WASHINGTON – The chairman of the Securities and Exchange Commission on Tuesday pledged better oversight of the nation's largest banks after criticism that the agency failed to spot accounting tricks at investment bank Lehman Brothers before it collapsed.
Chairman Mary Schapiro told a congressional panel that the agency has sent letters to 19 banks seeking information about whether they are using accounting tricks that a bankruptcy examiner said masked the bank's precarious financial condition. Lehman failed in September 2008 in the largest corporate bankruptcy in U.S. history.
Schapiro, who was not with the SEC at the time, said the agency is scrutinizing Lehman's use of the accounting move, known as Repo 105, that allowed it to mask its weakness.
Her testimony follows widespread criticism that the SEC failed to properly monitor Wall Street ahead of the Great Recession, and after the agency filed civil fraud charges Friday against Goldman Sachs.
Tuesday's hearing examining what led to Lehman's meltdown drew lawmakers into a partisan squabble over the Obama administration's push for financial regulatory reform. Republicans pointed to the track records of the SEC and other agencies as evidence that more regulation won't prevent future meltdowns.
Lehman's collapse was the biggest corporate bankruptcy in U.S. history and threw global financial markets into crisis. The hearing looked at the bankruptcy examiner's report, which said the firm masked $50 billion in debt.
Schapiro said the SEC is examining "the truthfulness of the disclosure" in Lehman's financial filings.
"It's not clear any action by the SEC could have saved Lehman Brothers, but we are determined to use the lessons of that experience to be more effective," Schapiro said. "More vigorous oversight and a new approach are essential."
Richard Fuld, Lehman's former CEO, said he has "absolutely no recollection whatsoever" of any documents related to the so-called Repo 105 accounting maneuver. After reviewing the transactions, he said the firm complied with accounting standards.
Fuld expressed regret about the company's collapse.
"One day we had a firm," he said. "The next day we did not. A lot of people got hurt by that, and I have to live with that."
Michael Lee, a former Lehman vice president, testified that he tried to alert Lehman managers to concerns he had about Lehman's accounting. He sent a letter in May 2008 to top executives. After that, he said, "somebody came into my office, pulled me out and fired me on the spot."
The bankruptcy examiner, Anton Valukas, criticized the company and the SEC.
"Although the public had a right to expect that firms like Lehman were being regulated in a meaningful way, in reality, they were not," Valukas told lawmakers. Regulators, he said, missed opportunities to alter Lehman's conduct "before its situation had reached the point of no return."
In his report last month, Valukas disclosed that Lehman put together complex transactions that allowed the firm to sell securities — mainly those made up of mortgages — at the end of a quarter. That wiped them off its balance sheet, avoiding the scrutiny of regulators and shareholders. Then the bank quickly repurchased them — hence the term "repo."
Valukas' report reached no conclusion on whether executives violated securities laws. But it did suggest there may be enough evidence to support civil damages in a trial.
Two lawmakers testified at the hearing that Lehman's meltdown cost school districts, local governments and hospitals millions, forcing them to make cutbacks.
Rep. Anna Eshoo, D-Calif., said 40 municipalities nationwide lost around $1.7 billion after the firm went under. She is introducing legislation that would require the federal government to compensate those governments. Eshoo said San Mateo County, which is in her district, lost $155 million.
Another lawmaker said numerous governments and hospitals in his state suffered huge losses.
"These were school districts and local governments that made investments that they believed were conservative," said Rep. Ed Perlmutter, D-Colo. "They trusted that federal regulators were keeping a watchful eye on companies like Lehman Brothers."
Treasury Secretary Timothy Geithner said at the hearing that Lehman's collapse highlights why the Obama administration's proposal to reform the financial system is needed. That legislation includes a mechanism to allow the government to safely wind down ailing financial companies whose collapse could take down the entire financial system and the broader economy.
Republicans asserted that regulators' failure to prevent Lehman's collapse is proof that the proposed financial reforms won't work either.
"Given their track record, giving these regulators more power will provide the markets with a false sense of security, while hampering the free market," said Rep. Scott Garrett, R.-N.J.
Republicans accused Democrats of trying to continue federal bailouts by injecting more money into Wall Street companies.
But the committee's chairman, Rep. Barney Frank, D-Mass., called that a "blatant mischaracterization," arguing that "no money can be spent in these cases until the institution is out of business."
Schapiro said the agency didn't do enough to oversee the five largest investment banks, even though it had authority over them since 2004. That oversight program, she said, did not have enough resources.
