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Remtha, Jordan (IRIN) – At the edge of this busy border town, a set of old, overcrowded buildings has become a transit house for Syrians fleeing to Jordan illegally.

Designed for 500, the compound now houses up to 800 at times. Those who do not find space inside sleep in the open under trees. The compound has no gate – external traffic passes through it as children run around without supervision. The toilets are strewn with days-old feces, with women’s sanitary napkins piled up in the corners.

No one is fond of the place – not the UN, not the NGOs which provide services, not the Jordanian police officer who runs it – but there are few alternatives.

Apartments in northern Jordanian border towns are filling up and some landlords have doubled the rent.

Refugee camps are already under construction along the border. But opening them entails a political decision Amman is not yet willing to take, as Jordan tries to play a delicate balancing act between providing humanitarian aid to the Syrians without calling them refugees and taking strong action that would offend the Syrian regime.

Nor are camps an ideal solution for aid workers, who much prefer refugees to live a normal life in apartments.

But as Andrew Harper, head of the UN Refugee Agency (UNHCR) in Jordan, put it: “If there is a lack of international support, there may be no option.”

Until now, the UN has played a limited role in the response to the Syrian refugee crisis. But as a year-long anti-government uprising in Syria becomes increasingly violent and refugees keep streaming out, the scale of the problem is becoming too big for host countries Jordan, Lebanon and Turkey to handle alone. And with the situation expected to get worse, the UN is now trying to prepare for a future influx.

“On a daily basis, there are hundreds of people who continue crossing the border,” said Panos Moumtiz, newly-appointed regional refugee coordinator for UNHCR. Given there is yet “no light at the end of the tunnel” with regards to a political solution, he told IRIN, “we know that on a pragmatic level, we need to be ready.”

UNHCR today appealed for US$84 million to cover immediate humanitarian needs for Syrian refugees in the next six months and to ensure systems are in place to be prepared for more arrivals. That price tag is likely to rise as needs are re-assessed in the coming weeks and months.

There are currently more than 30,000 Syrians registered with UNHCR across the region, but around 96,500 in need of humanitarian assistance, the agency says. That number is expected to double, according to the UN’s contingency plans.

“The burden”

Jordan is fast becoming the most desirable option for Syrian refugees. Some come here after fleeing first to Lebanon or Turkey, or from as far as northern Syrian cities Aleppo and Idlib. Syrians say they feel safer here than in Lebanon, where some elements of its government support the Syrian regime; and more comfortable than in Turkey, where they may encounter linguistic problems.

So far, Jordan has done a reasonable job of responding to the crisis. But the refugees are increasingly testing the small, resource-poor country’s weak infrastructure, already stretched to the limit by the presence of nearly half a million Iraqi refugees.

Jordan’s economy is based mainly on remittances and foreign aid. The national debt is $20 million and unemployment stands at 13 percent. The government subsidizes bread, water and fuel; and is also shouldering the cost of Syrians going to school and accessing medical care for free.

It is a country accustomed to hosting refugees – they have flowed here during several crises over the decades – and people do not question their presence.

“Of course they are welcome here. Where else would they go?” one taxi driver said.

But from the taxi drivers to the highest levels of government, there is a level of resentment at having to carry the “burden”, as government spokesman Rakan al-Majali put it, alone.

“We did not want to demand international help before responding to this crisis,” he told IRIN. “But we are confident that our Arab brothers and the international community will not let Jordan down.”

Needs beginning to increase

Many Jordanian families – economically vulnerable to begin with – have been hosting Syrian refugees in their homes.

“They’re basically sharing their shirts, their gas bottles, their bedrooms – anything they can share,” Harper told IRIN. “There’s an incredible demonstration of good will at the moment, but there’s only so much resources people can share before it becomes exhausted.”

According to community-based organizations, that has already begun happening. Jordanians who had rented out apartments to Syrians for free can no longer afford to do so and have, in some cases, had to kick their guests out.

Up six flights of dark, dusty stairs, Um Maher and eight other members of her family live in a soulless apartment with moldy, damp walls, donated beds, no toilets, and running water only once as week. They fled from the Syrian flashpoint city of Homs. Her husband now works for 250 Jordanian dinars a month, all but 40 of which goes towards medicine and rent.

