Gold rallies to fresh record, stocks up

NEW YORK (Reuters) - Gold climbed to a record on Thursday as the dollar struggled, while U.S. stocks settled higher after Alcoa (AA.N) began the third-quarter earnings season with an unexpected profit.

Major U.S. equity indexes rose nearly 1 percent, led by Alcoa, a day after the Dow component and the largest American aluminum producer posted its first profit after a string of quarterly losses. Alcoa cited improving metal prices and cost savings as the main reasons for its profitable quarter.

Alcoa is the first major company to release earnings in the U.S. third-quarter reporting season.

Its profit surprise also played a factor in world equity markets on Thursday, as investors have been scouring for signs of any fundamental improvement in organic growth. The MSCI world equity index .MIWO00000PUS rose 1.32 percent to 1,137.84, near the year's high of 1,150.42.

For their part, the Dow Jones industrial average .DJI was up 61.29 points, or 0.63 percent, at 9,786.87, while the Standard & Poor's 500 Index .SPX was up 7.90 points, or 0.75 percent, at 1,065.48. The Nasdaq Composite Index .IXIC was up 13.60 points, or 0.64 percent, at 2,123.93.

But gold stole the spotlight again.

The yellow metal topped $1,060 per ounce to mark a record high for the third session in a row, versus its late New York Wednesday quote of $1,043.70. It closed the day at $1,055.45.

The move in spot bullion has primarily been driven higher by the weakening dollar, which makes the dollar-denominated metal more attractive to investors.

In some currencies -- the high-flying Australian dollar, for example -- gold has actually fallen in price this year.

"Investors are turning toward gold as a hedge in dollar weakness," said Adrian Koh, an analyst at Phillip Futures in Singapore.

The dollar was down against a basket of major trading-partner currencies, with the U.S. dollar index down 0.69 percent at 75.966, a 14-month low and below a previous session close of 76.494.

The currency has been hit by a combination of expectations that U.S. interest rates will stay low for some time and a belief that the global economy is on the mend, easing the motivation behind last year's flight to dollar safety.

The euro was up 0.63 percent at $1.4778 from a previous session close of $1.4685, while against the Japanese yen, the dollar was down 0.15 percent at 88.45 from a previous session close of 88.580.

The Australian dollar jumped 1.7 percent to US$0.9063, still benefiting from this week's rate hike. It has now gained nearly 28 percent against the U.S. dollar this year.

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United Commercial Bank is shut down, sold to East West BancorpThis creates by far the largest U.S. bank focused on the Chinese American market and the largest bank based in Southern California. United Commercial was the 120th bank to fail in the U.S. this year.This creates by far the largest U.S. bank focused on the Chinese American market and the largest bank based in Southern California. United Commercial was the 120th bank to fail in the U.S. this year.

This creates by far the largest U.S. bank focused on the Chinese American market and the largest bank based in Southern California. United Commercial was the 120th bank to fail in the U.S. this year.

Toppled by loan losses and misstated financial reports, San Francisco's United Commercial Bank was shut down by regulators Friday night and immediately sold to Pasadena's East West Bancorp, creating by far the largest U.S. bank focused on the Chinese American market.

The combination also will be the largest bank based in Southern California, surpassing City National Bancorp.

East West agreed to assume all of United Commercial's deposits, so no depositors will lose money, the Federal Deposit Insurance Corp. said. The bank's 63 U.S. branches, including 17 in Southern California, will reopen Saturday as branches of East West Bank.

United Commercial, a unit of UCBH Holdings Inc., was the fourth-largest bank to fail this year. That position was formerly occupied by California National Bank of Los Angeles, which failed last week and was acquired by U.S. Bancorp of Minneapolis.

Regulators also seized on Friday one bank each in Georgia, Michigan, Minnesota and Missouri, bringing to 120 the number of failures this year.

United Commercial's collapse may cause a greater-than-usual stir because a year ago the federal government invested $299 million in bailout funds in the bank in exchange for preferred stock, which was made worthless by the failure.

In addition, the FDIC said the collapse would cost the federal deposit insurance fund an estimated $1.4 billion.