Going forward, "the SEC is determined to become a more effective regulator," she told lawmakers. "We are determined to use the lessons of that experience to be more effective"
Her comments come days after the SEC filed civil fraud charges against Goldman Sachs, alleging it withheld information in a complex transaction involving risky mortgage securities.
Federal Reserve Chairman Ben Bernanke testified at the hearing that the central bank wasn't aware that Lehman used the accounting move. And even if the Fed did know, it wouldn't have changed the Fed's view that the company was in bad financial shape, he said.
Although the SEC was Lehman's chief regulator, the Fed began to monitor the firm after trouble surfaced in the financial industry.
Britain reopened its airspace Tuesday evening as British Airways said a flight had arrived at London's Heathrow Airport, an indication that the worst of the air traffic crisis plaguing Europe may be coming to an end.
"The Civil Aviation Authority has approved the opening of UK airspace from 22:00 today," or 5 p.m. New York time, said a statement from Heathrow Airport.
RIYADH, Saudi Arabia – The head of Saudi Arabia's powerful religious police has fired the chief of the Mecca branch for advocating the mixing of the sexes, an official from the force said Tuesday.
Ahmed bin Qassim al-Ghamidi's suggestion in a newspaper interview this week that men and women should be left to mingle freely directly clashed with a central preoccupation of the force.
The religious police, under the control of the Commission for the Promotion of Virtue and Prevention of Vice, are charged with enforcing Saudi Arabia's strict interpretation of Islam, which prohibits men and women who are not immediate relatives from mingling.
"Mixing (between the sexes) is just natural and there is no good reason to ban it," al-Ghamidi said in the interview.
He was dismissed soon after, according to an official from the force who spoke on condition of anonymity because he was not permitted to talk to journalists.
The remarks by such a senior member of the religious police, who is also a top cleric, revealed a surprising shifting of views on the gender segregation ban at the heart of the hard-line establishment tasked with enforcing the restriction.
Zealous officers routinely jail unrelated men and women found sitting together in coffee shops, restaurants or other public places.
The policemen also patrol public places to ensure women are covered and not wearing makeup, shops close five times a day for Muslim prayers and men go to the mosque and worship.
The force's new chief, Abdul-Aziz bin Humain, has been billed as a reformer and promised a new tone after being appointed by the king last year. But his dismissal of al-Ghamidi shows there are limits to how far he is willing to go.
King Abdullah has been encouraging change in the oil-rich kingdom since becoming crown prince in 1982, and has intensified his efforts since assuming the thrown upon the death of his half brother, King Fahad, in 2005.
Male and female students are permitted to study together at the newly opened King Abdullah Science and Technology University, launched by the Saudi monarch last year. Abdullah dismissed a prominent hard-line cleric who criticized the university's coed policy.
LONDON - Last year, Hector Sants, the chief of the British financial regulator, pledged to shed his agency's toothless-tiger image in the wake of the financial meltdown by aggressively pursuing more high-profile fraud cases.
Britain's Civil Aviation Authority has ordered a phased reopening of much of the country's airspace from 10:00pm local time (7:00am AEST), as many European airports returned to life after days in limbo because of a ...
MAYEVKA, Kyrgyzstan (Reuters) - Kaptan, a minority Turkish farmer, died trying to defend his home against 100 armed attackers on the outskirts of Kyrgyzstan's capital as ethnic violence erupted in the Central Asian state.
The Associated Press - Carlo Piovano - 2 hours ago
REYKJAVIK, Iceland - For all the worldwide chaos that Iceland's volcano has already created, it may just be the opening act. Scientists fear tremors at the Eyjafjallajokull (ay-yah-FYAH-lah-yer-kuhl) volcano could trigger an even more dangerous ...
An Arizona bill that would impose some of the toughest immigration laws in the country is generating a storm of controversy nationwide as it tracks toward the governor's desk.
Dorothy I. Height's crusade for racial justice and gender equality spanned more than six decades. Ms. Height was among the coalition of African American leaders who pushed civil rights to the center of the American political stage in the years after ...
The Associated Press - Liz Sidoti - 35 minutes ago
WASHINGTON - The plight of Florida's Charlie Crist - a Republican governor who apparently can't win his own party's Senate primary - underscores the divisions dogging an otherwise emboldened national GOP.
