ cross hairs.

The UBS case highlighted a pattern of abuse that authorities have uncovered in a multiyear investigation into the rate-setting process. The government complaints laid bare a 10-year scheme, describing how the bank had reported false rates to squeeze out extra profits and deflect concerns about its health during the financial crisis.

“The settlement reflects the magnitude of the wrongdoing and how critical it is that these be honest and reliable,” said Gary S. Gensler, chairman of the Commodity Futures Trading Commission, the American regulator that opened the UBS investigation.

Six months ago, authorities did not seem ready to take an aggressive stance with UBS.

They had just scored their first Libor settlement, a $450 million payout from Barclays. UBS, which had already struck a conditional immunity deal with the Justice Department’s antitrust division, figured its penalty would be similar.

The immunity deal, some UBS executives contended, would protect the bank from criminal charges. Even officials at the Justice Department were skeptical about the prospect of levying large penalties, according to people briefed on the matter.

Then the tone shifted this fall. After examining thousands of e-mails and hours of taped phone calls, the agency’s criminal division concluded that the conduct at the Japanese subsidiary warranted a criminal charge.

Agency officials also cited the bank’s repeated run-ins with authorities. For example, the Swiss bank had agreed in 2009 to pay $780 million to settle charges that it had helped clients avoid taxes.

Not everyone in the Justice Department agreed on the course of action. According to people briefed on the matter, the antitrust unit pushed for less-onerous penalties, citing the cooperation of UBS. With officials split over how to proceed, Mr. Holder cast the deciding vote in favor of securing a guilty plea from the subsidiary.

The move caught UBS off guard. The bank dispatched dozens of lawyers to Washington to negotiate the fine print of the deal, setting up makeshift offices at the Four Seasons hotel in Georgetown.

Mr. Weber joined the lawyers, in a typical last-ditch appeal to the criminal division. Last Wednesday, Mr. Weber and his general counsel explained to the agency how UBS had overhauled its management ranks, bolstered internal controls and generally tried to clean up its act.

Mr. Breuer and other Justice Department officials agreed to consider the bank’s request to abandon the guilty plea, people briefed on the talks said. But hours later, a prosecutor phoned to say the agency was standing firm.

UBS agreed to the guilty plea, conceding that the Japanese unit would otherwise most likely face an indictment. In turn, prosecutors credited the bank for its recent efforts to improve.

“We are pleased that the authorities gave us credit for the important and positive changes we have already made,” Mr. Weber said in a statement.

The Commodity Futures Trading Commission adopted a similarly tough attitude.

Since Thanksgiving, UBS has tried to negotiate lower penalties with the regulator, according to people briefed on the matter. But David Meister, the agency’s enforcement chief, would not back down from $700 million in fines, an agency record.

“Even for a megabank, that amount serves as a direct deterrent,” said Bart Chilton, a commissioner at the regulator.

Authorities’ strict stance stems from the extent of the bank’s actions. The Commodity Futures Trading Commission cited more than 2,000 instances of illegal acts involving dozens of UBS employees across continents.

The most significant wrongdoing took place within the Japanese unit, where traders colluded with other banks and brokerage firms to tinker with yen-denominated Libor and bolster their returns.

In colorful e-mails, instant messages and phone calls, traders tried to influence the rates. “I need you to keep it as low as possible,” one UBS trader said to an employee at another brokerage firm, according to the complaint filed by the Financial Services Authority of Britain.

As the employees carried out the ostensible manipulation, they also celebrated the efforts, with one trader referring to a partner in the scheme as “superman.” “Be a hero today,” he urged, according the complaint.

The Justice Department also took aim at two former UBS traders, Tom Hayes, 33, and Roger Darin, 41, bringing the first criminal charges against individuals connected to the Libor case.

Like other traders at UBS, Mr. Hayes was willing to reward others for their efforts. He trumpeted the work of an outside broker who had helped, writing in a message, “i reckon i owe him a lot more.” Another broker responded that the person was “ok with an annual champagne shipment,” and “a small bonus every now and then.”

As prosecutors ramped up their investigation, Mr. Hayes even tried to dissuade former colleagues from cooperating, the complaint said. “The U.S. Department of Justice, mate, you know,” he said, they are the “dudes who…put people in jail. Why…would you talk to them?”

Mark Scott, Ashley Southall and Julia Werdigier contributed reporting.

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California senators propose tighter gun laws after Newtown deaths

SACRAMENTO — A group of California lawmakers responded Tuesday to the mass shooting in Newtown, Conn., with a series of proposals to further control access to weapons, including mandatory permits with fees and background checks for anyone who wants to buy bullets.

