Homeowners often complain of projects that cost more than estimated, delays, low-quality workmanship, miscommunications, and outright scams, all of which can pack a wallop to your wallet.

While due diligence isn&&9;t a guarantee that your home repair experience will be stress-free, it&&9;s the best way to protect yourself from these nightmares.

Perhaps a friend or neighbor recommended a repair person, or maybe you found one via an online forum or in the phone book. Remember that a recommendation is just the first step in securing reputable help. Do be sure that you also keep these important things in mind:

1. Ask the service professional you are considering to provide references. You&&9;ll want to contact at least two other sources who can confirm a job well done.

2. Make sure whoever you hire has adequate insurance (both general liability and worker&&9;s compensation) to cover any mishaps in your home. Otherwise you may be liable for the coverage if the unthinkable happens.

3. Check to see that your prospective contractor has professional credentials and affiliations. A contractor who is affiliated with organizations in his or her field is more likely to stay abreast of new developments in their area of expertise, as well as having access to the professional resources available to members. Your job is safer in the hands of someone who is in the field as a career, rather than simply trying out a new sideline.

Often, you&&9;ll see the words "licensed, bonded, and insured" in advertisements for home fix-it professionals. Licensing refers to a professional registration with a governing body (like a state) that typically requires the contractor to adhere to certain standards business cards. If a contractor is bonded, it means he or she has set aside funds in an account that is secured by the state; these funds are made available should a consumer win a claim against a company. And again, insurance is an important safeguard for your protection (as well as the company&&9;s) should anything go terribly wrong.

4. Find a home pro who accepts credit cards. Paying by credit card affords you much greater protection than cash or check in case you are dissatisfied with a job.

5. Get it all in writing. Make sure your estimate details each part of the work to be done, what kind/quality of materials will be used, who is responsible for supplying the materials, and a comprehensive cost breakdown so you can see exactly for what services you&&9;ll be paying.

6. Reward longevity. Many years in the business means that many more previous customers you can contact for a recommendation.

Of course, no one can guarantee that the home repairs you hire out will be problem-free, but taking these steps is as close as you can get to ensuring quality workmanship. That&&9;s peace of mind you can take all the way to the bank.

For more Foolishness:

What Will Be the Best Stock for 2010?The Greatest Stocks of the Next GenerationBuy These Stocks Before Wall Street Catches On

How to Hire Reputable Contractors

The insurance giant American International Group said on Tuesday that it had closed two debt-for-equity transactions that reduce its debt with the Federal Reserve Bank of New York by $25 billion.

A.I.G. said that under the agreement the New York Fed would receive preferred shares with a liquidation preference worth $16 billion in American Life Insurance Company and $9 billion in American International Assurance Company Ltd., which would be placed in special purpose vehicles .

The insurer said that the special purpose vehicles would prepare the two subsidiaries for initial public offerings or third-party sales, and in a separate statement said it was moving forward with the separation of American Life Insurance.

The liquidation preference is an undisclosed percentage of the estimated fair market value of the two A.I.G. units. A.I.G. retains the common interests in American Life and American International Assurance, and thus would benefit should the market valuation of the two units be in excess of $25 billion low fee payday loans.

A.I.G. said that as of Tuesday, its outstanding principal balance under the New York Fed credit facility was about $17 billion and the total amount available under the facility had been reduced to $35 billion from $60 billion.

&S220;We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities,&S221; the A.I.G. chief executive, Bob Benmosche, said in a statement.

A.I.G. in Debt-for-Equity Swap With New York Fed

WASHINGTON (MarketWatch) -- After several months of improvement in housing, manufacturing and sales, the U.S. economic recovery appeared to sputter in October, leading investors and analysts to re-evaluate whether their forecasts were too rosy.

The economic data to be released in the holiday-shortened week ahead could provide a few more "what-were-we-thinking?" moments. All in all, though, the data shouldn't kill hopes for modest growth while we wait for the private sector to start hiring again.

Last week, a "reality check" rippled through the markets following weak data on housing starts and industrial production, said Nigel Gault and Brian Bethune, U.S. economists for IHS Global Insight. They expect further "mixed and somewhat ambiguous" reports in the coming week, but, on whole, they say "the evidence is still positive and continues to point to a nascent recovery" that will need "strong policy support" for some time.

MarketWatch consensus See economic calendar date report forecast previous Nov. 23 Existing-home sales 5.74 million 5.57 million Nov. 24 GDP revision 2.8%  3.5% Nov. 24 Consumer confidence 45.5 47.7 Nov. 25 Jobless claims 495,000 505,000 Nov. 25 Durable goods orders 0.5% 1.4% Nov. 25 Durables ex-transportation 0.4% 1.2% Nov. 25 Personal income 0.1% 0.0% Nov. 25 Consumer spending 0.6% -0.5% Nov. 25 New home sales 390,000 402,000 Nov. 25 Consumer sentiment 67.0 66.0 Housing

Even four years after the peak, the state of the housing market remains central to the medium-term outlook.

Construction, sales and prices picked up over recent months after hitting generational lows, boosted in part by federal policies and in part by improvement in some of the fundamentals. But the weakening in the October data ahead of the anticipated expiration of the federal home-buying subsidy has put the strength of those fundamentals to the test.

The home-buyer tax credit, of course, has now been extended and even expanded. But buyers and builders didn't know that in October.

Last week, we found out that builders cut back on permits and starts on single-family homes in October, in anticipation that the tax credit would expire on Nov. 30.

This week, we'll get October data on sales of new and existing homes.

Economists surveyed by MarketWatch expect sales of existing homes to rise about 3% to a seasonally adjusted annual rate of 5.74 million. It would be the highest sales rate since June 2007. And it would reflect some sales of buyers rushing to get in ahead of the Nov. 30 deadline. Existing-home sales are recorded at closing.

By contrast, sales of new homes are recorded when the contract is signed, which is at least a month and often much more before the sale closes. To close on a sale before Nov. 30, a buyer would have had to sign contract in September or early October at the latest.

In part because the deadline would have passed for most buyers in October, sales of new homes are projected to have declined about 3% to a seasonally adjusted annual rate of 390,000, the survey says easy payday loans. Sales of new homes have underperformed compared with existing homes, probably because buyers can get a better deal on a foreclosed home or on a home owned by someone who needs to sell, fast.

Federal policies are clearly supporting the market, but there is uncertainty about how strong it would be without the support. Economists for Barclays Capital say that sales of existing homes would have risen 10% without the tax credit, instead of the 24% that has been recorded with it.