It is people like these UNHCR wishes to support financially, but has so far been unable to do so on a wide scale. While the family is registered with UNHCR, the only help it has received is from the Syrian Woman Association, a community group formed by an older wave of Syrian refugees who fled to Jordan in the 1980s.

Short of cash

The more protracted their stay in Jordan, the more vulnerable these new refugees are becoming. Some were able to support themselves when they first arrived, but have since exhausted their savings. The Islamic Charity Center Society, for one, is registering people who have been in Jordan for months but only now are starting to need assistance.

The UN Children’s Fund (UNICEF) says refugee children as young as eight or nine are working in coffee shops and garages because their families are so desperate for cash inflow. The agency is also concerned about families marrying off their daughters young as a way of coping.

New arrivals from Syria are arriving with less means.

Nithal Hassan spent four months hiding in a cave outside the southern Syrian town of Dera’a after security services came looking for him. By the time he arrived in the Jordanian border town of Mafraq, he had the equivalent of $15 in his pocket.

As the crisis in Syria continues, many have gone extended periods without work and have had to spend their savings to survive. They cannot sell their homes or cars because the market has stopped. Those who do come with the hugely de-valued Syrian pound cannot exchange it for much on the market.

“So even the rich are needy when they arrive,” said Masara Srass, who leads the Syrian refugee response for the Syrian Woman Association.

The long-standing Syrian community in Jordan absorbed many of the new arrivals into their homes and helped them with cash, food, blankets and furniture. But as the number grows, this, too, has become unsustainable. And the organizations themselves need support.

“We want international organizations to help us build our capacity, give us money. They need to help. Otherwise, how can we keep working?” said Eqbal Ebrahim of the association.

One of the weaknesses of these local groups has been coordination. There is an excess of food and a lack of cash to support families who are renting. Various different organizations have been registering families, and according to aid workers, many of the latter have received aid many times over.

Local aid agencies are already trying to amalgamate all their lists, but UNHCR hopes its new response plan will contribute to improved coordination and a clearer strategy for the government’s response – which has come under some criticism for lacking direction and having no clear lead ministry.

“If the government had a plan, would the situation here have gotten so bad?” asked one aid worker at the Remtha guesthouse.

International burden-sharing

The government spokesperson, al-Majali, said the number of Syrians in the country has so far been manageable.

“The movement between the two countries has always existed in the thousands,” he said. “Now they’re staying longer – these are just details.”

The government is ready to open the camps as soon as the numbers necessitate it, he added. “We are prepared to help our brothers no matter what the size of the problem.”

But Harper insists the international community needs to be part of the solution.

“If [we] are serious about international burden-sharing and trying to help those in need, then Jordan is doing the first step, the second, third and fourth steps, but at some point, it can’t do it alone.”

The UNHCR response plan includes cash assistance for vulnerable Syrian families and support for host communities, including the refurbishing of schools and health facilities.

As part of the plan, UNICEF hopes to repay the Jordanian government for the tuition and textbooks costs of Syrian children going to school, who number at least 10,000 according to al-Majali.

Through its partners, it is also hoping to provide psycho-social support for traumatized children who wet their beds, jump at every sound and whose vocabulary has come to include blood-covered streets and rocket-propelled grenades.

The International Organization of Migration (IOM) is requesting funds to be able to monitor the border and evacuate Palestinians or Iraqis in Syria who may eventually need to flee.

The Jordanian government will also be conducting an assessment of the refugee population in the coming weeks, to better define the needs.

Some agencies, like UNICEF, present in Jordan for decades, have been able to use some of their own funds to start projects immediately. But others, like UNHCR, have been hamstrung. “In Jordan, we’ve got basically nothing to work with at the moment,” Harper said.

As funds become available and the UN starts providing more assistance, people who have not registered with UNHCR are likely to come out of the woodwork, which will put an additional pressure on aid, he warned.