Tougher gun permit and safety measures, as well as a plan to close a loophole in the state's assault weapons ban, were also proposed.

California has been fighting in court for years with the National Rifle Assn. and other groups over an earlier, landmark law to restrict handgun ammunition sales. The state has been unable to enforce the law since 2010 because of the litigation.

"For too long, too much ground has been ceded in this debate about reasonable gun and ammunition control," said Sen. Kevin De Leon, chairman of the Senate Democratic Caucus.

The Democrat from Los Angeles is leading the effort for new regulations on ammunition sales, which he said Tuesday would be dedicated to those killed at Sandy Hook Elementary School. "We must not capitulate any longer."

He said his new proposal addresses concerns raised by the courts that the existing law does not clearly define what constitutes handgun ammunition.

The rules proposed by De Leon would apply to ammunition for all guns.

California lawmakers have repeatedly implemented strict rules on gun ownership despite the state's large population of hunters and recreational shooters, and constant wrangling with the NRA.

The nonprofit Brady Campaign to Prevent Gun Violence, which lobbies for restrictions on firearm ownership, ranks California No. 1 among states.

Bans on assault weapons and ammunition clips holding more than 10 rounds, as well as a strong background check requirement, retention of records on gun buyers and a 10-day waiting period for purchasing firearms helped earn California the distinction.

De Leon wants an annual permit fee of up to $50 to pay for felony and mental illness background checks. Those buying ammunition on the Internet would have to collect the bullets at a gun store, where the permit would be required.

C.D. Michel, the lawyer who filed the lawsuit on behalf of the California Rifle and Pistol Assn. Foundation — the NRA's California affiliate — said Tuesday that the senator's latest proposal might also be illegal.

"You can't tax the exercise of a fundamental constitutional right," he said.

Others questioned the effectiveness of the proposed law.

"Anybody who wants to can drive to Reno or Las Vegas or Oregon and buy all the ammunition they want and bring it back to California," said Sam Paredes, executive director of the advocacy group Gun Owners of California.

Gov. Jerry Brown has not always embraced anti-gun legislation. He vetoed a measure lawmakers passed last year aimed at addressing the legal issues bedeviling the existing restrictions on ammunition purchases.

"Let's keep our powder dry … until the court case runs its course," Brown wrote in his veto message.

De Leon said the politics of such bills had changed with the Connecticut shooting.

"They were mowed down," he said of the Newtown children. "I think that viscerally it will give a lot of political officials around the country the political courage to do the right thing."

Los Angeles and Sacramento require fingerprinting of ammunition buyers. The Sacramento Police Department found that 349 felons and other prohibited buyers purchased ammunition in that city from 2008 to 2011. Officers were able to go after the violators.

State Sen. Leland Yee (D-San Francisco) this week proposed three gun-control bills, including one prohibiting devices on semiautomatic weapons that allow them to be easily reloaded with multiple rounds of ammunition.

He also proposed requiring yearly registration and background checks for gun ownership, rather than just at the time of purchase. Yee also proposed that all guns have a locked trigger and be properly stored in a lock box when not in use.

Republican Sen. Ted Gaines of Roseville announced Tuesday his proposal to permanently ban from owning guns mentally ill people whom a court deems to be a danger to others.

Gaines said current law allowed those people to regain the right to possess firearms if they completed treatment.

patrick.mcgreevy@latimes.com

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Army Says This General Sexually Abused an Officer, Then Threatened Her Career

An Army general isn’t just accused of sexually assaulting a female subordinate. According to newly released military documents, the one-star general ”threaten[ed] to use his rank, position, and authority to damage or ruin [the captain's] military career if she ended their sexual relationship.” And he disobeyed a direct order from his superior officer to leave the female officer alone.

Army Brig. Gen. Jeffrey Sinclair, the former deputy commander of the 82nd Airborne Division, “received a lawful command from Major General (O-8) James L. Huggins,” then Sinclair’s superior officer, to cease contact with an unnamed female Army captain that Sinclair stands accused of sodomizing “without [her] consent.” That’s according to Sinclair’s official charge sheet, which Danger Room has acquired. Sinclair “attempt[ed] to willfully disobey the same by calling her cell phone” in March 2012. That attempted contact occurred after Sinclair allegedly sexually abused the captain.

It is unclear from the charge sheet if Huggins knew that Sinclair had forced himself on the captain, who apparently maintained a sexual relationship with Sinclair for years. Huggins recently completed a tour as the 82nd’s commanding officer and commander of U.S. forces in southern Afghanistan. He is slated for a promotion to lieutenant general.