Although home prices have fallen and mortgage rates are very low, the housing market faces considerable problems. Foreclosures continue to rise and vacancy rates are at record levels, which mean prices could fall another 5% to 10% by the middle of 2010, according to Jan Hatzius, chief economist for Goldman Sachs.

If prices, sales and construction do sag, banks are likely keep credit extremely tight, which in turn could weigh on the pace of recovery, Hatzius said.

GDP revisions

The other big story for the week could be the revision to third-quarter growth figures. Last month, the Commerce Department said real gross domestic product grew at a 3.5% annualized rate, the first gain in a year. On Tuesday, that figure is likely to be revised to about 2.8%.

The revision comes from more complete data. In the first go-around, the government statisticians must estimate many of the key inputs for September, including foreign trade, inventories and construction spending. Now that those data have been released, it's clear the first estimates were too big.

The largest source of revisions will come from nonresidential construction spending and net exports. Spending on nonresidential structures was weaker than first thought, while imports were stronger than believed, suggesting that more of the gains from increased sales in the third quarter accrued to foreign producers, rather than domestic companies. Inventories will be revised lower.

"Despite the likely downward revision, we still believe that the third quarter will prove to be the first quarter of recovery and that it demonstrates a decisive turn in the economy," wrote economists for Barclays Capital.

Economists see the economy growing at a pace just above its long-term trend. They expect GDP to grow 2.5% in the fourth quarter, 3% in the first quarter of 2010 and 3.5% in the second quarter. That's a far cry from the 6% growth seen in typical V-shaped recoveries, but it's better than a poke in the eye with a sharp stick.

Of course, those are just forecasts. No one really knows for sure how the economy will do over the next 12 to 18 months.

Economic Preview: Do weaker data show recovery is stalling?

The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.

While the pace of job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.

&S220;There&S217;s no doubt that the slashing and burning of jobs has abated quite a lot,&S221; said Allen L. Sinai, the founder of Decision Economics, a research firm. &S220;The economy is recovering, but it is a very soft recovery.&S221;

The biggest losses came in the construction, manufacturing and retailing sectors. Health care companies added 29,000 jobs to their payrolls, and the number of temporary workers increased by 34,000 &<51; a significant gain that could indicate employers are beginning to expand their businesses again.

The Labor Department also revised September&S217;s losses to 219,000 from 263,000.

Dean Baker, a director for the Center for Economic and Policy Research, said he did not expect declining unemployment rates until next spring. &S220;We may be looking at very high levels,&S221; Mr. Baker said, &S220;barring a policy response, for several years into the future.&S221;

The dissonance of the economic recovery, with steep job losses coming even as production intensifies and companies show better-than-expected profits, has placed policy makers in a delicate position.

On Thursday, in anticipation of the unemployment report, Congress overwhelmingly voted to extend benefits for jobless workers for up to 20 weeks. That will soothe the short-term financial pain of many families, but demands for a new wave of government relief may intensify if companies continue to cut back.

So far, the federal stimulus package has injected billions into local economies, giving states money, for instance, to finance construction projects or retain teachers. The housing and auto sectors have been propped up with government credits meant to encourage spending. But weak consumer demand and hefty labor costs are still forcing many employers to cut positions and reduce hours to survive.

The recession has forced many Americans to settle for part-time work because companies are reluctant to add full-time employees. The underemployment rate, which includes part-time workers, the jobless and those who have given up on searching, was 17 bad credit pay day loans.5 percent in October &<51; the highest level since at least 1994.

Even as unemployment remains high, there are signs that critical industries are gaining steam.

The manufacturing sector, considered the engine of the economy, was given its most optimistic bill of health in three years by a private group on Monday. Manufacturers added jobs for the first time in 15 months in October, the group said, largely by bringing in temporary workers or recalling laid-off workers. Economists say that the first sign of recovery in jobs will be when more companies begin bringing in temporary workers.

The economy expanded at a 3.5 percent annual rate in the third quarter, ending a year of back-to-back contractions. But whether that economic expansion will translate into immediate job creation is still widely debated.

&S220;You can&S217;t force businesses to use their profits to hire,&S221; Mr. Sinai said.

Consumer confidence is still low, and many economists believe an economic turnaround will not come until consumers feel at ease again. With families taking home smaller paychecks each month, that could take time.

For the 15.7 million Americans who were without work in October, Friday&S217;s data did little to change the realities of their daily lives &<51; mornings spent combing online job sites, afternoons devoted to fighting off bill collectors. Their r&>33;sum&>33;s will still go out, their interviews will go on, and, more likely than not, their phones will not ring.

Melissa Grodhaus, 42, a laid-off cemetery worker from Winona, Ohio, said she had filled out 150 applications since she lost her job nearly two years ago. She struggles to keep up with mortgage payments and utility bills, and she must also take care of her three children.

&S220;There&S217;s nothing here,&S221; she said. &S220;I can&S217;t see anything worse than it is right now.&S221;

Ms. Grodhaus has started selling old clothes on eBay, and she has told her children she cannot afford to pay the fees for school sports this year. Every two weeks, when the local church brings out food baskets, she rushes to pick up her share. Within minutes, she said, they are gone.

U.S. Unemployment Rate Hits 10.2%, Highest in 26 Years

Stocks fell on Wednesday as investors digested gloomy numbers on new-home sales and were unmoved by a report that showed a rise in United States durable goods orders.

The number of newly constructed homes with committed buyers was put at a seasonally adjusted annual rate of 402,000, the Commerce Department said, falling short of the 440,000 projected by economists. That marked a decrease of 3.6 percent in projected sales from August to September &<51; the first drop in five months. Analysts had expected new-home sales to increase by 2.6 percent, encouraged in part by a economic recovery program that awards first-time home buyers an $8,000 tax credit.

New-home sales have implications for the construction job market as well as consumer spending on items like furniture and appliances.

Stocks were down all day, but selling accelerated in the final hours of trading. By the end of the day, the Dow Jones industrial average was down 119.48 points, or 1.21 percent, at 9,762.69. The Standard &&8; Poor&S217;s 500-stock index was off 1.95 percent to 1,042.63 and the Nasdaq was 2.67 percent lower at 2,059.61. Stocks in energy companies and those producing materials like metals and paper goods drove the decreases.

Josh Shapiro, chief United States economist for MNR, a financial advisory firm, said the housing data showed that recovery would be slow and that housing prices might fall again.

&S220;It&S217;s still a very dicey environment,&S221; he said. &S220;There&S217;s still a lot of looming supply out there, particularly in the upper and middle price range.&S221;

The government released a report showing a 1 percent rise in orders for durable goods in September &<51; the second increase in the last three months. The jump met expectations, but total orders were still down 24.1 percent compared with a year ago, a sign that economic renewal may be slow to materialize.