The UN is preparing a separate three-month plan for a response to humanitarian needs within Syria, where there are an estimated 200,000 displaced people in need of immediate humanitarian assistance. It will be launched in a few weeks, following the results of a government-led assessment of affected areas, in which technical staff from the UN and the Organization of Islamic Cooperation are also taking part.

Other agencies, like the Jordan Red Crescent, will be launching their own appeals.

“The capitals around the world who are deploring what is going on [in Syria] should also step up [with support],” Harper said. “We will see whether the rhetoric is hollow on the humanitarian front.”

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Washington, DC, United States (KaiserHealth) – The Republican chairman of the House Budget Committee surprised no one today when he released a spending blueprint that would drastically reshape the Medicare and Medicaid programs for the elderly and poor in an attempt to rein in their soaring costs.

Democrats predictably pounced on the proposal by Rep. Paul Ryan of Wisconsin, making clear they would make it a major campaign issue.

The GOP document projects an estimated $205 billion in Medicare savings over President Barack Obama’s proposed budget over ten years.

The plan, which the committee will consider over the next couple of weeks, would cap Medicare spending at Gross Domestic Product plus 0.5 percent. It would turn Medicaid over to the states in the form of a federal block grant, “constraining Medicaid’s growing cost trajectory by $810 billion over ten years,” according to the document, which said:

“If Congress wants to avoid defaulting on federal health and retirement programs, it must adopt a program of gradual adjustment now – one that frees the nation from the shadow of debt, strengthens its health and retirement safety net, protects those in or near retirement from any disruptions in their benefits, and supports robust economic growth and job creation. Otherwise, the nation will face more significant, unpopular and immediate overhauls later.”

In Ryan’s 2012 budget resolution, which the House approved, federal spending on Medicare would have been limited to GDP plus 1 percent. Since then, President Barack Obama proposed a tighter cap, at GDP plus 0.5 percent, which is the same as Ryan’s plan today.

Ryan’s Medicare proposal is nearly identical to a premium support idea that he put forward in December with Sen. Ron Wyden, D-Ore., and to one that GOP presidential hopeful Mitt Romney crafted a month earlier in November. Ryan’s new budget would provide a set amount of money for future Medicare beneficiaries – those currently under the age of 55 – to purchase either a private health plan or the traditional government-administered program through a newly created Medicare exchange. That would begin in 2023.

All plans, including traditional Medicare, would submit bids for how much they would charge to cover a beneficiary’s health care costs. The government would pay the full premium for the private plan with the second lowest bid, or for traditional Medicare, whichever is lower. Beneficiaries would have to pay the difference if they chose a plan that set rates higher. There could be one less expensive plan option, and beneficiaries who chose it would get a rebate for the difference.

Private health plans would have to be at least actuarially equivalent to the coverage offered in the traditional, government-administered option. That means that the benefits could vary, but the value of the plan would have to remain the same.

In a presidential election year, proponents welcomed the Ryan-Wyden promise of traditional Medicare as more politically palatable than Ryan’s proposal from last year, which would have allowed only private plan options. And they expected that Ryan would include it in the 2013 budget.

But some critics are already arguing that the government-administered option would not be affordable and that it could cause doctors to leave the program. Critics have argued that the government-run plan would attract the sickest people, driving up its costs, while private plans would lure the healthiest.

Ryan makes it clear in his proposal that the cost to beneficiaries would be determined solely by competitive bidding between the private and public plans. If Medicare spending exceeded GDP plus 0.5 percent, then, other savings would have to be found in the program, and politicians have a long history of cutting payments to doctors, hospitals and other medical providers.

Democrats – ignoring Wyden’s role – vowed to launch a sweeping campaign against the Medicare proposal. A “Medicare Madness” graphic topped the website of the Democratic Congressional Campaign Committee Tuesday, which in a memo said it would “hold targeted Republicans accountable with automated and patch-through phone calls, citizen phone banks, earned media events, op-eds, letters to the editor, a new online Medicare Action Center, and paid advertising to be announced later in the Medicare March campaign.”