On Tuesday, officials at Fort Bragg, North Carolina, announced that Sinclair will definitely face a court-martial on charges of forcible sodomy, sexual misconduct, conduct unbecoming an officer, and other charges. Sinclair’s arraignment at Fort Bragg is scheduled for Jan. 22.

According to the charge sheet, the married Sinclair displayed “pornographic and sexually explicit photographs and movies” while serving in both Iraq and Afghanistan; used his government charge card for personal uses; and carried “inappropriate relationship[s]” with at least two other female officers, one a major and the other a lieutenant. The charge sheet does not accuse Sinclair of abusing those officers.

Sinclair is also charged with covering up his abuse of the female captain. In March of 2012, while he was serving in Kandahar, the charge sheet alleges Sinclair “wrongfully endeavor[ed]] to impede an investigation in the case of himself, by deleting nude photographs” and the e-mail account that either sent or received them.

As has been previously reported, when criticized for using “derogatory and demeaning words to refer to female staff officers,” Sinclair allegedly responded, “I’m a general, I’ll say whatever the [redacted] I want,” according to the charge sheet, which calls that “conduct unbecoming an officer and gentleman.” The female captain allegedly abused by Sinclair testified at a pre-trial hearing at Fort Bragg in November.

Secrecy has surrounded the Sinclair case since it became public in September that Sinclair faced potential prosecution. It’s unusual for the sheet listing the charges facing an accused servicemember to be delayed for so long. Retired Air Force Col. Morris Davis, a former chief prosecutor at Guantanamo Bay, told Danger Room in November that it smelled of favoritism shown to a general officer that an enlisted soldier wouldn’t enjoy. The Army insists that’s flat wrong.

“We did not initially release the charge sheets because the Article 32 investigating officer needed to decide if the evidence presented was sufficient to bring forward to the General Court Martial Convening authority for his action,” says Col. Kevin Arata, the spokesman for the XVIII Airborne Corps at Fort Bragg. “Now that the GCMCA has made a decision on those charges, and the accused is being arraigned, we know explicitly what charges are being referred against the accused, thus the release of the redacted charge sheets at this time.”

Gary Solis, a military law scholar at Georgetown University, considers that a credible explanation. “There is much to criticize, when it comes to public access to disciplinary matters denied by the military, but this is not such a case,” Solis tells Danger Room. “To have publicly announced un-investigated charges in the case of a general officer, even this one, would have been a miscarriage of justice, had any of the charges been demonstrated at the 32 to be groundless.”

Davis, unconvinced, adds: “I can’t recall a case where there was public interest where the charges were withheld from public disclosure until after the Convening Authority decided to refer the case to trial.”

Sinclair is one of a number of prominent generals whose ethical lapses have prompted Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, to launch an inquiry into whether the military needs to review its ethics training. (Dempsey’s initial findings, delivered last Friday, are that general and flag officers could benefit from ethics refreshers.)

But those other generals either misused small amounts of their official salaries for personal benefit, like Army Gen. William “Kip” Ward and Navy Adm. James Stavridis, or may have had “flirtatious” relationships over e-mail, like Marine Gen. John Allen. Sinclair stands accused of sexually assaulting, harassing and humiliating one of the officers under his command. It’s hard to imagine that a general officer needs a refresher course to understand how wrong that is.

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“Zero Dark Thirty” won’t be “Hurt Locker” at the Box Office

LOS ANGELES (TheWrap.com) – Kathryn Bigelow‘s Osama bin Laden manhunt thriller “Zero Dark Thirty” hits theaters Wednesday, and when it comes to the box office, this isn’t going to be “Hurt Locker.”

That was Bigelow’s last film, a gritty Iraq war drama that upset “Avatar” for Oscar’s Best Picture in 2009 but took in just $ 17 million domestically. “Zero Dark Thirty” could well top $ 100 million, say industry analysts – and if the awards season breaks the right way for the Oscar Best Picture front-runner, it could go higher than that.

“ZDT” and this year’s winner of the Palme d’Or at the Cannes Film Festival, “Amour,” are making limited debuts Wednesday, while the Barbra Streisand-Seth Rogen comedy “Guilt Trip” and a 3D re-release of “Monsters Inc.” go into wide release.

Six more movies will roll out on Friday, including Judd Apatow‘s “This Is 40″ and the Tom Cruise starrer “Jack Reacher,” in what Hollywood is hoping will be a very busy pre-holiday week at the box office.

In the course of detailing the killing of Bin Laden, “ZDT” is an examination of the nation’s war on terror, its prosecution and its effect on America’s collective psyche, and that will help, not hurt, the film at the box office, Exhibitor Relations Senior analyst Jeff Bock told TheWrap.

“This movie is about the biggest American war story since Pearl Harbor,” Bock said. “The American people are at a place now where they are ready to look back and really think about what we’ve been through.