East West raised $500 million in new capital to support the takeover, most of it from mutual funds and other existing shareholders, said Dominic Ng, chairman of the Pasadena-based lender.

The privately placed stock sales will enable East West to proceed slowly as it integrates the two banks, then have plenty of capital later next year to consider additional expansion by adding branches or making more acquisitions.

The takeover will greatly expand the reach of East West, which has concentrated on Southern California and the San Francisco Bay Area. In addition to 69 California offices, East West has full-service branches in Houston and Hong Kong.

United Commercial not only has dozens of branches in California but also has locations in key Chinese American areas, including New York, Boston, Seattle, Atlanta and Houston.

What's more, because of its 2007 acquisition of a Shanghai bank, United Commercial also has a banking license in China -- a "rare and hard-to-come-by" asset that makes it easier to operate and expand in that country, , said RBC Capital Markets analyst Joe Morford. It has full-service offices in Shanghai, Hong Kong and Shantou, China.

United Commercial, East West and Cathay General Bancorp of Los Angeles have vied for years to become the largest of the banks focused on the Chinese American market.

East West, which had $12.5 billion in assets at last report, agreed to acquire $10.2 billion of United Commercial's $11.2 billion in assets. That would put the combined bank, at almost $23 billion in assets, ahead of L.A.-based City National as the largest bank based in Southern California. At last report, City National had $18.4 billion in assets.

The FDIC agreed to absorb most of the expected losses on about $7.7 billion of the United Commercial assets acquired by East West.

Like its Chinese American rivals, United Commercial was burned by commercial lending losses, especially loans to developers and home builders during the housing boom. But it also was tainted by a financial scandal that resulted in a shake-up of its top management.

UCBH announced in September that its financial reports could not be trusted because of the "deliberate and improper actions and omissions of certain bank officers," who had understated losses in "an apparent desire to downplay deteriorating financial conditions."

The company's longtime chief executive, Thomas S. Wu, resigned in September, along with its chief operating officer.

Ng said he believed his new customers would happily accept a takeover by another California-based Chinese American bank rather than an institution "from somewhere else -- New York, or a foreign bank."

Ng said he anticipated only a few branch closures. Some back-office employees will be let go, he said.
 

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US jobless rate rises to over 10%

The unemployment rate in the US rose to 10.2% in October, which was its highest rate since April 1983, according to figures from the US Labor Department.

It rose from September's figure of 9.8%. The economy lost 190,000 jobs in the month.
Since the recession began in December 2007, the number of unemployed has risen by 8.2 million, while the jobless rate has risen from 4.9%.
President Barack Obama described the rise in unemployment as "sobering".
"I will not rest until all Americans who want work can find work," he added.
He also said he would be signing legislation to extend unemployment benefit, cut taxes for businesses and extend tax credits for home buyers.



Analysts were also downbeat after the worse-than-expected figures.
"It's pretty disappointing overall," said Richard Franulovich at Westpac.
"Job losses are not moderating as quickly as I had hoped despite those earlier indicators on jobs."
Dollar falls
The figures were particularly poor given Thursday's news of a fall in initial weekly jobless claims and the data earlier in the week that showed the US economy had grown by 3.5% between July and September.
The number of unemployed people rose by 558,000 to 15.7 million.
But there was some better news with the revision of September's figure from a loss of 263,000 jobs to a loss of 219,000 jobs.
The dollar fell against both the euro and the yen following the release of the figures.
Long-term unemployed
The sectors contributing the largest numbers of job losses in October were construction, manufacturing and retail.
It was the 22nd month in a row that the US economy had shed jobs, which is the longest run since records began 70 years ago.
There is concern that rising unemployment could scupper the recovery by restricting consumer spending, which accounts for 70% of the economy.
The number of people who had been out of work for at least six months rose to a record 5.6 million, accounting for 35.6% of the jobless total.