The White House criticized the budget blueprint as providing tax breaks for wealthy Americans, oil companies and Wall Street on the backs of seniors. “All of these tax breaks would be paid for by undermining Medicare and the very things we need to grow our economy and the middle class – things like education, basic research, and new sources of energy,” said White House Communications Director Dan Pfeiffer. “And instead of strengthening Medicare, the House budget would end Medicare as we know it, turning the guarantee of retirement security into a voucher that will shift higher and higher costs to seniors over time.”

Wyden, anticipating backlash from his own party, defended his partnership with Ryan in a column on Huffington Post Monday even as he distanced himself from the overall GOP budget proposal – “I can’t imagine a scenario where I would vote for it.”

He said “unless Congress enacts meaningful Medicare reform in the near future, seniors will be faced with inevitable cost-shifting and eventual benefit cuts until Medicare doesn’t look anything like the program does today.”

Even if the House passes the budget resolution, the Senate is unlikely to follow suit. And even if it did, budget resolutions are non-binding and don’t establish law. However, the process lays an important foundation for positioning over Medicare, which is already proving contentious in presidential and congressional campaigns.

Both houses of Congress are unlikely to consider legislation to overhaul Medicare or Medicaid until a new Congress – and possibly a new president – are seated in 2013. But Congress is expected to return to Washington after the election to consider major deficit reduction legislation. If lawmakers fail to reach agreement, automatic spending decreases will take effect starting in 2013, and Medicare spending would be cut by 2 percent – all from payments to hospitals and other care providers.

Today’s budget proposal also would prohibit Congress from using spending reductions in Medicare for other purposes. That would “stop the raid on the Medicare trust fund that was going to be used to pay for the new health care law. Any current-law Medicare savings must go to saving Medicare, not the creation of new open-ended health care entitlements,” according to the document.

Ryan would attempt to lower health care costs by capping non-economic damages (pain and suffering) awards in medical malpractice law suits.

The proposal also would repeal the Independent Payment Advisory Board that the health law created to hold Medicare spending to GDP plus 1 percent. Ryan calls it “the unaccountable panel of 15 unelected bureaucrats empowered by the President’s health care law to cut Medicare in ways that would lead to denied care for seniors.”

Marilyn Werber Serafini is the Kaiser Family Foundation’s Robin Toner Distinguished Fellow based at Kaiser Health News. The fellowship honors the late Robin Toner, The New York Times’ long-time health and politics reporter whose work often framed the public debate on health issues. KHN is an editorially independent program of the foundation.

– Provided by Kaiser Health News.

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Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Stock index futures point to extended gains for Wall Street Friday as traders remain upbeat on the U.S. economy.

Shortly before the opening bell, the Dow Jones Industrial Average rose 38 points to 13,209, the Standard & Poor’s 500 futures eked up 3.3 points and the NASDAQ futures climbed 8.8 points.

The closely watched S&P benchmark, because of its diversity, surpassed the 1,400 threshold Thursday for the first time since before the 2008 financial crisis. All three indexes have made impressive gains in recent trading sessions.

The markets in general have gotten a lift from optimistic data on the recovering U.S. economy, coupled with easing fears about the European debt crisis.

Market participants will be eyeing three key economic reports on Friday.

Before the open, a report on Inflation at the consumer level showed an increase of 0.4 percent in February, in line with estimates, with a spike in gas prices accounting for almost 80 percent of the rise. Excluding the food and energy components, prices were up 0.1 percent, slightly less than the 0.2 percent forecast.

Later on Friday, data from the Federal Reserve is expected to show production in the U.S. industrial sector grew at 0.4 percent in February from the prior month. Two regional manufacturing reports came in ahead of expectations on Thursday.

Also expected is a report on consumer sentiment which is expected to show a very slight, but positive, rise in early March. Rising gasoline prices may have also taken its toll here, too.

In premarket trading, oil rose 40 cents to $105.51 a barrel, and gold gave back $13,00 to $1,646 a troy ounce.

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Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – The U.S. trade deficit surged to the widest imbalance in more than three years in January as imports hit an all-time high, the Commerce Department reported Friday.

The increase in imports reflects the growing demand for foreign made cars, computers and food products.

Meanwhile, U.S. exports to Europe fell, raising concerns that the debt crisis in the region could hamper and dampen U.S. economic growth.