Durable goods, which include long-lasting items like refrigerators and planes, offer a window into the health of the manufacturing industry and provide a preview of how busy factories will be in the months ahead free credit report instantly. Increases in durable goods orders can lead to more jobs and are considered central to the growth of the economy.

Some analysts discounted the importance of the durable-goods numbers, saying the increase was largely anticipated and not market-shaking. But Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, an economic research group, said the data suggested manufacturing would be slow to take off again.

&S220;It paints a clear picture of a weak-kneed recovery,&S221; he said. &S220;There&S217;s no aggressive, entrepreneurial, animal-spirits kind of investment.&S221;

Financial stocks were down slightly as news that GMAC Financial Services was seeking a third round of bailout financing from the United States government spread through the market.

At the close of trading, the price of crude oil was at $77.26 a barrel, down from $79.55 on Tuesday.

Traders were looking ahead to Thursday, when the government will report gross domestic product figures, which provide a hint of how quickly the economy is growing by measuring the total value of all goods and services in the economy. Wall Street analysts are expecting an annual growth rate of 3.2 percent, although on Wednesday, Goldman Sachs slashed its projection to 2.7 percent from 3 percent.

Overseas, the Nikkei stock average in Japan closed 1.35 percent down at 1,0075.05. European markets also tumbled, with the FTSE 100 in London ending down 2.32 percent, the DAX in Germany index falling 2.46 percent, and the CAC-40 in France closing down 2.14 percent.

Stocks Decline on Economic News

Bowing to pressure from Washington&S217;s pay czar, Kenneth D. Lewis agreed on Thursday to forgo his salary and bonus as chief executive of Bank of America, as new legal questions emerged about the troubled takeover of Merrill Lynch that led to his downfall.

Two weeks after abruptly announcing his resignation, Mr. Lewis promised to return the pay he received this year to avoid a confrontation with Kenneth R. Feinberg, the Obama administration&S217;s overseer of executive compensation. Mr. Lewis, who plans to retire on Dec. 31, still stands to collect a $53.2 million pension, which will fall under Mr. Feinberg&S217;s purview.

The move came as new details emerged about the role of a prominent law firm in Mr. Lewis&S217;s star-crossed acquisition of Merrill Lynch at the height of the financial crisis.

The firm, Wachtell, Lipton, Rosen &&8; Katz, initially advised Bank of America to withhold information about the perilous state of Merrill from the bank&S217;s shareholders, but later advised it to alert federal officials to the growing losses, according to four people with direct knowledge of the matter.

The developments thrust Wachtell, a white-shoe adviser to corporate America, into one of the most troubled and closely watched deals of the financial crisis. Bank of America maintains that it did not mislead investors. But its disclosures are now the subject of several state and federal investigations. The legal snarl, and shareholder ire over the deal, prompted Mr. Lewis to resign. Legal experts say the ultimate responsibility may lie with Bank of America, not its lawyers.

Bank of America plans to turn over documents Friday that are expected to shed new light on the deal and on Wachtell&S217;s role in it. The bank could face greater scrutiny if the documents show that executives knowingly misled investors or government officials.

Wachtell also advised Bank of America that it probably could not back out of the deal, even if it tried, according to the people with knowledge of the matter. And Wachtell kept Merrill&S217;s bonuses hidden from investors, without consulting the bank&S217;s management, the four people said. That, however, is often standard practice in preparing merger agreements.

A spokesman for Wachtell declined to comment on the legal advice it provided Bank of America. The bank also declined to comment. The New York attorney general, Congress and the Securities and Exchange Commission are looking into why the bank did not tell shareholders that Merrill had suffered huge losses and had made large bonus payouts just before the deal. The bank has said it does not believe it misled investors.

According to another person briefed on the matter, Edward D. Herlihy and Nicholas G. Demmo, top lawyers at Wachtell, have received subpoenas from the attorney general of New York, Andrew M. Cuomo.

Wachtell was intimately involved in the Merrill merger from the start. The negotiations took place in the law firm&S217;s Midtown Manhattan offices. Mr. Herlihy, a 25-year veteran of the firm who had long worked with Bank of America on other deals, was already close with Mr. Lewis.

In early November, a team that Bank of America put in place to oversee Merrill&S217;s transition spotted large losses as they grew on Merrill&S217;s books. Alarmed, bank executives held marathon meetings on the weekends around Thanksgiving. They contacted Mr. Herlihy with a pressing question: should Bank of America executives disclose Merrill&S217;s gaping losses to shareholders?

As the vote on the merger approached, Wachtell told the bank&S217;s executives that shareholders did not need to know about Merrill&S217;s losses, and needed to be notified only if the losses would be far worse than the fourth-quarter results at Goldman Sachs, Morgan Stanley and other peers, said the four people briefed on the matter.

Some of the documents the bank will submit on Friday will show communications between the bank and Wachtell in which they discussed analysts&S217; expectations for other investment banks.

Mr. Lewis and his chief financial officer, Joe Price, conferred with Merrill executives, and they determined the losses were likely to be of the same scale as those at the other investment banks, these people said check cash advance. In the wake of that conclusion, the bank did not send out a warning to its shareholders.

But there was some dissent within Bank of America, according to a person with knowledge of executives&S217; discussions. Some deputies believed the bank should disclose Merrill&S217;s predicament before the shareholder vote anyway.

Legal experts said they were surprised at the advice Wachtell gave Bank of America about Merrill&S217;s losses.

&S220;I&S217;m taken aback by the advice,&S221; said Donald C. Langevoort, a professor at Georgetown Law. &S220;When shareholders are asked to vote, they deserve a fine-tuned picture and are not to be expected to piece together pieces of public knowledge, public awareness and economic awareness in order to make the right decision.&S221;

Charles Elson, a bank shareholder and professor of corporate governance at the University of Delaware, found Wachtell&S217;s advice defensible but disturbing.

&S220;I think the shareholders are entitled to know everything that management knows on a vote of this size.&S221; he said. &S220;Let the investors decide. The losses might have been in line with Goldman and Morgan, but Bank of America wasn&S217;t acquiring Goldman or Morgan.&S221;

Several weeks after the shareholder vote, Goldman and Morgan Stanley reported their quarterly earnings. It then became clear that Merrill was performing far worse than its peers, these people said. It is unclear whether Bank of America at that point considered disclosing Merrill&S217;s losses, given that the shareholder vote was already over and the deal was just weeks from closing.