April 20 (Bloomberg) -- Yahoo! Inc., owner of the second- ranked US Internet search engine, reported profit that topped analysts' estimates, bolstered by a rebounding online advertising market and the sale of its Zimbra business.
The Securities and Exchange Commission is considering new rules that would prevent large banks from masking the risks they take by temporarily lowering their debt levels before quarterly reports to the public are due.
WASHINGTON (Dow Jones)--The International Monetary Fund is calling for two types of taxes on financial institutions to prevent and pay for future crises.
Watching Apple's every move is a spectator sport. And the spectators have been agog this week over reports that tech blog Gizmodo was in possession of a lost prototype presumed to be the next generation iPhone.
The hackers who breached Google's network last year were able to nab the source code for the company's global password system, according to The New York Times.
Well, she's probably texting, according to a study by the Pew Internet & American Life Project. The results of the study, released today, show that half of all American teenagers send 50 or more text messages a day.
Cameron Douglas, the 31-year-old son of the actor Michael Douglas, was sentenced to five years in prison on drug-related charges in Federal District Court in Manhattan on Tuesday.
One of the all-time greatest wordsmiths in hip-hop history, Gang Starr's Keith Elam - aka Guru, for "Gifted Universal Rhymes Unlimited" - passed away Monday.
As TMZ first reported, actor Kal Penn was robbed at gunpoint in Washington, DC, early this morning, his rep confirmed. The 32-year-old star of the 2004 stoner comedy Harold & Kumar Go to White Castle and its 2008 sequel has been ...
Injured Reds pitcher Edinson Volquez says his 50-game suspension for violating Major League Baseball's policy on performance-enhancing drugs is the result of medications he took to treat a fertility condition.
ESPN reported that the teams agreed to swap places in the fifth round as compensation. Carriker will rejoin his former coach in St. Louis, Jim Haslett, who is now the defensive coordinator in Washington.
Two members of Congress urged the Food and Drug Administration on Tuesday to move quickly to limit the amount of salt in processed foods, calling the matter a "public health crisis" that demanded a swift response from government.
April 20, 2010 -- The average American eats the equivalent of about 21 teaspoons of added sugar a day -- about 2 1/2 to 3 times more than new heart disease prevention guidelines say they should.
U.S. News & World Report - Megan Johnson - 3 hours ago
Indoor tanning can be addictive, a new study finds. Researchers surveyed more than 400 college students about their indoor tanning habits and found that 30 to 40 percent met enough criteria to be called "tanning addicts," HealthDay ...
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A convicted drug smuggler and horse trainer appeared before a federal magistrate on Friday after his arrest for allegedly operating a rural Whatcom County business that catered to people who want to have sex with animals.
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Democrats and Republicans in America's Senate are playing chicken over reforming finance
Apr 20th 2010 | NEW YORK AND WASHINGTON,DC | From The Economist online
THE Democrats’ first big domestic reform, of health care, was criticised as unnecessary, distracting and partisan. Not so the latest big piece of reform, the Senate’s bill on financial services. No one, Republican or Democrat, thinks the financial system should be left alone. In an era of general grumpiness with a hyperactive federal government, a Pew poll shows that 61% of Americans nonetheless want stricter restrictions on financial firms. A lawsuit brought against Goldman Sachs by the Securities and Exchange Commission has boosted expectations that a reform bill will pass. A slew of big financial firms have just announced stellar results, including Citigroup (which announced a $4.4 billion first-quarter profit this week) and Goldman (which announced a $3.46 billion profit), turning the heat up further. President Barack Obama will make a speech in New York on Thursday outlining his case for reform.
But as Democrats bring their bill, crafted by Chris Dodd of Connecticut, to the Senate floor, their hopes for bipartisan support are dim. Mr Dodd’s bill passed the banking committee last month without a single Republican vote. Since then, the Republican leadership in the Senate has persuaded all of its 41 members to sign a letter criticising what they regard as the Democrats’ partisan approach to the bill thus far. If they hold fast, the Democrats are one vote shy of breaking a filibuster.
Several aspects of the bill invite debate. Perhaps most notable is the proposal for a $50 billion fund, paid for by the banks, to keep banks in trouble from becoming a systemic risk to the financial system. The Republicans, echoing the anger of conservative populist “Tea Party” activists, have said that this will only encourage future bail-outs. The Democrats respond that it is to assist orderly liquidation of failing banks, not to rescue them. In practice, $50 billion might not be enough to cover the failure of even a single big bank. Both parties keep quiet about having supported past bail-outs for systemically important banks in 2008 and 2009. They would rather compete to show which is the most unwilling to do so in future.