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Berlin all fired up for wall-to-wall partying

THE elderly lady with her shopping bag stood and stared at the armed policeman politely but firmly preventing her from crossing the 8ft-high barrier built across the street. “It’s like having the Wall back,” she said tetchily. But with a smile.
The policeman smiled back. Stretching away on either side, a chain of 1,000 wall-like slabs daubed with graffiti form a new 1.2-mile barrier from the Brandenburg Gate to Potsdamer Platz — now once again one of Europe’s busiest intersections.


Tomorrow night, at the climax of the biggest official party seen in Europe, with Angela Merkel, the German chancellor, hosting Gordon Brown, Hillary Clinton, the US secretary of state, Nicolas Sarkozy, the French president, and Dmitry Medvedev, the Russian president — to name but a few — the slabs will crash into one another like dominos, representing the chain of events that 20 years ago brought the cold war to an end.
The first “domino” will be pushed over, fittingly enough, by Lech Walesa and Miklos Nemeth, the veteran Polish and Hungarian anti-communist campaigners. They will be joined by two other main actors in the drama of 1989: the former Soviet president Mikhail Gorbachev and Hans-Dietrich Genscher, the then West German foreign minister.
The officially organised street party is costing £4.6m and kicks off with a Daniel Barenboim-led concert at the Brandenburg Gate, followed by Bon Jovi performing their single We Weren’t Born to Follow and an extravagant firework display as the thousand dominos fall.
All of Germany is celebrating what the newspaper Die Welt yesterday called “the unexpected joy” that hit the country on a cold night in November 1989 when popular unrest, democracy protests, and a series of misjudged measures and misunderstandings caused the Berlin Wall to fall.
In today’s difficult climate, nobody is claiming reunification came without economic pain, but with Germany having already climbed out of recession, one newspaper editorial could claim yesterday that “if we are not the happiest nation on earth, at least we are a happy nation”.
On that wintry, chaotic, euphoric November night 20 years ago, I met up on West Berlin’s showy Kurfürstendamm with Kerstin and Andreas, two friends from East Berlin who had escaped only weeks before on one of the sealed trains that brought asylum seekers from West Germany’s embassy in Warsaw through to the West.
On a night of tears, joy, fireworks, inebriation and incredulity — a far more spontaneous celebration than anything taking place tomorrow — Kerstin was reunited with the family she had left in the East and expected never to see again.
Karin, another East German friend, reluctantly trained as an engineer by the communist regime, was expelled from East Germany shortly before the Wall fell — her brother had spent months in prison as a failed escaper — and now runs a thriving business. She has moved to a leafy suburb so far west in West Berlin that, back then, it was in East Germany.
We walked along the banks of the Spree, past the Berliner Ensemble, Bertolt Brecht’s theatre, and Ganymed, old East Berlin’s stuffy, showcase restaurant. Twenty years ago the path ended a few yards along in darkness, concrete and barbed wire across the river.
Today the same riverbank leads to the restored Reichstag, again the seat of parliament, and is lined with restaurants. Instead of patrol boats with machineguns and searchlights, the Spree is home to river cruisers with beer and champagne bars. Potsdamer Platz, near the site of Hitler’s buried bunker, has been transformed from a no man’s land of wall and watchtowers into a bustling, 21st-century streetscape.
Berlin today has seized with both hands its role at the heart of an expanded Europe, symbolised by the vast new Central station, with high-speed trains on three levels hurtling east and west. Workers from western Poland returning from Britain fly to Berlin and catch the Intercity-Express to Poznan.
As the Cafe Varna, not far from the Brandenburg Gate testifies, there are now — thanks to European Union expansion — more Bulgarians, Czechs, Slovaks and Hungarians working in Berlin than there were when they were “fraternal allies” in the Warsaw Pact. More Russians too, if one does not count the 380,000 departed troops.
As part of the celebrations, an exhibition in the city centre is showcasing the Art of Socialist Realism, a collection of Stalinist-style paintings of happy children scattering grain to chickens, or Lenin addressing adoring workers. Nostalgia is a funny thing.
On Ebertstrasse, named after the first president of the pre-war Weimar Republic — save for a brief spell as HermannGöring-Strasse — Japanese tourists queue to be photographed astride the brick line in the pavement that shows where the Wall once ran.
Ironically, it is once glitzy western Berlin that now looks the shabbier part of the city, with the Ku’damm (as the Kurfürstendamm is known) in search of regeneration money.
A few statistics alone illustrate some of the superficial social changes in the old East. The number of cars has almost doubled from 3.9m to 7.5m, while — partly thanks to mobile phones — the number of telephones has soared from 49 per 100 households to 243.
The child mortality rate has fallen by two-thirds, life expectancy has risen from 69.8 years for men and 76.8 for women to 76.1 and 82.2 respectively, and although the number of hospitals has fallen from 392 to 254, they are far better equipped.
But the west’s longer established infrastructure still beckons: the population of the old East Germany has dropped from just under 17m to just over 14m, while that of the former West Germany has risen from 61.7m to 67.5m.
For those of us who lived in the East in the years before the Wall came down and were there to see it crumble, the emotion of the anniversary is still best summed up in the words spoken at the reunification ceremony in 1990 by Lothar de Maizière, East Germany’s last prime minister: “It is an hour of great joy, It is the end of some illusions. It is a farewell without tears.”
Inevitably, there is a new joke doing the rounds: East Berlin and West Berlin used to be fractious siamese twins, one dowdy, prudish and hypocritical, the other stylish, spendthrift and sluttish. Through the miracle of modern science they have been united, and what do you get? Angela Merkel.
Peter Millar’s book 1989 The Berlin Wall (My Part in Its Downfall) is published by Arcadia Books, £11.99.
History’s back from the dead, Bryan Appleyard, News Review, page 6