The January trade deficit widened to $52.6 billion, the biggest gap since October 2008, according to the report. Imports rose 2.1 percent to a record $244.4 billion. Exports were up less, at 1.4 percent to $180.8 billion. Exports to Europe dropped 7.5 percent.

Economists forecast the deficit in 2012 will widen from last year’s $560 billion imbalance, thanks in part to the ongoing economic woes in Europe, which accounts for roughly 20 percent of America’s export market. A wider deficit can depress economic growth because it usually means fewer export-related jobs.

The deficit with China rose 12.5 percent in January to $12.6 billion. In 2011, the deficit with the Asian nation hit a record $295.5 billion, the highest deficit ever recorded with a single country.

Political pressure is growing to impose economic sanctions on what critics see as China’s unfair trade practices, such as a currency regime that keeps the yuan undervalued against the dollar, making Chinese goods less expensive and more attractive to U.S. consumers, and makes American products more expensive in China.

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Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – U.S. stocks rose on the open Wednesday, attempting to recover from Tuesday sharp sell-off in which all three indexes suffered their worst day in 2012.

Just after the opening bell on Wall Street, the Dow Jones Industrial Average rose 28 points, the Standard & Poor’s 500 Index added 4 points and the NASDAQ was better by 14 points.

Oil for April delivery rose 36 cents to $105.08 a barrel. Gasoline prices dropped for the second straight day to $3.76 a gallon, according to AAA. To date, gas prices are up 14.69 percent in 2012.

Gold for April delivery gained $7.30 to $1,679.40 a troy ounce.

Reports due on Wednesday that may sway investors include a report on private sector jobs, consumer credit, productivity, crude inventories and mortgage applications.

U.S. market participants are also keeping a close eye on Greece, where private sector bondholders need to officially agree to a crucial restructuring of the nation’s debt this week. If bondholders do not sign on in a majority number, Greece’s bailout could be in jeopardy, and the Mediterranean nation faces a messy and chaotic default.

European markets were higher at midday. Asian markets ended the day lower.

In corporate news, Apple is widely expected to announce its third and latest version of the iPad at an invitation-only event in San Francisco. Shares of the tech behemoth are up 47 percent over the past year. In early trading Wednesday, shares rose $3.60 to $533.92.

Shares of Netflix jumped 4 percent following reports that CEO Reed Hastings is seeking a partnership with a cable company.

Online radio service Pandora’s shares plunged some 24 percent after the company reported quarterly earnings and revenue that narrowly missed expectations.

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Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Wall Street slipped on the open Friday as investors keep a sharp eye on rising oil prices.

Just after the opening bell, the Dow Jones Industrial Average was off 24 points, the Standard & Poor’s 500 Index dropped 2 points and the NASDAQ was flat.

Stocks aim to end the choppy week up. A positive close to the week will mean nine straight weeks of gains, the longest such run since January 2004.

Investors are hesitant to jump into stocks as oil prices continue to rise. U.S. crude oil futures were hovering near $108 a barrel Friday, a day after hitting a 10-month high of $110 on supply concerns in the Middle East.

The U.S. dollar’s strength against the yen and the euro could continue to pressure oil and other commodity prices.

Gold, which fell sharply Wednesday and gained some ground Thursday, was down $10 in early trading Friday, last quoted at $1,712.90 a troy ounce.

Market participants continue to monitor developments in Europe as finance ministers in the region forge ahead in their efforts to bring the eurozone’s debt crisis under control

Concerns persist about Greece’s stability and Europe’s capacity to support larger economies such as Italy and Spain should they face economic distress.

In afternoon trading, European stocks were mixed, while Asian markets ended higher.

In corporate news in the U.S., the highly anticipated initial public offering of YELP debuts Friday on the New York Stock Exchange.

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‘Urgent’ need for HIV treatment

Yangon, Myanmar (IRIN) – Lack of access to anti-retroviral therapy (ARV) to treat HIV has left thousands of patients in Myanmar with deteriorating immunity and increased vulnerability to tuberculosis (TB), say health workers.