On Dec. 17, Mr. Lewis and Mr. Price flew to Washington to meet with officials from the Federal Reserve and the Treasury Department. They traveled with talking points in hand that had been prepared by Wachtell. The first item on the page was a note suggesting that the executives should tell the government officials that Bank of America was considering backing out of the deal, said one of the people with knowledge of the matter.

That talking point flew in the face of legal advice that Wachtell had earlier given the bank, that it was unlikely that Bank of America could get out of the merger given the terms of the deal. In particular, the law firm told the bank it probably could not end the deal even though the value of Merrill&S217;s assets were more degraded than first thought, the people said. The bank also considered trying to undo the merger based on concerns about Merrill&S217;s liquidity.

Since the deal closed early this year, Mr. Herlihy has continued working with the bank, which has since hired two other law firms. The bank had kept the details of Wachtell&S217;s advice under wraps, and did not agree to send the investigators documents reflecting the advice until a few days ago, when it gave up its right to keep conversations between clients and their lawyers private.

Even as the bank waives that right, Wachtell has not given investigators its own in-house documents to investigators. Because Wachtell never provided its own internal documents to the bank, the law firm argues, it owns the documents, the four people familiar with the matter said.

&S220;We have not refused to provide any documents or information to the bank,&S221; said Mr. Anders, a partner at the firm.

Legal experts said the law firm&S217;s advice would either make a case against Mr. Lewis and the bank, or weaken it. While Mr. Lewis relied on his lawyers&S217; advice, corporate responsibility generally rests with the chief executive.

&S220;It&S217;s hard to overstate how important it is knowing what they were told by their lawyers,&S221; said David Skeel, a law professor at the University of Pennsylvania. &S220;It will make it much easier to isolate who knew what, and who was on board with the decisions, and who wasn&S217;t.&S221;

Jack Healy contributed reporting.

Bank Chief Forgoes Pay for 2009

A year after Washington rescued the banks considered too big to fail, the ones deemed too small to save are approaching a grim milestone: the 100th bank failure of 2009.

In what has become a ritual, the Federal Deposit Insurance Corporation has swooped down on a handful of troubled lenders almost every Friday, seizing 98 since January alone and putting their assets into the hands of another bank.

While the parade of failures still represents a mere fraction of America&S217;s small banks, it underscores a growing divide between them and large institutions like Goldman Sachs, JPMorgan Chase and U.S. Bancorp, which are slowly growing stronger as the economy improves.

Burdened by worsening commercial real estate loans, many small banks&S217; troubles are just beginning. Many analysts say that the now-toxic loans could sink hundreds of small lenders over the next few years and place a significant drag on the economy.

Already, the bank failures are placing enormous strain on the F.D.I.C. and its fund, which keeps depositors whole. Flush with more than $50 billion only two years ago, the fund recently fell into the red.

The prospect of more failures has led the F.D.I.C. to seek new ways to replenish the fund with higher and earlier payments by healthy banks, even after setting aside reserves for future losses.

The initial wave of failures has also unsettled some communities, even though most of the troubled institutions have been bought by other banks rather than shuttered. While deposits are safe thanks to federal insurance, the new buyers often do not have the same ties to local businesses as the former owners.

In some cases, they tighten lending and make it harder for longtime customers to obtain loans or favorable terms. In other cases, managers of the new bank make other changes, like ending offers for high-interest certificates of deposit and calling in certain lines of credit. In the longer term, some new owners are likely to close branches of the bank they have acquired in order to cut costs.

&S220;In the near term, bank failures can be painful,&S221; said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation. But a bank that is teetering on collapse is not going to lend, she said, and &S220;that&S217;s not good for the economy.&S221;

Regulators expect closures to ripple through hundreds of small banks over the next couple of years, especially in the Midwest and Southeast, where lenders have been hard hit by the recession.

These banks loaded their balance sheets with loans to home builders and other property developers to make up for lost business in credit card and mortgage lending that bigger competitors wrested away. They eased their lending standards during the boom years and made big bets on new housing developments, strip malls and office projects. Now, many of those deals are falling apart, and the lenders are scrambling to raise capital to cushion the losses.

&S220;These banks were big enough that they could do loans that were fairly sizable,&S221; said John R. Chrin, a former investment banker who is now an executive in residence at Lehigh University. &S220;If they go bad, they are toast.&S221;

The pace of bank failures is expected to accelerate in the coming months. There were just 25 bank failures in 2008 and just 10 in the five previous years. But in September alone, regulators took over 11 banks in nine states that were saddled with soured commercial real estate loans, from Corus Bank, a $7 billion construction lender based in Chicago that financed projects across the country, to Brickwell Community Bank in Woodbury, Minn., which had just a single branch and $72.6 million in assets.

Three others were taken over this month, including Warren Bank, a small lender just outside Detroit. Regulators swept into the offices on a recent Friday night after brokering a sale to Huntington Bancshares of Ohio, a regional bank with a big presence in Michigan.

By Saturday morning, Huntington had taken control of the bank&S217;s computer systems, started reassuring depositors and placed vinyl signs with its name outside some of the Warren Bank branches free credit scores.

Even though the process went smoothly, customers still found it unnerving.

&S220;People expect companies to go out of business, not banks,&S221; said James R. Fouts, the mayor of Warren, Mich., whose working class city of 140,000 has had a front row seat to the collapses of General Motors and Chrysler. &S220;That is something that you expect to hear about in the Great Depression, and it further exacerbates the feeling that financially, the country is not yet in stable shape.&S221;

The banking system may also be facing a long recovery. About $870 billion, or roughly half of the industry&S217;s $1.8 trillion of commercial real estate loans, now sit on the balance sheets of small and medium-size banks like these, according to an analysis by Foresight Analytics, a research firm. For most of the banks, this represents the biggest and riskiest part of their loan portfolio, since they lack the trading streams and fee businesses of their larger rivals. And as a group, small banks have written off only a tiny percentage of the losses that analysts expect them to incur.

In fact, applying only the commercial real estate loss assumptions that federal regulators used during the stress tests for the big banks last spring, Foresight analysts estimated that as many as 581 small banks were at risk of collapse by 2011.

By contrast, commercial real estate losses put none of the nation&S217;s 19 biggest banks, and only about 5 of the next 100 largest lenders, in jeopardy.

Even Citigroup, the biggest and most troubled of the banks, has a relatively small portion of its loans tied to commercial real estate and may begin to recover faster than other rivals.

Gerard Cassidy, a veteran banking analyst, said the problems call to mind the wave of small bank failures in Texas and New England two decades ago during the savings and loan crisis &<51; only on a national scale.