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Texan police officer Kim Munley who shot Fort Hood gunman hailed as a heroine

A police officer who intervened to stop a shooting spree at America's biggest military base was hailed today a heroine as she received treatment for the wounds received in a shoot-out with the gunman.
Major Nidal Hasan, an army psychiatrist due to be posted to Afghanistan, shot dead 13 people and wounded 30 others after opening fire with two handguns at Fort Hood yesterday afternoon.
But the death toll from the rampage could have been far worse had it not been for the actions of Sergeant Kimberly Munley, a civilian police officer stationed at the base who was the first on the scene as Major Hasan picked off his victims.
Sergeant Munley managed to hit Major Hasan four times but was herself hit by a bullet that passed through both her legs, according to witnesses.



Colonel John Rossi, briefing reporters at Fort Hood this morning, said that Major Hasan's victims, who were killed in a part of the base used to process soldiers for deployment to Iraq and Afghanistan, had all been unarmed. Sergeant Munley had been the first armed person on the scene and had immediately taken him on.
"Her efforts were superb," he said.
The base commander, Lieutenant-General Bob Cone, also paid tribute: “She happened to encounter the gunman. In an exchange of gunfire, she was wounded but managed to wound him four times,” he said.
“It was an amazing and aggressive performance by this police officer.”
Colonel Steven Braverman, commander of the base hospital and Major Hasan's supervisor, said that Sergeant Munley was in a stable condition in a nearby community hospital.
She is likely to return home to a hero's welcome, although her Twitter page – which features a picture of her with the country music star Dierks Bentley at the Fort Hood "Freedom Fest" on July 4 – suggests she is not the type to have her head turned.
Her Twitter biography reads: "I live a good life ... a hard one, but I go to sleep peacefully @ night knowing that I may have made a difference in someone's life."

It emerged today that Major Hasan, a Muslim who had argued with his comrades against the wars in Iraq and Afghanistan and had been trying to get out of the Army, shouted "Allahu akbar" – Arabic for "God is great" – as he launched the attack.

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Fort Hood shooting: President Barack Obama will travel to Texas for Fort Hood memorial service

The mass shooting by Army psychiatrist Major Nidal Malik Hasan on Thursday, left 13 dead and 38 wounded at America's largest military base.
A memorial service has been scheduled for Tuesday. The White House said Mr Obama and Michelle Obama, the First Lady, would be there. Mr Obama is due to leave the following day for a 10-day tour of Asia.