The other big point for debate is a new consumer financial-services authority. Congress has already passed a bill reforming credit-card practices, and now wants a new body that will regulate things like mortgages and payday loans. Republicans worry about the cost of compliance that a new, standalone authority (with an aggressively pro-consumer slant) will impose on banks, especially small ones.
The third sticking-point is over derivatives. Both the banks and Republicans are opposed to the bill's requirement that most derivatives trading be moved from dealer markets to regulated exchanges. Meanwhile a separate bill is moving through the Senate agriculture committee which is significantly tougher on banks than Mr Dodd’s proposal: it would force them to give up their swaps desks. For his part, Mr Obama says he will veto a bill that does not reform derivatives.
There is room for compromise on all these issues. But so far both sides prefer to play chicken: the Republicans to filibuster, the Democrats to paint the Republicans as protecting their fat-cat friends. The conventional wisdom is that the SEC's case against Goldman now makes some kind of reform virtually inevitable; but it is not yet a foregone conclusion. Republicans do not want to be on the wrong side of this issue, but neither do they want to be rolled over as they were over health care: told to support a Democrat-only bill or get out of the way. Nor do American voters want the Democrats to do this alone. On such large, complicated issues they prefer reforms to come with a bipartisan stamp of approval.
The Democrats have the option of trying to peel off just one or a tiny number of Republicans. Susan Collins of Maine, along with Richard Shelby of Alabama and Bob Corker of Tennessee are the names mentioned most often. But the Republican leadership has been extraordinarily successful in keeping usually independent-minded senators on side. One Republican defector will not be enough to brand a bill bipartisan, and so any potential 60th vote from the Republican side will face enormous pressure from the leadership not to hand the Democrats a victory they will claim as theirs alone.
So the Democrats face a risk too. By not compromising with Republicans, they may be held in as much scorn as Republicans if a bill falls just short. Americans are still frustrated about the way health care was handled. Financial reform may be much more popular, but Democratic strategists will nonetheless have to remember that the way they have used their big majorities in both houses of Congress has made them extraordinarily unpopular, with just seven months to go before mid-term elections.
In a rare joint appearance, U.S. Ambassador to the UN Susan Rice and Russian Ambassador to the UN Vitaly Churkin called on other member states to voluntarily dial down their nuclear arsenals and backed the idea of a global nonproliferation regime in advance of the Nuclear Non-Proliferation Treaty review. Google/Agence France-Presse (4/19) , Google/The Associated Press (4/19)
We were surprised to find that the Interior Ministry is explaining its position by saying that the law permits it to use force to break up illegal protests, even by using live ammunition, according to an ancient law from the days of British colonialism."
Egyptian opposition party Muslim Brotherhood lawmaker Hamdi Hassan. Read the full story.
"Sana, previously called MocaMobile, was selected for both the mHealth Alliance Award and the Vodafone Americas Foundation's 3rd place prize for its Wireless Innovation Project. ... Sana addresses the limited reach of specialists who, especially in the developing world, often are accessible only in a few large cities."