Back then, regulators closed more than 700 lenders in those regions. Today, Mr. Cassidy projects that as many as 1,000 small banks will close over the next few years and that their losses will be more severe. &S220;It&S217;s a repeat on steroids,&S221; he said.

But Ms. Bair said the savings-and-loan crisis far surpassed the current situation. &S220;We aren&S217;t anywhere close to that today, and based on current projections, I don&S217;t think we will get near that pace,&S221; she said.

Even if hundreds of banks collapsed, they would not threaten to bring the financial system to its knees.

Together, the 8,176 smallest banks control just 15 percent of the industry&S217;s $13.3 trillion in assets. And thanks to the expansion of the government&S217;s deposit insurance program, regulators also appear to have squelched the threat of bank runs that brought down IndyMac Bank and Washington Mutual last year.

Consumer deposits are now insured up to $250,000 per account, and the F.D.I.C. offers unlimited coverage on noninterest payroll accounts used by businesses.

&S220;We&S217;ve passed the panic stage,&S221; said Frederick Cannon, the chief equity analyst at Keefe, Bruyette &&8; Woods in New York.

What is more, community bank supporters say the bulk of their institutions will emerge from the crisis stronger. &S220;The community banks are picking up market share,&S221; said Camden R. Fine, the head of the Independent Community Bankers of America.

&S220;People are angry with all the shenanigans on Wall Street,&S221; he said. &S220;They believe their money stays local when they put it in a community bank, rather than sent off to Never-Never land.&S221;

Small Banks Failure Rate Grows, Straining F.D.I.C.

(Reuters) – The administrator for Lehman Brothers Holdings Inc (LEHMQ.PK) plans to seek permission to remove the claims against the bank from British courts and give out assets directly to creditors, the Wall Street Journal said, citing a joint administrator for the collapsed investment bank.

According to the paper, Steven Pearson, a partner at PricewaterhouseCoopers and joint administrator for Lehman&&9;s operations in London, said he hoped to gain the support of "90 percent" of creditors, which would reduce the risk of non-participating creditors filing claims later against those who do participate no faxing payday loan.

Under the proposal, expected to be announced later on Monday, creditors who agree in writing will be bound to the plan, the paper said, adding that such a move would allow the administrator to set a time-frame for the release of the assets.

PricewaterhouseCoopers did not immediately respond to an email sent by Reuters.

(Reporting by Biswarup Gooptu in Bangalore, editing by Will Waterman)

Lehman administrator looks to dole out assets: report

Who will lead Bank of America out of this mess?

That question is reverberating through Wall Street and Washington after the abrupt resignation of Kenneth D. Lewis, the bank&S217;s beleaguered chief executive. On Thursday, a day into this remarkable boardroom drama, bank insiders and a rapt audience in the financial community were grasping for a clear answer.

No sooner did news of Mr. Lewis&S217;s resignation break Wednesday evening than the handicapping began. Wall Street odds-makers tossed out the names of half a dozen possible successors. But Bank of America directors, many of them stunned by the turn of events, have only just begun to consider their options. The search is expected to take weeks.

For all the names being floated, few banking executives have the skill and experience to run Bank of America, a coast-to-coast giant with nearly $1 trillion in deposits &<51; and a bunch of giant-size problems.

Some executives with the right r&>33;sum&>33; have, like Mr. Lewis, fallen from grace during the financial crisis. Few would come without baggage. While federal regulators will not handpick the successor, they will effectively have veto power of the board&S217;s choice, according to a person briefed on the matter.

Whoever gets the job will face the daunting task of guiding Bank of America into its post-bailout future. The bank has yet to repay the many billions of taxpayer dollars that propped it up during the worst of the crisis.

Its controversial takeover of Merrill Lynch, which nearly undid both companies, remains problematic. And the bank&S217;s legal troubles &<51; and Mr. Lewis&S217;s &<51; are formidable.

So while Mr. Lewis transformed Bank of America into national behemoth, his successor must grapple with this troubled legacy. The new leader must repair the bank&S217;s strained relationship with its regulators, and perhaps, set it on a new course.

&S220;It is not only the choice of who is going to be the captain, but also what direction the ship needs to sail,&S221; said Rakesh Khurana, a leadership and corporate governance professor at Harvard Business School.

Mr. Lewis, who intends to leave on Dec. 31, did not groom an heir. Indeed, his resignation came just two months after Bank of America&S217;s board drew up a list of deputies who might fill the top job &<51; but then refused to select one, believing that Mr. Lewis would stay, according to two people with knowledge of the board&S217;s actions.

Now the board, in a state of upheaval, is moving quickly to interview several internal candidates. It plans to designate a group of directors on Friday to lead the search for Mr. Lewis&S217;s replacement. It also plans to hire an executive search firm to review outside prospects.

One controversial option under consideration would be to name an interim chief executive, someone who might stay in the position for two or three years. An interim leader might be viewed as a lame duck &<51; a significant risk, considering the bank&S217;s challenges &<51; but it would give Bank of America time to cultivate another executive to take over.

One possible interim chief is Gregory L. Curl, the bank&S217;s chief risk officer and the architect of Mr. Lewis&S217;s biggest deals. Mr. Curl, who is about 60 years old, has avoided the spotlight for years totally free credit score. He served as Mr. Lewis&S217;s chief negotiator in the ill-fated Merrill deal, which prompted Bank of America to seek a second financial lifeline from Washington.

The list of internal candidates is long. Brian T. Moynihan, 49, the head of the bank&S217;s big consumer unit, is perhaps the top contender. Mr. Moynihan, an adviser to Mr. Lewis who has rotated through four top jobs in the last year, has a background in law and appears to have the confidence of some members of the board. After he refused to move to Delaware to take over Bank of America&S217;s credit card unit, Mr. Lewis, who is said to believe that bank executives should do whatever it takes to serve the company, first told him there no option other than to leave. Under pressure from several directors, Mr. Lewis reversed course and named him the bank&S217;s legal chief.

Like Mr. Curl, Mr. Moynihan was closely involved with the Merrill deal, and both would probably be carefully vetted by regulators.

The odds, analysts say, are longer for Thomas K. Montag, 52, who runs the investment banking business; Barbara J. Desoer, 56, the head of mortgage operations; and Joe L. Price, 48, the chief financial officer.

The board will almost certainly consider outside candidates as well, but few of them would come without problems. Among the names that have surfaced are Robert K. Steel, 58, who has held discussions about the possibility with some of the bank&S217;s investors. Mr. Steel, a former Goldman Sachs executive and Treasury under secretary in the Bush administration, is a North Carolina native. But there are lingering concerns related to his time leading another North Carolina-based bank, the Wachovia Corporation. Among them are a television appearance where he promoted the company just before it was sold to Wells Fargo in duress and at least one open regulatory inquiry. A spokesman for Mr. Steel said he declined to comment on the search.