Earlier, he said the response to the tragedy had displayed "the best of America." He said: "Thursday's shooting was one of the most devastating ever committed on an American military base and yet, even as we saw the worst of human nature on full display, we also saw the best of America."

Mr Obama said he had met with FBI director Robert Mueller and Defense Secretary Robert Gates to be briefed on the investigation into the crime.
Hasan, 39, a specialist in combat stress, went on the rampage as he was about to be deployed to Afghanistan against his wishes.
Mr Obama said it might prove impossible to understand what the motive was.
He said: "We cannot fully know what leads a man to do such a thing. What we do know is that our thoughts are with every single one of the men and women who were injured at Fort Hood.
"Our thoughts are with all the families who've lost a loved one in this national tragedy.
"And our thoughts are with all the Americans who wear, or who have worn, the proud uniform of the United States of America.
"They are Americans of every race, faith and station. They are Christians and Muslims, Jews and Hindus and nonbelievers. They reflect the diversity that makes this America. But what they share is a patriotism like no other." Mr Obama praised the reaction of soldiers and civilians to the initial shootings at Fort Hood.
He said: "We saw soldiers and civilians alike rushing to aid fallen comrades, tearing off bullet-riddled clothes to treat the injured, using blouses as tourniquets, taking down the shooter even as they bore wounds themselves.
"We saw soldiers bringing to bear on our own soil the skills they had been trained to use abroad."

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UPDATE: US Stocks Close Sharply Lower; DJIA Ends Month Flat

By Donna Kardos Yesalavich
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--U.S. stocks tumbled Friday, with Bank of America, JPMorgan Chase and Alcoa leading the Dow Jones Industrial Average's components lower as investors again grew concerned about the economy after the short-lived excitement over Thursday's good report on gross domestic product.

The Dow Friday posted its biggest one-day point drop since April 20, and ended October just 0.45 point above where it began. Other major measures, including the Standard & Poor's 500 and the Nasdaq Composite, ended the month in the red, marking their first monthly declines since February.

The Dow closed down 249.85 points, or 2.51%, at 9712.73, marking its 10th triple-digit movement this month. Five of them were down and five up, reflecting how volatile the market has gotten as investors try to get a handle on whether the 48% surge in the Dow since March can be justified by economic fundamentals. For the week, the Dow fell 259.45 points, or 2.6%, marking its second consecutive week in the red.



Among the Dow's big movers Friday, Bank of America tumbled 1.15, or 7.3%, to 14.58, while JPMorgan slid 2.58, or 5.8%, to 41.77, and Alcoa dropped 58 cents, or 4.5%, to 12.42.

Across other measures, the Nasdaq Composite fell 52.44, or 2.50%, to 2045.11. It was down 5.08% for the week, and 3.65% for the month.

The Standard & Poor's 500 dropped 29.93, or 2.81%, to 1036.18. For the week, it dropped 4.02%; it was down 1.98% for the month.

Friday's declines come as the latest measure of consumer spending came in weak, reflecting the biggest drop since December 2008, although it was in line with economists' expectations.

Still, investors are growing hungry for economic data to start showing improvement and strength, rather than simply being above or in line with expectations. In addition, they are starting to wonder how much of the economic growth that was reported Thursday would have been there if it weren't for all the government support through such programs as the "cash for clunkers" funding for automobile purchases.

Nonetheless, some market participants said Friday's decline was typical of a market in recovery, and therefore no major cause for concern.

"It's not unprecedented after having such a strong rally," said Mary Ann Bartels, head of U.S. technical and market analysis at Bank of America Merrill Lynch. "Markets need to consolidate in order to achieve new recovery highs, and a correction will broaden out the base-building process we've been in since last year," giving stocks more support for a move higher, she said.

Life insurers fell in an exaggeration of the declines across the market, as the sector is exposed to equities through its variable-annuity guarantees and other equity-linked retirement-income products. MetLife was among the decliners, slumping 2.81, or 7.6%, to 34.03, after it swung to a third-quarter loss on $1.4 billion in investment losses. The life insurer's stock had climbed 7.8% Wednesday ahead of the report.