“This movie, particularly if it keeps getting awards buzz, is going to be talked about everywhere, and if you want to have an opinion, you’re going to have to see it.”

Despite all the newcomers arriving Wednesday and Friday, Peter Jackson’s “The Hobbit” is expected to continue dominating. It took in about $ 7 million Monday – on the heels of its $ 85 million debut weekend – and should cross the $ 100 million mark Tuesday

Sony Classic is rolling out “Amour,” Michael Haneke‘s dark and unsparing look at old age and death, at two theaters in New York and one in L.A. The French-language film was recently named the best film of 2012 by the Los Angeles Film Critics Association, giving it an important boost during a season in which its chances outside the Oscar foreign-language category hinge on getting Academy voters to see it.

That honor stopped an awards run by “Zero Dark Thirty,” which Sony is rolling out on five screens. The intense tale had won the top award with the New York Film Critics Circle, the National Board of Review, the Boston Film Critics Society and the New York Film Critics Online.

“ZDT” was produced by Megan Ellison’s Annapurna Pictures for about $ 45 million.

Sony’s plan is to go wide with it release on January 11 after the Academy Award nominations.

Beside the film itself and director Bigelow, her producing partner Mark Boal is a good bet for an Best Adapted Screenplay nomination, as is Jessica Chastain in the Best Actress category. All of those earned Golden Globes nominations in those categories.

The gritty and gripping tale is a critical favorite – it has a 97.7 percent rating at Movie Review Intelligence – but a lightning rod for political criticism, from both the left and right of the political spectrum. Some critics have charged the film is an apology for U.S. interrogation tactics that included waterboarding, while others say it’s intended to boost the image of President Obama.

“Our agenda isn’t a partisan agenda – it’s an agenda of trying to look behind the scenes at what went down,” screenwriter Boal told TheWrap earlier. “Hopefully art or cinema can present a point of view that’s a little above the political fray, but that doesn’t mean the political narrative doesn’t try to assert itself and pull you back in.”

“Amour” is a co-production between companies in Austria, France and Germany. It is Austria’s entry and a favorite in Oscar’s Best Foreign Language category, and it has a shot at a Best Picture nomination, too.

Jean-Louis Trintignant and Emmanuelle Riva star as Anne and George, an elderly couple who are retired music teachers and have a daughter (Isabelle Huppert) living abroad. The story, which Haneke wrote and directed based on a similar experience in his own family, focuses on what happens when Anne suffers a stroke.

It was nominated in six categories at the recent European Film Awards and won four, including Best Film and Best Director. The L.A. Film Critics named the 85-year-old Riva co-Best Actress (with Jennifer Lawrence in “Silver Linings Playbook”), and she has an outside shot an Oscar nomination in that category.

“Guilt Trip” is Streisand’s first film foray since “Little Fockers,” which debuted around the same time of year in 2010 for Universal – and her first starring role since 1996′s “The Mirror Has Two Faces.”

“Little Fockers,” a sequel to “Meet the Fockers,” opened to $ 30 million and went on to make $ 148 million. Distributor Paramount will be happy if the PG13-rated “Guilt Trip,” which will be on about 2,300 screens, can match half that debut.” The analysts are looking for it to wind up around $ 12 million.

It’s one of three Paramount releases this week; the Tom Cruise thriller “Jack Reacher” and concert film “Cirque du Soleil: Worlds Away” debut Friday.

“They all play to distinctly different demographics, Paramount’s head of distribution Don Harris told TheWrap, “so other than being really busy, we don’t have any problem with these three all in the marketplace.”

What could provide some tough competition is Judd Apatow‘s R-rated comedy “This Is 40,” which Universal is rolling out on roughly 2,900 screens Friday.

Disney will have its 3D version of its 2001 animated hit “Monsters Inc.” in 2,400 theaters. It will be the third 3D re-release of a Disney film this year. The first two did unspectacular but solid business, particularly when you consider the only cost to the studio is the 3D conversion and marketing.

A 3D version of “Beauty and the Beast” debuted to $ 17 million in July and went on to make $ 47 million. In September, a converted “Finding Nemo” took in $ 16 million in its first week and wound up at $ 41 million.

Between “The Hobbit,” the holdover kids holiday film “Rise of the “Monsters Inc.” and a very crowded marketplace, “Monster Inc.” will have a tough time matching those numbers.

Movies News Headlines – Yahoo! News

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Attackers in Pakistan Kill Anti-Polio Workers

Rizwan Tabassum/Agence France-Presse — Getty Images

A Pakistani mother mourned her daughter, who was killed on Tuesday in an attack on health workers participating in a drive to eradicate polio from Pakistan.