Other possible candidates have close ties to Bank of America, including Alvaro G. de Molina, 52, a former finance chief who now runs the finance company GMAC, which has also received extraordinary government support. Another is Gregory J. Fleming, 46, the former Merrill Lynch president, who negotiated a great deal for Merrill Lynch shareholders in selling the brokerage company to Bank of America.

Bank of America&S217;s board must make its choice amid looming questions about the bank&S217;s future. The board has been reviewing the bank&S217;s businesses, weighing the risks and opportunities for every area of the company, including those businesses that might suffer severe losses if the economy worsens. Management is also conducting a stress test similar to the one the bank provided for regulators last spring to help determine the shape of its businesses.

The conclusion of those reviews is bound to influence the choice of a new leader. But many see the Lewis era fading.

&S220;Ken Lewis had a very clear leadership style &<51; it was his way or the highway,&S221; said Meredith A. Whitney, a prominent banking analyst. &S220;Now you have a weak, undefined and to-be-determined leadership operation.&S221;

Who Can Take Charge at Bank of America?

ALTHOUGH cause-related marketing usually entails a company selecting a nonprofit in need of money and exposure, when it comes to Dawn dishwashing liquid, it was not the brand that chose the charity but the other way around.

In 1978, Alice Berkner, founder of the International Bird Rescue Research Center, which helps birds harmed by oil spills, secured a small grant from Chevron to test all major dish soaps for cleaning birds.

&S220;The one that worked better than anything else was Dawn,&S221; Jay Holcomb, executive director of the group, said in a telephone interview from California, where the center operates outside San Francisco and Los Angeles. &S220;It cut the oil faster than anything else.&S221;

The organization informed Dawn&S217;s parent company, Procter &&8; Gamble, which initially ignored requests to donate cases of the product, then finally agreed to do so in 1988, according to Mr. Holcomb. (P.&&8; G. said in a statement that because Dawn had made its debut only in 1973, &S220;In these early stages it was important for Dawn to solidify its fundamentals before pursuing opportunities the brand felt passionate about.&S221;)

In 1989, during the Exxon Valdez spill, volunteers used Dawn on crude-covered birds, and the brand figured prominently in media accounts of the disaster, as it has in animal-rescue coverage since. In recent years, Dawn also has donated as much as $100,000 annually.

Now Dawn is championing animal-rescue efforts in a television spot &<51; by Kaplan Thaler Group, New York, part of the Publicis Groupe &<51; that shows a baby duck, penguin and seal being washed in sudsy tubs. There is no voiceover, just the song &S220;Wash Away&S221; by Joe Purdy, and text stating that Dawn helped save thousands of animals caught in oil spills. Lastly, it reveals that the company will donate $1 to wildlife groups each time a consumer buys a bottle of Dawn and visits a Web site.

Dawn has highlighted wildlife in advertising campaigns intermittently since 2002 but never tried so actively to engage consumers. For Dawn to make a donation, consumers must go to dawnsaveswildlife.com &<51; which features the bird rescue group and another beneficiary, the Marine Mammal Center &<51; and enter a sequence of numbers printed on the back of bottles. So far, more than $89,000 has been raised.

A Facebook page, Everyday Wildlife Champions, features volunteering opportunities and has more than 14,000 fans. Dawn also chose a spokeswoman, the actress Minnie Driver, who has appeared &<51; with penguins &<51; on &S220;The View&S221; and the &S220;Today&S221; show. Dawn is the leading American dish soap brand, with 36 percent of the category, according to Information Resources, a market research firm whose data does not include Wal-Mart Stores. Revenue for dishwashing liquid in the 52 weeks that ended Sept. 6 totaled $623 million, a 5 percent increase over the previous year, owing perhaps to the recession driving more people to eat at home.

The contest between Dawn and Palmolive, the Colgate-Palmolive brand whose original formula ranks second, historically has been one of power versus mildness, with Palmolive saying how gentle it is on hands &<51; in the iconic 1970s television spots a manicurist, Madge, had clients soak their hands in it &<51; and Dawn asserting that it powers through grease payday loans for bad credit. Both brands secondarily claim to beat their rival at its own game, with Palmolive promoting its efficacy and Dawn its mildness.

For Dawn, sullied birds help with that secondary claim.

&S220;Some of our competitors have owned mildness, but Dawn has proved also to be gentle on hands, and this commercial demonstrates that in a different way,&S221; said Susan Baba, a P.&&8; G. spokeswoman. &S220;This is really a great way of highlighting our messaging of being tough on grease but gentle on hands.&S221;

Linda Kaplan Thaler, chief executive of Kaplan Thaler Group, said the Web site and Facebook group were inspired not by an advertising campaign but by a political one.

&S220;Instead of a getting a few people to contribute a lot of money, the Obama campaign got a lot of people to give a little, and kept telling them they were stewards for their country,&S221; she said. &S220;People don&S217;t want to be lectured to; they want to really participate.&S221;

Not all participation in the Dawn campaign has been positive, however: several comments on Facebook &<51; and on YouTube, where the commercial is posted &<51; have noted that Procter &&8; Gamble conducts tests on animals.

&S220;Go ahead and support animal testing!&S221; wrote Janina Miranda Laffitte on Facebook. &S220;Dawn donates $1.00 yes but they test their products on many animals to this day!&S221;

Kathy Guillermo, vice president for laboratory investigations at People for the Ethical Treatment of Animals, said, &S220;The bottom line is that Procter &&8; Gamble is really good in some ways and bad in others.&S221;

The company severed ties with an animal testing laboratory after a PETA investigation revealed that dogs had been mistreated, and it says that it has invested more than $250 million developing alternative testing methods, but it has not declared it will cease animal testing. (Among the top 25 dish soaps, only Seventh Generation and Method do not test on animals, according to a &S220;cruelty-free company&S221; compilation on PETA&S217;s Web site.)

Asked if Dawn itself is tested on animals, Ms. Baba of P.&&8; G. responded in an e-mail message, &S220;We do not test finished products, which includes Dawn, on animals,&S221; adding that &S220;at some time over the 30-year history of Dawn, an ingredient may have been tested on an animal because the law required it or there was no alternative test at that time.&S221;

Ms. Guillermo of PETA said of the current Dawn campaign: &S220;Anything a company does to help animals we applaud even if we have issues with their policies in their entirety. It sounds like they may have figured out the marketing advantage of helping &<51; but in any case they&S217;re helping.&S221;

Advertising: Tough on Crude Oil, Soft on Ducklings

LONDON (AFP) – London stocks retreated from previous gains on Wednesday while investors remained on tenterhooks before a US Federal Reserve interest rate call.