Pakistan takes action on UN assassination report Responding to a UN probe that found deliberate efforts by police to scuttle the investigation, Pakistan suspended several officials involved with the investigation -- including one senior police officer who ordered the murder scene cleaned before evidence could be gathered, and one official who described the assassination as the work of Pakistani Taliban leader Baitullah Mehsud. Pakistani officials have not taken action against Pakistani military or intelligence figures. Pakistani government officials suggested that they would consider charging former military leader Pervez Musharraf, who was in power at the time of Benazir Bhutto's death. The Guardian (London) (4/20)
UN concerned DR Congo exit would worsen sexual violence The battle against sexual violence will likely suffer if the United Nations peacekeeping force pulls out from the Democratic Republic of Congo, the UN special representative on sexual violence in conflict Margot Wallstrom warns. DR Congo authorities are pushing for an end to the UN mission. The country's laws on sexual violence are poorly implemented, and thousands of rapes are committed with impunity every year. Reuters (4/19)
ILO: G20 economic crisis efforts protected 21 million jobs Austere fiscal policies by members of the G20 in the face of a global economic crisis have saved or created 21 million jobs over the past year, the United Nations' International Labour Organization said Monday. Governments should continue to keep protection measures in place as demand and growth remain weak in most countries, the ILO warned. Reuters (4/19)
Malaria-control funding brings results A tenfold hike in anti-malaria funding across the African continent since 2004 has dramatically cut the disease's rate of progress. A joint study by UNICEF and the Roll Back Malaria Partnership found that 2010 levels for anti-malaria funding still fall short of the $6 billion needed to implement malaria inventions throughout Africa. The report says that sustained and reliable development is necessary for African countries, particularly south of the Sahara, to make progress toward the Millennium Development Goals. Google/Agence France-Presse (4/19)
Bad weather imperils Qinghai earthquake survivors Weather forecasts of snowfall amid freezing temperatures have aid groups concerned for the safety of the tens of thousands in China's Qinghai province left homeless by the April 14 earthquake. Chinese authorities and relief organizations are racing to get supplies into the remote area, but thousands of families are still sleeping out in the open. AlertNet.org (4/19)
"American Idol" David Cook speaks out for Ethiopian girls "American Idol" winner David Cook, who traveled to Ethiopia as part of the Idol Gives Back program, told reporters that UN programs were making a significant difference for Ethiopian girls, but there's still a long way to go. The UN Foundation's Elizabeth Gore said she hoped the event would inspire Americans to give. "Something we take for granted at home -- $5 -- can actually mean changing a girl's life and allowing her to go to school," Gore said. Canada.com/Canwest News Service (4/19)
African farmers feel the heat from climate change African farmers are suffering as rain patterns become increasingly erratic as a consequence of climate change. Agriculture experts say immediate investment in irrigation, infrastructure and better farming supplies will help the continent's farmers adjust to the changes. AlertNet.org/Reuters (4/20)
World Bank: East Asia has a chance to reduce emissions East Asian countries can stabilize their greenhouse-gas emissions by 2025 if governments in the region act quickly, the World Bank says in a report. Prompt investment in renewable-energy sources and new technologies would help individual countries retain growth rates and help transition economies onto a sustainable track. Google/Agence France-Presse (4/19)
New Zealand backs UN efforts on indigenous rights New Zealand has reversed its previous stance and will now support the United Nations Declaration on the Rights of Indigenous Peoples, authorities announced Monday. New Zealand was one of only four countries -- along with the U.S., Canada and Australia -- to vote against the declaration, which acknowledges indigenous communities' land, resources and human rights. Google/Agence France-Presse (4/19)
Egyptian security forces mull firing on protesters During an Egyptian parliamentary hearing in which a security minister answered questions about the use of force against protesters at a political demonstration, the official warned that Egyptian security forces could legally fire on pro-democracy demonstrators if necessary. A lawmaker from the Muslim Brotherhood opposition party said that they take the threats seriously. The opposition party member said that two ruling party officials said that security forces were too lenient with protesters, but one of those officials said his remarks were taken out of context. Google/The Associated Press (4/19)
Iraqi security forces kill 2 senior al-Qaida leaders Iraqi President Nouri al-Maliki and U.S. military officials confirmed that Iraqi intelligence officials killed two senior al-Qaida leaders in a shootout near Tikrit. U.S. Vice President Joe Biden, who praised the Iraqi military for its maturity, said that the Iraq-led operation was based on intelligence developed by Iraqi security forces and assisted by U.S. forces. U.S. Gen. David Petraeus said that Abu Ayub al-Masri and Abu Omar al-Baghdadi were responsible for the deaths of thousands of Iraqis as well as U.S. soldiers. Al-Jazeera (4/19) , Google/Agence France-Presse (4/19) , The Christian Science Monitor (4/19)
Egypt to call for nuclear-free zone in Middle East At a meeting of the 189 signatories to the Nuclear Non-Proliferation Treaty next month, Egypt is expected to revive a 1995 resolution calling for the Middle East to become a zone free of all nuclear weapons and weapons of mass destruction -- a move that would bring direct pressure to bear on Israel. Diplomats said that a resolution calling for a regional conference could draw U.S. backing. The Washington Post (4/20)
Rhetoric escalates over Korean warship sinking South Korean President Lee Myung-bak pledged that he would discover the source of the explosion that sank a South Korean warship in the Yellow Sea near the border with North Korea -- a source that is increasingly looking like an external explosion. South Korean Foreign Minister Yu Myung-hwan said that South Korea might raise the incident before the UN Security Council if North Korea is indicated as responsible. CNN (4/19)
Ethnic militias resist Myanmar order to merge and serve A series of cease-fire agreements between the junta in Myanmar and a number of ethnic militias is fading, raising the prospect of renewed conflict. Members of the largest armed ethnic militia, the Kachin Independence Army, say that they do not want to serve as a border military unit under government control, and they have resisted government calls to merge and consolidate with other armed groups or disarm in advance of nationwide elections. Among the Wa, the Shan, the Karen and the Kachin minority groups opposed to Myanmar's rule, the Karen and the Shan groups are involved in fighting with government troops. National Public Radio/The Associated Press (4/20)
UN Wire is a free service sponsored by the United Nations Foundation which is dedicated to supporting the United Nations' efforts to address the most pressing humanitarian, socioeconomic and environmental challenges facing the world today.