ISLAMABAD, Pakistan — Gunmen shot dead five female health workers who were immunizing children against polio on Tuesday, causing the Pakistani government to suspend vaccinations in two cities and dealing a fresh setback to an eradication campaign dogged by Taliban resistance in a country that is one of the disease’s last global strongholds.

“It is a blow, no doubt,” said Shahnaz Wazir Ali, an adviser on polio to Prime Minister Raja Pervez Ashraf. “Never before have female health workers been targeted like this in Pakistan. Clearly there will have to be more and better arrangements for security.”

No group claimed responsibility for the attacks, but most suspicion focused on the Pakistani Taliban, which has previously blocked polio vaccinators and complained that the United States is using the program as a cover for espionage.

The killings were a serious reversal for the multibillion-dollar global polio immunization effort, which over the past quarter century has reduced the number of endemic countries from 120 to just three: Pakistan, Afghanistan and Nigeria.

Nonetheless, United Nations officials insisted that the drive would be revived after a period for investigation and regrouping, as it had been after previous attacks on vaccinators here, in Afghanistan and elsewhere.

Pakistan has made solid gains against polio, with 56 new recorded cases of the diseases in 2012, compared with 192 at the same point last year, according to the government. Worldwide, cases of death and paralysis from polio have been reduced to less than 1,000 last year, from 350,000 worldwide in 1988.

But the campaign here has been deeply shaken by Taliban threats and intimidation, though several officials said Tuesday that they had never seen such a focused and deadly attack before.

Insurgents have long been suspicious of polio vaccinators, seeing them as potential spies. But that greatly intensified after the C.I.A. used a vaccination team headed by a local doctor, Shakil Afridi, to visit Osama bin Laden’s compound in Abbottabad, reportedly in an attempt to obtain DNA proof that the Bin Laden family was there before an American commando raid on it in May 2011.

In North Waziristan, one prominent warlord has banned polio vaccinations until the United States ceases drone strikes in the area.

Most new infections in Pakistan occur in the tribal belt and adjoining Khyber-Pakhtunkhwa Province — some of the most remote areas of the country, and also those with the strongest militant presence. People fleeing fighting in those areas have also spread the disease to Karachi, the country’s largest city, where the disease has been making a worrisome comeback in recent years.

After Tuesday’s attacks, witnesses described violence that was both disciplined and well coordinated. Five attacks occurred within an hour in different Karachi neighborhoods. In several cases, the killers traveled in pairs on motorcycle, opening fire on female health workers as they administered polio drops or moved between houses in crowded neighborhoods.

Of the five victims, three were teenagers, and some had been shot in the head, a senior government official said. Two male health workers were also wounded by gunfire; early reports incorrectly stated that one of them had died, the official said.

In Peshawar, the capital of Khyber-Pakhtunkhwa Province, gunmen opened fire on two sisters participating in the polio vaccination program, killing one of them. It was unclear whether that shooting was directly linked to the Karachi attacks.

In remote parts of the northwest, the Taliban threat is exacerbated by the government’s crumbling writ. In Bannu, on the edge of the tribal belt, one polio worker, Noor Khan, said he quit work on Tuesday once news of the attacks in Karachi and Peshawar filtered in.

“We were told to stop immediately,” he said by phone.

Still, the Pakistani government has engaged considerable political and financial capital in fighting polio. President Asif Ali Zardari and his daughter Aseefa have been at the forefront of immunization drives. With the help of international donors, including the Bill and Melinda Gates Foundation, they have mounted a huge vaccination campaign aimed at up to 35 million children younger than 5, usually in three-day bursts that can involve 225,000 health workers.

The plan seeks to have every child in Pakistan immunized at least four times per year, although in the hardest-hit areas one child could be reached as many as 12 times in a year.

Declan Walsh reported from Islamabad, and Donald G. McNeil Jr. from New York. Salman Masood contributed reporting from Islamabad, and Zia ur-Rehman from Karachi, Pakistan.

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Boehner Plan Addresses Taxes but Delays Fight Over Spending Cuts

Joshua Roberts/Reuters

John A. Boehner winced while talking to a reporter on the way to a closed-door meeting with House Republicans today.

WASHINGTON — House Republican leaders struggled on Tuesday night to rally their colleagues around a backup measure to ease the sting of a looming fiscal crisis by allowing tax rates to rise only on incomes over $1 million.

The plan would leave in place across-the-board spending cuts to military and domestic programs that Republicans have been warning could have dire consequences, especially to national defense.