“The situation is dire,” said Peter Paul de Groote, head of Médecins Sans Frontières (MSF) in Myanmar. “The gap between the treatment that is needed and what is received is unacceptably high.”

ARV providers in Myanmar – of whom MSF is the largest – are concentrated in Yangon and Mandalay divisions, and Shan and Kachin states, which account for more than 60 percent of the country’s 133 ART distribution sites, according to UNAIDS Myanmar.

“The unfortunate case is that many people have to travel far to access treatment. This country has the potential to treat more people, save more lives and prevent transmission by expanding service provision,” Sung Gang, the UNAIDS Myanmar country coordinator, told IRIN from Yangon.

But according to MSF, funding is the biggest problem.

When donors did not deliver on pledges, the Global Fund to Fight HIV, Tuberculosis and Malaria canceled its Round 11 funding in late November.

While a Transitional Funding Mechanism has been established to provide emergency relief to current recipients, which will run out of money before 2014, it only covers essential services such as HIV treatment, care and prevention, leaving ARV providers unable to expand to other needed areas, notes MSF.

Scale-up interrupted

Funds from Round 11 were expected to treat 46,500 more patients in Myanmar, according to a recent MSF study .

Of the estimated 240,000 HIV-positive people, only 24 percent receive ARV therapy. Roughly 85,000 people need treatment but cannot access it, causing up to 20,000 preventable AIDS-related deaths annually, according to MSF.

“The Ministry of Health, MSF, and the hospitals all have the willingness and capacity to scale up. There are a lot of new donor pledges [going into Myanmar] but not for HIV,” MSF’s De Groote said.

Doctors are forced to prioritize treatment for patients in the most advanced stages of HIV/AIDS, despite proof that earlier treatment decreases transmission rates and improves health outcomes, according to the Inter-Agency Standing Committee’s (IASC) 2010 Guidelines for addressing HIV in humanitarian settings .

“Turning back patients is a difficult and impossible choice. We have to tell them, come back when you get sicker,” said Khin Nyein Chan, MSF’s deputy medical coordinator in Myanmar and a doctor at the NGO’s clinic in Yangon, one of four nationwide.

While the World Health Organization (WHO) recommends starting ARV medications when an HIV patient’s CD4 count, a specialized immune system cell measure, has dropped below 350 cells/mm3 , doctors in Myanmar administer ARVs only to those with CD4 levels below 150 cells/mm3.

“They have to wait until severe life-threatening and opportunistic infections are in their bodies before we can treat them,” said Khin Nyein Chan.

TB threat

TB is one such opportunistic infection. An HIV-positive status can increase the chance of contracting TB by up to 37-fold, according to WHO .

In Myanmar, 300,000 people are infected with TB – 60,000 of whom are also HIV-positive – according to MSF.

The increased incidence of airborne TB among HIV patients not taking ARVs raises the likelihood that it will spread among the general population, said Maria Guavara, MSF’s medical coordinator.

“HIV/AIDS and TB are a lethal combination. Treatment of HIV drops the instance rate of TB.”

At Phoenix Association, a Yangon-based social support center for HIV-positive people, patients seek solace from debt and disease.

One patient from Phyuu Township of Bago Division in the country’s south, Sai Hlaw Aung, 33, told IRIN in 2011 that battling HIV and TB had made him too weak to continue working as a bamboo cutter.

“Now I am not as strong as before. I have no idea how I could earn household income when I go back home,” said Sai Hlaw Aung.

The association allows out-of-town patients to sleep in the office while undergoing treatment in Yangon. Space is tight.

“Currently we need shelter to accommodate the people,” said Thiha Kyaing, head of the association told IRIN. Little has changed since.

“We don’t just want to bridge the treatment gap and walk away. We need sustainable programs, and the sooner the better,” De Groote said. “If we don’t treat people now we will lose them,” he added.

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ProPublica Staff

United States (ProPublica) – by Cora Currier

According to the Wall Street Journal, the Securities and Exchange Commission has warned a top banker that it may bring civil charges against him for his role in creating a risky collateralized debt obligation, or CDO, that exploded spectacularly as the housing market crashed. It’s the first public evidence that the SEC is considering charges against a top banking executive involved in CDOs, which fueled the financial crisis.