WASHINGTON – The Securities and Exchange Commission is examining whether any of the 19 largest U.S. banks are using an accounting trick that a bankruptcy examiner has said led to the collapse of Lehman Brothers, SEC Chairman Mary Schapiro said Tuesday.
Schapiro testified at a congressional hearing that the SEC is scrutinizing Lehman's use of the accounting move, known as Repo 105, that allowed it to mask its weakness before it failed.
She said the agency has sent letters to the 19 banks, seeking information about any such transactions.
The hearing is looking into what led to Lehman's meltdown in September 2008. But it also drew lawmakers into a partisan squabble over the Obama administration's push for financial regulatory reform.
Lehman's collapse was the biggest corporate bankruptcy in U.S. history and threw global financial markets into crisis. The hearing probed the bankruptcy examiner's report that said the firm masked $50 billion in debt.
Schapiro said the SEC is examining "the truthfulness of the disclosure" in Lehman's financial filings.
"It's not clear any action by the SEC could have saved Lehman Brothers, but we are determined to use the lessons of that experience to be more effective," Schapiro said. "More vigorous oversight and a new approach are essential."
Richard Fuld, Lehman's former CEO, said he has "absolutely no recollection whatsoever" of any documents related to the so-called Repo 105 accounting maneuver. After reviewing the transactions, he said the firm complied with accounting standards.
Fuld expressed regret about the company's collapse.
"One day we had a firm," he said. "The next day we did not. A lot of people got hurt by that, and I have to live with that."
The bankruptcy examiner, Anton Valukas, criticized the company and the SEC.
"Although the public had a right to expect that firms like Lehman were being regulated in a meaningful way, in reality, they were not," Valukas told lawmakers. Regulators, he said, missed opportunities to alter Lehman's conduct "before its situation had reached the point of no return."
In his report last month, Valukas disclosed that Lehman put together complex transactions that allowed the firm to sell securities — mainly those made up of mortgages — at the end of a quarter. That wiped them off its balance sheet, avoiding the scrutiny of regulators and shareholders. Then the bank quickly repurchased them — hence the term "repo."
Valukas' report reached no conclusion on whether executives violated securities laws. But it did suggest there may be enough evidence to support civil damages in a trial.
Two lawmakers testified at the hearing that Lehman's meltdown cost school districts, local governments and hospitals millions, forcing them to make cutbacks.
Rep. Anna Eshoo, D-Calif., said 40 municipalities nationwide lost around $1.7 billion after the firm went under. She is introducing legislation that would require the federal government to compensate those governments. Eshoo said San Mateo County, which is in her district, lost $155 million.
Another lawmaker said numerous governments and hospitals in his state suffered huge losses.
"These were school districts and local governments that made investments that they believed were conservative," said Rep. Ed Perlmutter, D-Colo. "They trusted that federal regulators were keeping a watchful eye on companies like Lehman Brothers."
Treasury Secretary Timothy Geithner said at the hearing that Lehman's collapse highlights why the Obama administration's proposal to reform the financial system is needed. That legislation includes a mechanism to allow the government to safely wind down ailing financial companies whose collapse could take down the entire financial system and the broader economy.
Lawmakers used the hearing to spar over the Obama administration's push for financial regulatory reform.
Republicans asserted that regulators' failure to prevent Lehman's collapse is proof that the proposed financial reforms won't work either.
"Given their track record, giving these regulators more power will provide the markets with a false sense of security, while hampering the free market," said Rep. Scott Garrett, R.-N.J.
Republicans accused Democrats of trying to continue federal bailouts by injecting more money into Wall Street companies.
But the committee's chairman, Rep. Barney Frank, D-Mass., called that a "blatant mischaracterization," arguing that "no money can be spent in these cases until the institution is out of business."