The FTSE 100 index of leading shares dropped 0.06 percent to 5,139.37 points.

Royal Bank of Scotland (RBS) was the most traded stock, seeing 164 million stocks switch owners, followed by telecom giant Vodafone which saw 134 million shares change hands.

Fashion label Burberry was the top blue-chip gainer, adding 25.9 pence -- or 5.43 percent -- to finish at 502.5, followed by Standard Chartered bank, which added 64 pence -- or 4.32 percent -- to end at 1544.

Shopping-centre owner Liberty International was under heavy selling pressure after announcing plans to sell shares for the second time in five months no fax payday loans. The company&&9;s shares slipped 57.0 pence -- or 10.1 percent -- to end at 507.

Real estate investment trust British Land was the second sharpest faller shedding 23.0 pence -- or 4.48 percent -- to close at 490.

Sterling edged higher against both the dollar and the euro.

The pound was worth 1.6391 dollars at 16:58 BST, up from 1.6359 at Tuesday&&9;s close, while it stood at 1.1120 euros, up from 1.1058 over the same period.

FTSE retreats from previous gains

WASHINGTON (Reuters) – The Federal Reserve on Wednesday said that the U.S. economy was in recovery after a severe downturn and decided to slow purchases of mortgage debt to extend that program&&9;s life until the end of next March.

The Fed, as widely expected, held overnight lending rates at close to zero percent and repeated its intention to keep rates exceptionally low for an extended period.

"Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn," the Fed said a statement.

The Fed said that it would gradually slow the pace of its purchases of mortgage-related debt in order to promote a smooth transition in markets, but reiterated it would keep its options open.

"The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook," it said.

The Fed doubled the size of its balance sheet to around &&6;2 trillion as it flooded financial markets with money during the crisis last year. It has maintained this support through a campaign to buy &&6;300 billion of longer-dated U.S. government bonds and &&6;1.45 trillion of mortgage-related debt in an effort to keep lending rates low allstate insurance.

The Fed opted in August to taper down the Treasury purchases by the end of October, and had been expected to opt for a similar gradual withdrawal for its mortgage debt buying, which initially had been scheduled to close at year-end.

The U.S. central bank must walk a delicate path between acknowledging the recovery evident in the economy, and assuring investors that it remains tuned to the risks of a double dip recession as policy stimulus fades next year.

This means exiting in time from aggressive steps aimed at boosting growth to avoid igniting inflation as the economy picks up steam, while not smothering the recovery in the process.

Recent data has pointed to turnarounds in manufacturing, housing markets and consumer sentiment, and many analysts expect strong growth in the third quarter after four quarters of contraction. However, with unemployment at a 26-year high of 9.7 percent, most analysts nevertheless expect consumer spending to remain weak and damp the recovery.

(Reporting by Alister Bull, Editing by Andrea Ricci)

Fed says U.S. recovery is underway

WASHINGTON (Reuters) – The Federal Reserve plans new rules on bank pay to curb the type of excessive risk-taking that sparked the global financial crisis and triggered international demands for action.

Public outrage at the stratospheric compensation of some bankers has boiled up to the level of the Group of 20 nations, whose leaders meet next week in Pittsburgh.

The United States, under pressure to act on pay at the G20 from France and Germany, has already said it aims to curb the culture of excessive risk-taking at the root of the crisis.

A Fed source said on Friday that guidelines would be proposed in the next few weeks and would apply to any employee able to take risks that could imperil an institution, not just the executives who have been the main target of popular ire.

The rules will be aimed at all firms the Fed regulates and be enforceable under its existing powers, said the source, who requested anonymity. The Fed oversees more than 5,000 bank holding companies and over 800 smaller state-chartered banks.

Massive losses inflicted by risky subprime mortgage bets destroyed some of the oldest names in U.S. finance and intensified a recession that has cost millions of jobs, putting both the banks and the regulators under scrutiny.

The Financial Stability Board, which answers to the G20 and will issue guidelines at the September 24-25 summit, said on Tuesday that poorly capitalized banks should not be allowed to pay large bonuses.

MULTIPLE TRACKS

The Obama administration has already appointed a "pay czar" to oversee executive compensation at firms getting taxpayer aid, and has indicated it will take further steps.

"Properly designed compensation practices constitute an important measure in ensuring safety and soundness in our system," White House adviser Lawrence Summers said on Friday.

Industry officials said many financial firms had already reined in pay practices and warned a heavy-handed approach by the Fed could be harmful.

"What we&&9;re worried about is if they place undue restrictions on the sales people because that could weaken the company itself," said Scott Talbott, senior vice president for government affairs for the Financial Services Roundtable, the industry&&9;s lobbying group.

Some analysts said Washington was bowing to populist pressure. "I think that talking about curbing Wall Street pay is emotional and not rational," said Tom Sowanick, co-president and chief investment officer of Omnivest Group LLC.

The Fed&&9;s proposal would take a two-pronged approach bad credit payday advance. A top tier of the largest banks, numbering around 24, would get particularly close scrutiny, while all other lenders under the Fed&&9;s supervision would receive less-intensive treatment.

Larger firms would also be subject to a review that would compare their practices against rivals, and would be required to submit their pay policies to the Fed for its approval.

This would put the burden on the big firms to modify existing compensation practices, while leaving them with flexibility to customize compensation to best fit their needs.

Practices at smaller banks would be reviewed as part of existing regular bank exams, the Fed source said.

PLACING THE FOCUS ON THE LONG RUN

Goldman Sachs, which set aside &&6;11.3 billion in the first half of the year toward employee bonuses but which has also spoken out against excessive pay at firms that lost money, said excessive risk-taking should not be rewarded.

"We think it entirely appropriate that people are rewarded for performance, but compensation should correlate directly with the performance of the firm," said Goldman Sachs spokesman Lucas van Praag.

The Fed board has yet to vote on the proposal, but the timeline for the guidelines should advance in weeks, not months, the source said.

The proposed rules would then face a period of public comment before they could be made final. But the Fed plans to launch the review process for the large firms as soon as the proposal goes out, the source said.

The guidelines would not apply a one-size-fits-all prescription to cap pay at any specific level, the source added. Rather, the guiding principle would be to aim for a longer view of profits that squeezes out risk-taking that might lead just to short-term gains.

Officials are also discussing the possibility of "clawing back" compensation when it later becomes apparent excessive risks were taken.