The CDO, from the end days of the boom in 2007, was one of dozens that had been created with the help of the hedge fund Magnetar. As we reported with This American Life and NPR, Magnetar often pushed for riskier assets to be included in CDOs, and placed bets against many of the same investments so that it would profit if those risky assets went sour. (Magnetar has never been charged with any wrongdoing, and has always maintained that it did not have a strategy to bet against the housing market.)

The banker warned by the SEC, Alexander Rekeda, helped create a $1.6 billion CDO for Japanese bank Mizuho called Delphinus CDO 2007-1. Investigators allege that investors were not told Magnetar stood to profit if the investments failed. (Here’s the pitchbook for Delphinus.)

Delphinus is not the first deal involving Mizuho and Rekeda that the SEC has looked into. As the Journal reported last year, the agency has been investigating another CDO that Magnetar created with Mizuho called Tigris. That CDO was a collection of the riskiest bits of other CDOs — as we described it, they were “bundling up the dregs of a CDO,” a “rare, if not unprecedented” strategy. The Tigris deal has not yet resulted in charges.

We’ve reached out to Rekeda, who no longer works at Mizuho, but have yet to hear back. A spokesman for Mizuho told the Wall Street Journal that it “has been asked by the SEC to provide related documents and information, and it’s currently dealing with it.” (We also have reached out to Mizuho.)

The warning sent to Rekeda, called a Wells notice, says that the SEC has made a “preliminary determination…to recommend charges based on alleged misrepresentations in connection with the structuring of a CDO.”

As we noted last fall, the SEC has also warned ratings agency Standard & Poor’s that it also may face civil charges in connection with the Delphinus CDO. Standard & Poor’s abruptly downgraded Delphinus just a few months after the security was issued and received a top rating.

Other banks have been charged by the SEC and settled allegations involving CDOs. In 2010, Goldman Sachs settled with the SEC for more than $500 million. Last June, J.P. Morgan agreed to pay $153 million and in October, Citigroup reached a $225 million settlement.

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The Media Line Staff

Cairo, Egypt (The Media Line) – Egypt faces a risk-laden game of Beat the Clock as it tries to get its political house in order before its foreign currency reserves sink much more.

Reserves fell to $16.4 billion in January from about $36 million a year earlier, a drop that economists all agree imperils the economy and requires Egypt to seek support from external sources and make difficult decisions to cut back government spending and subsidies. But that will be difficult given the political situation.

Presidential elections are now scheduled for late May, preceded by a six-week election season. Meanwhile, a parliament dominated by Islamists is tussling over who will control the government with the interim military council. A dispute with the United States over foreign human rights activists detained in Egypt is threatening vital American aid to the country. In the meantime, no U.S. assistance is being transferred to the country.

The timetable looks even more challenging when the role of the International Monetary Fund (IMF) is factored in. Egypt’s Ministry of Finance is reportedly counting on the IMF’s executive board to approve a $3.2 billion facility towards mid-March, which will then go to parliament for approval about the time the presidential campaign is getting under way.

“Time is not on Egypt’s side and politics could be the prime suspect to derail or delay an IMF program or exacerbate dollarization and [foreign currency] outflows,” Bank of America Merrill Lynch analyst Jean-Michel Saliba said in a note to investors last week.

Concerns that Egypt’s political trajectory looks to be on a collision course with its financial needs came in the form a downgrade in its bond rating by Standard & Poor’s (S&P) on Feb. 10. S&P lowered its ratings to B from B+ on Friday, five notches into junk territory, and said further downgrades could be on the way.

“The negative outlook reflects our view that a further downgrade is possible if the government fails to stem the decline in reserves, or an uncertain policy environment and weak institutions emerge from the ongoing political transition,” S&P said. Moody’s and Fitch, two other bond-rating agencies, cut their ratings on Egypt earlier.

Diminishing foreign reserves may be the most immediate threat to Egypt’s economy, but it is not the only one. More than a year after the revolution that brought down Hosni Mubarak, economic growth has stalled, the number of visiting tourists has plummeted and foreign investment has evaporated, all of which is exerting huge economic pressure on the government at a time of political flux.