Schapiro, who was not at the SEC in the fall of 2008, said the agency didn't do enough to oversee the five largest investment banks, even though it had authority over them since 2004. That oversight program, she said, did not have enough resources.
Going forward, "the SEC is determined to become a more effective regulator," she told lawmakers. "We are determined to use the lessons of that experience to be more effective"
Her comments come days after the SEC filed civil fraud charges against Goldman Sachs, alleging it withheld information in a complex transaction involving risky mortgage securities.
Federal Reserve Chairman Ben Bernanke testified at the hearing that the central bank wasn't aware that Lehman used the accounting move. And even if the Fed did know, it wouldn't have changed the Fed's view that the company was in bad financial shape, he said.
Although the SEC was Lehman's chief regulator, the Fed began to monitor the firm after trouble surfaced in the financial industry.
LONDON – Many European flights took to the skies Tuesday for the first time in days, with even Britain's busy airports promising to reopen, but the travel chaos was far from over: a massive flight backlog was growing and scientists feared yet another volcanic eruption in Iceland.
London airports were closed during the day Tuesday, and in the evening officials said they would reopen all U.K. airports Tuesday night. British Airways said it hoped to land two dozen flights in London from the United States, Asia and Africa.
It was the first day since Iceland's Eyjafjallajokull (ay-yah-FYAH'-plah-yer-kuh-duhl) volcano erupted Wednesday that travelers were given a glimmer of hope.
Cheers and applause broke out as flights took off from Paris' Charles de Gaulle Airport, Amsterdam and elsewhere. German airspace remained officially closed but 800 planes were allowed to land or take off, all flying at low altitude.
"Everyone was screaming in the airplane from happiness," said Savvas Toumarides of Cyprus, who arrived in New York after getting stuck in Amsterdam for five days and missing his sister's wedding. He said the worst part was "waiting and waiting and not knowing."
"We were in the hotel having breakfast, and we heard an aircraft take off. Everybody got up and applauded," said Bob Basso of San Diego, who has been stranded near Charles de Gaulle since Friday.
The Eurocontrol air traffic agency in Brussels said it expected just under half of Europe's 27,500 flights to go ahead Tuesday, a marked improvement over the last few days. The agency predicted close to normal takeoffs by Friday.
"The situation today is much improved," said Brian Flynn, deputy head of operations at the Brussels-based agency.
But with more than 95,000 flights canceled in the last week alone, airlines faced the enormous task of working through the backlog to get passengers where they want to go — a challenge that could take days or even weeks.
Passengers with current tickets were being given priority — stranded passengers were being told to either pay for a new ticket, take the first available flight or to use their old ticket and wait for days, or weeks, for the first available seat.
"I'm supposed to be home, my children are supposed to be in school," said Belgian Marie-Laurence Gregoire, 41, who was traveling in Japan with her husband and three children, ages 6, 8, 10. They said the best that British Airways could do was put them on a flight to Rome.
"I'm tired. I just want to go home," she said.
Although seismic activity at the volcano has increased, the ash plume appeared to be shrinking Tuesday. Still, scientists were worried that the activity could trigger an even larger eruption at the nearby Katla volcano, which sits on the massive Myrdalsjokull icecap and has erupted every 80 years or so — the last time in 1918.
"The activity of one volcano sometimes triggers the next one, and Katla has been active together with Eyjafjallajokull in the past," said Pall Einarsson, professor of geophysics at the Institute of Earth Sciences at the University of Iceland.
At eruption at Katla could spark similar travel disruptions, depending on the prevailing winds. But in Iceland's eight volcanic eruptions in the last 40 years, only the recent one at Eyjafjallajokull was followed by winds blowing toward northern Europe.
An international pilots group warned of continued danger because of the ash, which drifted over the North Sea and was being pushed back over Britain on Tuesday by shifting north winds.
A Eurocontrol volcanic ash map on Tuesday listed the airspace between Iceland, Britain and Ireland as a no-fly zone, along with much of the area around the Baltic Sea. The ash cloud also spread westward from Iceland, toward Greenland and Canada's eastern coastline.
Still, planes were being allowed to fly above 20,000 feet (7,000 kilometers) over the United Kingdom.
Herbert Puempel at the World Meteorological Organization in Geneva said there was a small possibility that some far-flung airports on the Canadian east coast, such as Goose Bay, might be affected by the ash but said "a serious effect on the eastern seaboard I think is very unlikely."