Speaker John A. Boehner unveiled what he dubbed “Plan B” less than 24 hours after President Obama offered a more comprehensive deal that would raise tax rates on incomes over $400,000 and, over 10 years, produce $1.2 trillion in tax increases and cut $930 billion in spending.

Mr. Boehner pledged to continue negotiating on a broad deficit-reduction deal but called the president’s plan unbalanced and insufficient.

“What we’ve offered meets the definition of a balanced approach, but the president is not there yet,” Mr. Boehner said Tuesday.

The Boehner proposal was intended to raise the pressure on Democrats to compromise further still by embracing a tax increase on millionaires first pushed by Senator Charles E. Schumer, Democrat of New York, and Representative Nancy Pelosi of California, the House Democratic leader.

Confronted with her past support for raising income taxes only on millionaires, Ms. Pelosi said that effort had merely been “a plan to smoke out” Republicans.

But a protracted meeting of the House Republican Conference on Tuesday night made it clear that passage of Mr. Boehner’s proposal would be difficult. Representative Howard P. McKeon of California, the chairman of the House Armed Services Committee, said he was not sure he could support a bill that would allow $500 billion in military cuts over the next 10 years and indicated that other Republicans on his committee shared his concern.

Representative John Fleming, a conservative Republican from Louisiana, dismissed the speaker’s plan as a pointless “messaging exercise.”

“Why go on record raising taxes on anybody if it won’t cut spending and won’t even become law?” he asked. “I haven’t found a way of supporting that.”

Ms. Pelosi was leaning hard on House Democrats to stay united in their opposition. If she succeeds, the speaker could afford about only 18 Republican defections, fewer than he has had on any major fiscal vote since Republicans took control two years ago.

Defense Secretary Leon E. Panetta was unsparing on Tuesday in his criticism of lawmakers resisting a deal to stop the military cuts.

“It is unacceptable to me that men and women who put their lives on the line in distant lands have to worry about whether those here in Washington can effectively support them,” Mr. Panetta said in a speech at the National Press Club. “We’re down to the wire now. In these next few days, Congress needs to make the right decisions to avoid the fiscal disaster that awaits us.”

Senator Rob Portman of Ohio, an influential Republican, said the Pentagon cuts would damage not only military readiness but also the fragile economy.

House Republican leaders on Tuesday night sought to assess whether the speaker’s proposal could be brought to the House floor on Thursday. Under that plan, the House would take up take up tax legislation and consider two amendments. The first would mirror a Senate-passed bill to extend the expiring Bush-era tax cuts for incomes below $250,000. That would be expected to fail, as a show to the president that his initial offer cannot pass.

A second amendment would raise that threshold to incomes below $1 million. The House may also vote on some middle ground, like the president’s $400,000.

Mr. Boehner told House Republicans that he would also like the bill to include provisions to prevent the existing alternative minimum tax from expanding to impact more of the middle class and to extend existing low tax rates on inherited estates.

But he said the bill would not cancel across-the-board spending cuts — known as sequestration — that are scheduled to total $110 billion in 2013 and more than $1 trillion over 10 years.

Republicans would resume the fight for broad spending cuts, especially to entitlement programs like Medicare, in late January or February, when the government will face raising its borrowing limit and when, many Republicans believe, they will have much more leverage than they do now.

The White House came out strongly against the speaker’s plan. The White House press secretary, Jay Carney, said that it could not pass the Senate and “therefore will not protect middle-class families” from large tax increases schedule to begin on Jan. 1.

Jennifer Steinhauer and Thom Shanker contributed reporting.

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Girl, 13, gets Hasbro to make gender-neutral Easy-Bake oven

McKenna Pope, the 13-year-old girl who petitioned toy maker Hasbro for an Easy-Bake oven suitable for both girls and boys, will get what she’s been asking for.

After meeting with the New Jersey girl at its Rhode Island headquarters Monday, Hasbro said it will offer a new black-and-silver oven design in fall 2013. The company said the prototype, which it showed to Pope, has been in development for 18 months and will debut at the New York Toy Fair in February.

Since 1963, a dozen different Easy-Bake models have been introduced in colors including teal, green, yellow, silver, blue and purple, Hasbro said.

The packaging for the new oven will feature boys and girls, according to Change.org, where Pope launched her petition recently. More than 44,000 people have since signed the petition.

Pope’s effort also scored support from some major male bakers and chefs, including “Top Chef” star Manuel Trevino, who was featured in a YouTube video backing her cause.

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Cosmo the God Hijacks Twitter Account of Hateful 'Church'

The 15-year-old hacker known as Cosmo the God was behind the takeover of a Westboro Baptist Church member’s Twitter feed, a source with direct knowledge of the attack confirmed to Wired on Monday.