McAfee declined 1.87, or 4.3%, to 41.88, after the security-software company said its third-quarter profit fell 25% as higher costs led to lower margins.

Stereo maker Harman International Industries was a bright spot, surging 4.61, or 14%, to 37.61, after the company reported fiscal first-quarter sales above Street expectations. The company said its markets are stabilizing and it is gaining market share.

Estee Lauder also rose, climbing 1.36, or 3.3%, to 42.50, after its fiscal first-quarter profit more than doubled as the beauty-products company posted higher earnings across all of its businesses. Goldman Sachs raised its investment rating on the stock to neutral from conviction sell.

ITT fell 3.66, or 6.7%, to 50.70, after the defense and industrial conglomerate reported a 73% drop in third-quarter profit, stemming from a $131 million charge for asbestos-liability claims.

Cummins was down 2.86, or 6.2%, to 43.06, after the engine maker reported its third-quarter earnings fell 59% from last year's record results as it struggles in the face of weak North American and European trucking and construction markets.

Beckman Coulter fell 2.73, or 4.1%, to 64.33. The maker of biomedical instrument systems and test equipment posted a 94% plunge in third-quarter earnings as restructuring and acquisition costs masked higher sales and margins.

Universal Health Services' latest quarterly earnings beat analysts' expectations, but its shares fell 5.07, or 8.4%, to 55.65, as investors focused on the hospital operator's growing bad debt, which climbed more than analysts had been expecting. The news weighed on Tenet Healthcare, which fell 37 cents, or 6.7%, to 5.12.

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Banks broken up: Q&A

Three new banks are to appear on Britain's high streets as part of a major break-up of the sector to be announced by the Government this week, The Sunday Telegraph has learned.
Why is the government doing it?

Gordon Brown and Alistair Darling have little choice. Under European law, Royal Bank of Scotland (RBS), Lloyds Banking Group and Northern Rock have to pay a price for the billions of pounds of state aid they have received. However, there are likely to be smiles rather than frowns in Downing Street because gradually returning these troubled institutions to full private ownership is firmly on the to do list. The government’s stakes in RBS and Lloyds are also threatening to become an even bigger political headache should these banks shower their best performing staff with bonuses in the New Year. Expect to see the emergence of Williams and Glyn, the revival of TSB and the resuscitation of Northern Rock hailed by the Prime Minister as a return to an era of more sensible and conservative banking.
Who will own these new banks?



We know who the Government do not want to own the new High Street banks but less about who could be favoured. Hoping to introduce more competition and stability into the market, ministers will not encourage bidders with big UK presences such as Barclays, HSBC and Spain’s Santander, which subsumed Abbey National, Alliance & Leicester, and Bradford & Bingley during the financial crisis. Likely candidates are therefore new or fledgling entrants into the banking market or foreign groups with substantial operations in other countries. It is thought that supermarkets or other retailers with interests in building current account facilities such as Tesco, Sainsbury’s, Boots, WHSmith or Sir Richard Branson’s Virgin Money, could make bids. Building societies, co-operatives or other financial services institutions could also be in the running.

Is it good news for the taxpayer?

At the Labour party conference, Mr Brown pledged to make last October’s dramatic bank bail-out pay for the average UK taxpayer. The government remains tight-lipped about the sort of prices these new banks may be sold for, but it is highly unlikely to be enough to cover the cost of the intensive care the banks have been in. RBS and Lloyds received a capital injection of £37 billion, and that is before counting any losses that might eventually land on the taxpayers’ doormat from the government insuring billions of pounds of the most toxic assets of RBS. The government will hope that the sale of these banks will go at least some way to recouping some of the billions spent at a time when the public finances are in such a parlous state. But with the sales not happening before the next general election, the taxpayer will have to wait.

What will the new High Street look like?

Since the onset of the crisis, the big banks have been furiously consolidating branches and closing stores with the loss of thousands of jobs. The rise of internet and telephone banking as consumers seek convenience, and banks try to cut costs, has also led to the slow demise of the High Street bank manager that knows the name of every customer. But the revival of two historic brands associated with personal banking, Williams and Glyn’s and TSB could herald a return to the importance of a High Street presence. If the Government manages to generate more competition in retail banking, branches may once again vie for prize spots in town centres.