The volcano was also grumbling — tremors, which geologists believe to be caused by magma rising through the crust, can be heard and felt as far as 16 miles (25 kilometers) from the crater.
"It's like a shaking in the belly. People in the area are disturbed by this," said Kristin Vogfjord, geologist at the Icelandic Met Office.
Scottish airports let in a handful of domestic flights, while Switzerland and northern Italy also opened their airspace. Some flights took off from Asia to southern Europe and came in from Cairo, where at least 17,000 people had been stranded.
Airports in central Europe and Scandinavia were open and most of southern Europe remained clear. Spain volunteered to be an emergency hub for overseas travelers trying to get home and piled on extra buses, trains and ferries to handle the expected crush.
Britain sent a navy ship to Spain to fetch 500 troops coming home from Afghanistan and pick up hundreds of passengers stranded by the chaos.
"How many modes of transport have I been on? I have lost count now," said Angus Henderson, 40, of the 1st Battalion, Royal Welsh, an infantry unit. "Planes, buses and now ships."
Henderson was pressing to get back to Britain to see his wife and three small kids and attend the funeral of a colleague killed in Afghanistan. But the trip on the HMS Albion, a 570-foot (173-meter-long) amphibious assault ship, will take 40 hours from Santander in northern Spain to Portsmouth, England.
Patricia Quirke of Manchester said she and nine other families drove all night across Spain just to catch the Royal Navy ride.
Many Asian airports and airlines remained cautious, and most flights to and from Europe were still canceled. Australia's Qantas canceled its Wednesday and Thursday flights from Asia to Frankfurt and London, as well as return flights to Asia, saying the situation was too uncertain.
The aviation industry — facing losses of more than $1 billion — has sharply criticized European governments' handling of the disruption that grounded thousands of flights on the continent. But its first order of business was to cut down that flight backlog.
"We've never had a backlog like this before," said Laurie Price, director of aviation strategy at consultant Mott Macdonald.
Spain's main airline Iberia said it was using bigger planes and adding extra flights to help stranded passengers get to their destinations. Other airlines were hiring buses to help customers get home.
Most airlines said they would let passengers with tickets for a departing flight this week go first, but offered to rebook customers on another plane for no additional cost.
British Airways, which has canceled about 500 flights a day for the past five days, said it was trying to clear its backlog on a case-by-case basis. It said travelers could either rebook online or claim a full refund, and it also urged travelers booked to fly this week to consider canceling their trips so the airline could fly more people home.
In the end, many people did not get a flight out Tuesday.
Phil Livingstone, a university student from St. Helens, England, spent three nights sleeping on chairs and eating cups of noodles at Seoul's Incheon International Airport.
"Hope is high at the minute just because it's the only thing we've got," he said.
NEWSNIGHT - Tuesday 20 April 2010 at 10.30pm on BBC Two Topic: bbc 2, biodun iginla
============================================================ by Biodun Iginla, BBC News, London ============================================================
------------------------------------------------------------ Presented by Jeremy Paxman ------------------------------------------------------------
Hi Biodun!!!
US bank Goldman Sachs has reported an extremely strong quarterly profit, with net earnings of $3.46bn (£2.25bn) for the three months to March, up from $1.8bn a year ago.
However, the announcement comes amid news that UK financial regulators have decided to follow their US counterparts in pursuing civil fraud allegations against the company - forcing the issue of investment banking's business model into the UK electoral limelight.
Tonight, Paul Mason looks at what has changed in the banking system since boom and bust left the state picking up the pieces.
And, in a live interview, Jeremy Paxman will be asking Chancellor Alistair Darling whether his party, which was at the helm during the crash, can really be trusted to change the banks.
Plus, as hopes that most UK flights could soon return to the air are dashed by more volcanic ash drifting south from Iceland, Susan Watts examines the science behind the decisions being made and whether the air authorities from another region would have made a different choice.
We will also have the latest on how the plan to use Spain as an extraction point for stranded Britons is faring.
Also tonight, Michael Crick is in Dundee, and we have a live interview with Scottish National Party leader Alex Salmond who, when launching his party's manifesto today put the case for a hung parliament and called for Scottish electors to vote SNP and achieve a "balanced parliament".
And we have the next instalment of Motorway Man, which this week sees Margaret Beckett arriving in her caravan and Stephen Smith weighing up the election odds with racing pundit John McCririck.
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