Cosmo gained access to the @DearShirley Twitter account via an e-mail account, and from there was able to leverage control of the Twitter feed itself, according to the source, who spoke on condition of anonymity. As of this writing, the account remains up and operating, and seemingly beyond the control of its owner.

Westboro Baptist Church is notorious for picketing funerals of American soldiers killed in action in Iraq and Afghanistan. Last week the organization apparently announced its intention to protest at the funerals of the children killed at Sandy Hook, with spokewoman Shirley Lynn Phelps-Roper tweeting the following: “Westboro will picket Sandy Hook Elementary School to sing praise to God for the glory of his work in executing his judgment.”

The sentiment was echoed on Westboro Baptist Church’s website, which included the line “God sent the shooter to Newton, CT.”

The announcement triggered astonished outrage from observers, and the hacker group Anonymous declared open season on the group, publishing contact information for many of its members, including Phelps-Roper. Phelps-Roper’s Twitter account @DearShirley was then taken over early Monday morning.

Cosmo the God has been able to keep control of the account using a flaw in Twitter’s Zendesk system that allows an attacker to close an account support ticket before it’s acted on, according to the source, who demonstrated inside knowledge of the account takeover.

Cosmo and his group UG Nazi took part in many of the highest-profile hacking incidents of 2012, including taking down websites for NASDAQ, CIA.gov, and UFC.com, redirecting 4Chan’s DNS to point to its own Twitter feed, and defeating CloudFlare CEO Matthew Prince’s Google two-step authentication.

The teen’s social-engineering techniques allowed him to gain access to user accounts at Amazon, PayPal and a slew of other companies. He was arrested in June, as part of a multi-state FBI sting and was recently sentenced to probation until his 21st birthday, during which time he is prohibited from using the internet without supervision and prior consent.

The latest hack would seem to violate those terms. But it’s garnered Cosmo an unending stream of Twitter praise. “I love that @cosmothegod hacked @DearShirley!! I’m glad that there is one less hateful twitter account,” wrote one fan. “I think @cosmothegod deserves a medal for hacking @DearShirley and making everyone’s day,” another tweeted.

Wired sought to reach Westboro Baptist Church for comment, but its phone line was consistently busy.

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Gabby Douglas, Adele among brightest young stars -Forbes magazine

NEW YORK (Reuters) – Fashion designer Carly Cushnie, actress Kate McKinnon and videogame creator Kim Swift may not be household names yet, but they are destined to do great things and will be tomorrow’s young stars, Forbes magazine said on Monday.

Along with Olympic Gold medalist gymnast Gabby Douglas, rapper Wiz Khalifa and researcher Josh Sommer, they have been chosen by the magazine for its “30 Under 30″ list of top achievers under 30 years old in their fields.

They are considered the top 30 achievers in 15 categories ranging from education, energy, music, science and healthcare to sports, technology games and apps and marketing.

“This is a celebration of youthful ambition and success. These are really amazing people and they are doing amazing things. It makes you very hopeful about the world,” Michael Noer, the executive editor of Forbes, said in an interview.

Many on the list, including singers Bruno Mars and Justin Bieber, as well as actresses Ashley and May Kate Olsen and fashion designer Alexander Wang, the newly appointed creative director at the French fashion house Balenciaga, are already well known.

Some are returnees to the list that was launched last year – like British singer and new mother Adele, the 24-year-old multiple Grammy Award winner, and American entrepreneur Kevin Systrom.

Noer said there has been a 60 percent turnover since 2011, so there are plenty of new faces on the list drawn up by Forbes staff and industry experts.

“I think there are a lot of interesting names on the list,” he said.

In energy, it is 28-year-old Leslie Dewan, a Massachusetts Institute of Technology graduate and co-founder and chief science officer of Transatomic Power.

“They are developing a new type of nuclear reactor that uses nuclear waste,” said Noer.

In music, Pittsburgh-bred Khalifa, 25, topped the list. Swift, the 29-year-old creative director at Airtight Games, was noted for creating hit videogame Portal.

“Kate McKinnon, the actress from ‘Saturday Night Live’ who just joined in April is our Hollywood selection. She is being hailed as the next Tina Fey,” Noer said.

Sommer, the executive director of the Chordoma Foundation which raises funds for research into chordoma, a rare, slow-growing bone cancer most commonly found in the spine, is another young achiever, according to Forbes.

Sommer created the foundation with his mother after being diagnosed with the disease while a student at Duke University in North Carolina.

“He was diagnosed with a rare type of bone cancer, dropped out of school to find a cure and he has made some progress,” said Noer.

The full list will be published in the January 21 issue of Forbes and can also be found at www.forbes.com/under 30 .