It plans to outline ways to defer pay, for example by using restricted shares that take longer to vest, which would give bank management more time to judge if the revenues from a particular activity really lived up to expectations.

It will also point out the ability to weigh compensation according to the riskiness of the activity involved, as some already do to internally allocate capital.

(Additional reporting by Karey Wutkowski in Washington and Jennifer Ablan and Steve Eder in New York; Editing by James Dalgleish)

Fed eyes new bank pay rules to fight risk

DEARBORN, Mich. &<51; The government&S217;s cash-for-clunkers program has been so popular with consumers that one automaker, the Ford Motor Company, will increase production to meet the higher demand.

Ford said on Thursday that it would add 10,000 vehicles to its production schedule in the third quarter and significantly increase its fourth-quarter output as well. The company now plans to make 570,000 vehicles in its North American plants during the last three months of the year.

That would amount to a 33 percent increase compared with production in the period a year earlier, and 15 percent more than Ford had planned before the clunkers program began in late July.

&S220;Under the cash-for-clunkers program, the Ford Escape and Focus are flying off dealer lots,&S221; said Mark Fields, who oversees Ford&S217;s operations in the Americas, &S220;and we&S217;re doing all we can to ensure our dealers are well stocked with fuel-efficient vehicles that customers really want.&S221;

Ford&S217;s move is the latest indication of the boost that the clunkers program has given to the new car market, which has been mired in its worst slump in 25 years.

&S220;The pace of sales is extremely fast,&S221; said George Pipas, Ford&S217;s chief market analyst. &S220;Retail sales are eye-popping compared to a year ago.&S221;

The Obama administration&S217;s clunkers program gives consumers up to $4,500 toward trade-ins of older gas guzzlers for newer, more fuel-efficient models.

The government&S217;s original $1 billion allocation for the program was exhausted in a week, as dealers submitted 245,000 transactions to federal officials for approval.

Most large car companies benefited immediately from the program. In July, industry sales fell just 12 percent from a year earlier, compared with a 32 percent decline for the year to date.

And since $2 billion was added to the program last week, the rush to take advantage of it has continued.

About $300 million of the $2 billion has already been used, and the funds are drying up quickly, Ellen Hughes-Cromwick, a Ford economist, said.

&S220;The appetite is there,&S221; Ms. Hughes-Cromwick said. &S220;This thing could pretty much expire in the next three or four weeks.&S221;

While Ford is the only auto company to announce a production increase because of the clunkers program, both General Motors and Chrysler are considering similar moves.

G.M. executives said this week that the company might increase production in the fourth quarter. Suppliers to G.M. have been told to expect an increase of at least 50,000 vehicles.

Car companies are starting to run short of some models that have been the best sellers as a result of the program. Toyota, for example, said it had less than a two-week inventory for its Prius gas-electric hybrid.

Ford said it had an inventory of vehicles that would last about 48 days &<51; a major decline from the 80-day supply it reported earlier this year.

The company is planning to add shifts and increase overtime at plants in Michigan and Missouri to raise supplies of the Escape sport utility vehicle and the Focus compact car, two of its most fuel-efficient models.

Ford, the only American automaker to have avoided a bankruptcy filing, has generated impressive momentum in the market since the clunkers program started.

The company posted a rare 2 percent increase in sales in the United States in July from a year earlier. It was Ford&S217;s first year-over-year increase since 2007, according to company executives.

One analyst said that Ford&S217;s improving sales gave another indication that consumers were gravitating to its showrooms at the expense of G.M. and Chrysler, both of which were bailed out by the government this year.

&S220;It has become increasingly apparent that consumers are viewing Ford in a different light than its troubled cross-town rivals, which along with strong product, should continue to drive sales for the company,&S221; John Murphy, an analyst at Merrill Lynch, wrote in a research note to clients.

Ford said that its share of the cars sold under the clunkers program was about 16 percent. By contrast, the company&S217;s retail share of the United States market is 13 percent, Mr. Pipas said.

Most of the vehicles being bought with clunker cash are smaller sedans and crossover vehicles that rank high in fuel economy.

Besides the Escape and the Focus, the top sellers in the first phase of the program were the Honda Civic, Jeep Patriot and Toyota Corolla.

Ms. Hughes-Cromwick of Ford said that, based on current clunker trade-ins, participants would save more than $800 a year on gasoline bills.

She also estimated that 30 percent to 40 percent of the people taking advantage of the program would not have purchased a new vehicle so soon without the clunker cash.

&S220;Whether it&S217;s pent-up demand or not,&S221; she said, &S220;the numbers of this program have really been a blockbuster.&S221;

Invigorated by Clunker Cash, Ford Moves to Increase Output

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SYDNEY &S212; Anglo-Australian mining company Rio Tinto said Tuesday it has yet to be presented with any evidence to support the detention of four of its China-based staff on suspicions of stealing state secrets.

Chinese authorities detained Rio Tinto&S217;s top iron-ore salesman in China, who is an Australian citizen, and three Chinese colleagues a month ago, accusing them of spying on Chinese steel mills, major buyers of the company&S217;s iron ore. The four have yet to be officially charged.

&S220;We are still not aware of any evidence that would support their detention,&S221; Rio Tinto&S217;s iron ore division chief, Sam Walsh, said in a statement.

Meanwhile Tuesday, Australian Foreign Minister Stephen Smith said that Australian diplomats were allowed their second visit to the Shanghai detention center late last week where Stern Hu is being held.

&S220;We were very pleased to see that his health and welfare continues to be in good order,&S221; Mr. Smith told state radio. He added that Australian diplomats had made a fresh appeal for China to grant legal representation to Mr. Hu.

An article published online by a Web site affiliated with China&S217;s state secrets bureau over the weekend alleged that Rio spied on Chinese mills for six years, resulting in the mills overpaying $102 billion for iron ore unsecure cash loans.

But on Monday, China seemed to be backing away from the article. The author, an official with the state secrets bureau, told several news agencies that he had not been assigned to write the article and was just expressing his opinion.

On Tuesday, Australia brushed off the report, saying it had not been officially sanctioned.

&S220;It is now quite clear, given that the article has been taken off the Web site, that it was essentially the opinion of the individual writer, and not if you like officially sanctioned,&S221; Mr. Smith said.

David Kelly, a professor of Chinese studies at the University of Technology, Sydney, speaking in Beijing, said it was unclear how much Chinese government weight was reflected in the article.

&S220;I would suggest that at least it reflected a powerful view of at least part of the bureaucracy,&S221; said Mr. Kelly.

Rio Tinto Says China Hasn't Backed Up Spying Allegations

Hot News: Shut Out at Home, Americans Go to China