Bank of America Merrill Lynch estimated that Egypt’s drawdown of its foreign currency would slow to what it called a “more manageable” $500 million a month because the foreign capital that has been responsible for much of the decline has been nearly drained out of the country.

On the other hand, Egypt could also get a boost from a rare instance of foreign investment if France Telecom goes ahead with the purchase of a $2 billion stake in the Egyptian Company for Mobile Service, popularly known as Mobinil, which it agreed to buy from Egyptian entrepreneur Naguib Sawiris last week. If the transaction goes through, that money might be transferred to Egypt in March.

But Merrill also noted that Egypt’s finances look more precarious than the headline foreign reserves figures show. Taking out Egypt’s holdings of gold, reserves fall to $13.6 billion, which are equal to just 2.8 months of imports, Saliba wrote in the Feb. 16 note. Meanwhile, Egypt’s external financing needs could reach some $11 billion through June 2013, Finance Minister Momtaz el-Saieed said Feb. 10.

But accepting aid is politically problematic because the public looks askance at foreign assistance, especially from the U.S. Only 26 percent favor accepting American aid, according to a Gallup poll taken in December. The proportion willing to accept international aid rises to 50 percent (with 42 percent opposing) and those willing to accept it from fellow Arabs reaches 68 percent (28 percent opposing), Gallup found.

Egyptians don’t like aid because it usual comes with strings attached, such as unpopular economic reforms in the case of the IMF and maintaining the 1979 peace treaty with Israel, in the case of American assistance. Political opposition to foreign assistance caused the interim military government to reject the original offer of an IMF credit last spring, a decision many economists say has exacerbated the financial troubles in which Egypt now finds itself.

Parliament must approve an IMF loan, but Essam el-Erian, a leader of the Muslim Brotherhood’s Freedom and Justice Party, which dominates parliament, said his group may vote against it because it might impinge on Egyptian sovereignty. “Look at Greece,” el-Erian said in an interview with Bloomberg News this week. “Everybody is telling it what to do.”

Above and beyond accepting foreign financial assistance, the other remedies for Egypt’s foreign reserves ailment are all painful for politicians and the public alike.

One is bringing down the budget deficit. As the economy has shrunk and the government boosted handouts in the early days of the revolution to try and palliate the population, Egypt’s fiscal deficit has ballooned. Officials recently revised upward their forecast for the budget deficit for the fiscal year ending June 30 to 9.4 percent of gross domestic product.

The solution would be to cut spending, particularly costly and wasteful subsidies on food and energy. Indeed, the military government recently announced plans for $4 billion in spending cuts and the IMF and others providing aid will have their own list of fiscal measures. But political analysts suggest that will inevitably mean cuts to popular energy and food subsidies of the kind that have set off riots in the past.

Another remedy is devaluing the Egyptian pound. In spite of Egypt’s mountain of economic woes, the pound had shed only about 1 percent of its value over the past year as the central bank acted to shore up its value by raising interest rates and drawing down on reserves. But the bank’s options are narrowing as it is forced to devalue the pound, which will almost certainly lead to higher inflation.

Analysts see some positive elements in the Egyptian political scene. Saliba notes that the decision to move up the presidential vote to May reduces the length of the campaign season and the opportunity for grandstanding by candidates. Ahmed Galal, managing director of the Economic Research Forum in Cairo, maintains that the Muslim Brotherhood has taken a pragmatic line on subsidiary reform and supports free markets.

©2012. The Media Line. All Rights Reserved.

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ProPublica Staff

Washington, DC, United States (ProPublica) – by Cora Currier

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi’s mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The suit itself makes for good reading. We’ve pulled out the juiciest bits, and explain just what Citi appears to have been doing.

Some background: The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners’ default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making “substantial profits through the sale and/or securitization of FHA-backed insured mortgages” while “it wrongfully endorsed mortgages that were not eligible.”

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, “admits, acknowledges, and accepts responsibility” for passing on bad loans.

The suit’s allegations

Citi was passing on mortgages with particularly high rates of default to the FHA, costing taxpayers millions in insurance claims:

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