(Reporting by Patricia Reaney; editing by Paul Casciato and Mohammad Zargham)

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Ancient Bones That Tell a Story of Compassion

Lorna Tilley

DISABLED Almost all the other skeletons at the Man Bac site, south of Hanoi, are straight. But the man now called Burial 9 was laid to rest curled in a fetal position that suggests lifelong paralysis.

While it is a painful truism that brutality and violence are at least as old as humanity, so, it seems, is caring for the sick and disabled.

And some archaeologists are suggesting a closer, more systematic look at how prehistoric people — who may have left only their bones — treated illness, injury and incapacitation. Call it the archaeology of health care.

The case that led Lorna Tilley and Marc Oxenham of Australian National University in Canberra to this idea is that of a profoundly ill young man who lived 4,000 years ago in what is now northern Vietnam and was buried, as were others in his culture, at a site known as Man Bac.

Almost all the other skeletons at the site, south of Hanoi and about 15 miles from the coast, lie straight. Burial 9, as both the remains and the once living person are known, was laid to rest curled in the fetal position. When Ms. Tilley, a graduate student in archaeology, and Dr. Oxenham, a professor, excavated and examined the skeleton in 2007 it became clear why. His fused vertebrae, weak bones and other evidence suggested that he lies in death as he did in life, bent and crippled by disease.

They gathered that he became paralyzed from the waist down before adolescence, the result of a congenital disease known as Klippel-Feil syndrome. He had little, if any, use of his arms and could not have fed himself or kept himself clean. But he lived another 10 years or so.

They concluded that the people around him who had no metal and lived by fishing, hunting and raising barely domesticated pigs, took the time and care to tend to his every need.

“There’s an emotional experience in excavating any human being, a feeling of awe,” Ms. Tilley said, and a responsibility “to tell the story with as much accuracy and humanity as we can.”

This case, and other similar, if less extreme examples of illness and disability, have prompted Ms. Tilley and Dr. Oxenham to ask what the dimensions of such a story are, what care for the sick and injured says about the culture that provided it.

The archaeologists described the extent of Burial 9’s disability in a paper in Anthropological Science in 2009. Two years later, they returned to the case to address the issue of health care head on. “The provision and receipt of health care may therefore reflect some of the most fundamental aspects of a culture,” the two archaeologists wrote in The International Journal of Paleopathology.

And earlier this year, in proposing what she calls a “bioarchaeology of care,” Ms. Tilley wrote that this field of study “has the potential to provide important — and possibly unique — insights into the lives of those under study.” In the case of Burial 9, she says, not only does his care indicate tolerance and cooperation in his culture, but suggests that he himself had a sense of his own worth and a strong will to live. Without that, she says, he could not have stayed alive.

“I’m obviously not the first archaeologist” to notice evidence of people who needed help to survive in stone age or other early cultures, she said. Nor does her method “come out of the blue.” It is based on and extends previous work.

Among archaeological finds, she said, she knows “about 30 cases in which the disease or pathology was so severe, they must have had care in order to survive.” And she said there are certainly more such cases to be described. “I am totally confident that there are almost any number of case studies where direct support or accommodation was necessary.”

Such cases include at least one Neanderthal, Shanidar 1, from a site in Iraq, dating to 45,000 years ago, who died around age 50 with one arm amputated, loss of vision in one eye and other injuries. Another is Windover boy from about 7,500 years ago, found in Florida, who had a severe congenital spinal malformation known as spina bifida, and lived to around age 15. D. N. Dickel and G. H. Doran, from Florida State University wrote the original paper on the case in 1989, and they concluded that contrary to popular stereotypes of prehistoric people, “under some conditions life 7,500 years ago included an ability and willingness to help and sustain the chronically ill and handicapped.”

In another well-known case, the skeleton of a teenage boy, Romito 2, found at a site in Italy in the 1980s, and dating to 10,000 years ago, showed a form of severe dwarfism that left the boy with very short arms. His people were nomadic and they lived by hunting and gathering. He didn’t need nursing care, but the group would have had to accept that he couldn’t run at the same pace or participate in hunting in the same way others did.

Ms. Tilley gained her undergraduate degree in psychology in 1982 and worked in the health care industry studying treatment outcomes before coming to the study of archaeology. She said her experience influenced her interest in ancient health care.

What she proposes, in papers with Dr. Oxenham and in a dissertation in progress, is a standard four-stage method for studying ancient remains of disabled or ill individuals with an eye to understanding their societies. She sets up several stages of investigation: first, establishing what was wrong with a person; second, describing the impact of the illness or disability given the way of life followed in that culture; and third, concluding what level of care would have needed.

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