Is it good news for consumers and businesses?

In economic textbooks, more competition is usually deemed to be good news for the customer. It is likely that the new entrants will seek to improve on existing retail services as they try to win customers. However, smaller banks focused on the nuts and bolts of consumer and business banking are also likely to be less profitable institutions and that may come at the public’s cost. There may be more choice, but it is not clear if banking services will be any cheaper. The Government’s plan to force Lloyds and RBS to hand out more mortgages and loans to businesses has so far delivered mixed results. The banks argue that there is little appetite for loans from either consumers, who are cutting their spending, or businesses fearful of investing in this economic climate. When these new banks are sold by the government, compelling them to lend gets even harder. Ultimately, the pace of lending to the wider economy is likely to depend more on a broader recovery in Britain.

Will it improve the stability of the financial system?

The speed with which the financial system unravelled still remains shocking a year on. So these new entrants in the British banking universe are likely to be focused on the basics: providing current and savings accounts as well as lending to home owners and businesses. What’s more they will only be lending what they get in from depositors – a model far removed from the old Northern Rock and HBOS when they relied on their own borrowing to plug the gap between what they handed out in loans and what they had in the bank. That certainly ticks a box for financial stability. However, this week’s announcement from the Government will not really address the 'too big to fail’ question that is at the heart of the future shape of banking. Big banks, such as Barclays and HSBC, still provide the very basics like current accounts and savings accounts but at the same time own investment arms engaged in far riskier and typically more profitable activities. What’s more, there’s nothing to stop a big foreign institution like Bank of America buying one of these new banks

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Pilots 'face same distractions as drivers'

"I have my own ideas about this, but I'm going to work with the folks at the FAA and our department to deal with this issue," LaHood said. "We're going to take a very close look at that entire issue."

The Obama administration and lawmakers have already expressed interest in targeting distracted driving, including the use of mobile devices while behind the wheel. LaHood held a summit meeting in September that brought together researchers, regulators and other experts on distracted driving.

WASHINGTON - The two airline pilots who overshot their destination by 150 miles have prompted the Obama administration to broaden its look at distracted driving to include distracted flying, Transportation Secretary Ray LaHood said today.



The use of mobile devices and laptops while driving any type of vehicle is unsafe, LaHood told a hearing of the Senate Commerce, Science and Transportation Committee.

"We're not going to equivocate on this. Any kind of distraction, whether it's trains, planes or automobiles is a distraction and we should figure out ways to get these cell phones, the texting, ... and the use of laptops out of the hands of people who are supposed to be delivering the public to somewhere safely," LaHood said.

The pilots of Northwest Airlines Flight 188 told safety investigators they lost track of time and place while using their laptops to work out crew schedules. They said they were out of communications with air traffic controllers and their company's dispatchers for 91 minutes while cruising in their Airbus 320 at 37,000 feet, unaware that they had flown past their destination of Minneapolis in the upper Mideast until a flight attendant called them on an intercom.
The incident "raises serious safety concerns," said Sen. Jay Rockefeller, D-W.Va., chairman of the committee.

Sen. Frank Lautenberg, a Democrat, noted that the Federal Aviation Administration does not prohibit the use of laptop computers above 10,000 feet and asked whether the Transportation Department might regulate the use of laptops by pilots.
A group of senators proposed legislation that would offer incentive grants to states that approve laws to combat distracted driving.

"Texting takes your eyes off the road - long enough at high speeds to travel the length of a football field," Rockefeller said.

The FAA said that it had revoked the licenses of the Northwest pilots - Timothy Cheney, the captain, and Richard Cole, the first officer. Phone messages left at the homes of the pilots were not returned.

The pilots have 10 days to appeal the revocation to the three-member National Transportation Safety Board, the same agency that investigates air crashes and makes safety recommendations. If an appeal fails, they can apply for a new license after one year.

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