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Tuesday, July 17, 2012

Bernanke, Gloomy on Unemployment, Says Fed Is Ready to Act

Ben Bernanke, chairman of the Federal Reserve, testified today before the U.S. Senate Banking Committee, saying he saw “frustratingly slow” progress on unemployment and growth. He urged Congress to prevent a fiscal fallout caused by tax increases and spending cuts that will be triggered at the end of this year should Democrats and Republicans not reach a compromise. Still, stock markets only heard the part about the Fed being ready to act to boost growth, and closed on a high. Bernanke also took the opportunity to defend the Fed’s actions around Libor, putting the blame on British Banker’s Association instead.

HSBC Helped Launder Money, Violated Sanctions

U.K. bank HSBC accepted Mexican drug money, worked with organizations linked to terrorism, and secretly had transactions with Iran despite U.S. sanctions, a U.S. Senate inquiry said. Top executives at the company appeared before the Senate’s Permanent Subcommittee, admitted wrongdoing, and apologized. At least one of them, responsible for compliance, said he would resign. HSBC faces a massive fine.

Goldman Sachs’ Earnings Fall 12%

U.S. bank Goldman Sachs announced today its quarterly earnings fell by 12 percent as investment income dropped. Economic sluggishness from the U.S. and Europe to China is forcing the financial giant to turn to safer, more traditional commercial banking, focusing on deposits and loans rather than the more sophisticated market bets that made its success before and during the crisis. In response, Goldman cut 1,000 jobs and employee compensation.

Penn State’s Athletic Program May Be Shut Down on Child Abuse

Mark Emmert, president of the National College Athletic Association, said in a television interview yesterday that Pennsylvania State University’s athletic program could be shut down. This came after an independent inquiry showed that head coach Joe Paterno and other Penn State officials actively covered up 15 years of child sexual abuse by Jerry Sandusky, Paterno’s right-hand man. Emmert said a final decision on penalties would have to wait until “actual charges” are determined.

Romanian Prime Minister Abused Constitution, EU Says

A report by the European Union says Romanian Prime Minister Victor Ponta has “tampered with the democratic process” to unseat president Traian Basescu last month. Ponta rushed a referendum to remove Basescu and ignored the country’s Supreme Court ruling that his actions were unconstitutional. Romania became an EU member in 2007 and as such is expected to adhere to “the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights.”

FDA Approves HIV Drug in Controversial Move

A pill that reduces HIV infection by 75 percent in healthy adults at high risk of contracting the disease has been approved by the Food and Drug Administration, in a move that the AIDS Healthcare Foundation has called “reckless.” The drug, which will cost $14,000 a year in the U.S., is already helping limit the spread of the disease in the developing world, where the maker sells it for $100 a year. The medicine is not a miracle cure, however, and it does not replace basic protection such as condoms. Health experts also stressed that it is a mistake not to require HIV testing before prescribing it. In patients who are already infected, the virus could mutate to become resistant.

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