Fair Game: New York Fed Agreed to Testify for Bank of America

A.I.G., which is suing Bank of America to recover losses it suffered on those securities, has calculated the value of the fraud claims at $7 billion.

Late on Thursday, a copy of the actual agreement came to light. It was filed by Bank of America in a California court that is hearing the matter of who owns those fraud claims — A.I.G. or the New York Fed. The agreement was also filed by the New York Fed in a related lawsuit in the Southern District of New York, where the New York Fed asked that the court keep the agreement under seal.

A reading of the document makes it clear why.

The agreement spells out the terms of a deal in which the New York Fed received $43 million from Bank of America’s Countrywide unit. The money changed hands to settle a narrow dispute involving cash flows on several mortgage securities held by an investment vehicle, known as Maiden Lane II. That vehicle was created by the New York Fed as part of the rescue of A.I.G., which had held the Countrywide securities. The previously confidential agreement released Bank of America from all litigation claims on the securities held by Maiden Lane II.

But in exchange for that $43 million, the New York Fed did something else for Bank of America. It agreed to testify on behalf of the bank in its legal battle against A.I.G. over fraud claims.

In that matter, Bank of America has argued that A.I.G. has no right to sue it for fraud because A.I.G. sold the securities to Maiden Lane II and so transferred the litigation rights to the New York Fed. A.I.G., however, maintains that the Maiden Lane agreement never specified the transfer of the right to sue for fraud and that an explicit transfer is required by New York law, which governs the agreement. The New York Fed provided Bank of America with two affidavits supporting the bank’s view of who owned the mortgage securities’ fraud claims.

Two weeks ago, it was unclear why the New York Fed gave Bank of America the affidavits. But now, its promise to testify “as needed,” shown in the formerly confidential settlement, addresses that oddity. It was a contractual obligation.

Interestingly, the New York Fed did not tell the California court that its affidavits came about because of its deal with Bank of America. The affidavits came from James M. Mahoney, a vice president at the New York Fed, and Stephanie A. Heller, its deputy general counsel.

But those affidavits differ from the position taken earlier by Thomas C. Baxter Jr., the New York Fed’s general counsel. In a letter to A.I.G. in October 2011, Mr. Baxter said that he and his colleagues “agree that A.I.G. has the right to seek damages” under securities laws for the instruments it sold to Maiden Lane II.

Michael Carlinsky, A.I.G.’s lawyer at Quinn Emanuel Urquhart & Sullivan, said on Friday that he found it “disturbing” that the New York Fed made a contract to “assist Bank of America in its defense of A.I.G.’s lawsuit.”

Also on Friday, I asked the New York Fed why it had included this promise of legal support for Bank of America in the settlement agreement. Jack Gutt, a spokesman, said in a statement that the New York Fed had intended to hold the litigation rights and that the declarations were true.

“The New York Fed did not agree to provide the declarations to benefit B. of A., but rather because doing so helped the New York Fed obtain the best possible settlement” for Maiden Lane II, Mr. Gutt said. “In agreeing to this provision as part of what the New York Fed believed was a favorable settlement agreement, the New York Fed was concerned exclusively with advancing the taxpayer interest.”

I also asked a Bank of America spokesman whether the bank had paid more in the settlement because of the New York Fed’s promise to testify. He declined to answer that question, saying, “Countrywide provided fair value for a complete release of claims by the Federal Reserve Bank of New York, and the Fed agreed to provide testimony standing behind what it had formally represented to Countrywide regarding the assignment of claims from A.I.G.”  

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Detroit Car Sales Climb Again

DETROIT – Sales of new vehicles in the United States rose modestly in February, as consumers continued to buy more fuel-efficient cars and as businesses replaced aging pickup trucks with newer models.

Auto executives said overall industry sales for the month would improve about 2 percent over the strong results reported in the same period a year ago.

The seasonally adjusted annual sales rate – a closely watched indicator for the industry – is expected to total about 15.5 million vehicles for February.

That seasonal rate bodes well for the industry going forward, as automakers ratchet up production to meet demand for their new products.

The Detroit auto companies all posted positive results during the month.

General Motors, the largest American automaker, said it sold 224,000 vehicles in February, a 7 percent increase from the same month in 2012.

All of G.M.'s domestic brands – Chevrolet, Cadillac, GMC and Buick – had higher year-over-year sales. Cadillac led the way with a 20 percent gain, primarily because of healthy sales of the new ATS compact sedan.

G.M. also reported increases in sales of its newest small cars, like the Buick Verano and the Chevrolet Spark. But its most prominent gains were in pickup trucks.

The company said that sales of the Chevrolet Silverado pickup rose 29 percent, and the GMC Sierra increased 25 percent. Executives attributed the performance to a surge in housing starts and the need for construction companies to replace older pickups.

“A significant tailwind for our industry is new home construction, which is creating jobs and fueling the demand for pickups,” said Kurt McNeil, G.M.'s vice president of United States sales operations.

The Ford Motor Company, the second-biggest Detroit auto company, said it sold 195,000 vehicles during the month, a 9 percent gain from a year ago.

Ford said that many of its gains came from sales of sport utilities such as the Escape and Explorer. The company’s redesigned midsize sedan, the Fusion, also had a good month, with a 28 percent improvement over last year.

Like G.M., Ford also benefitted from the surging demand for pickups. Ford said that it sold 54,000 F-series trucks during the month, a 15 percent increase from February of 2012.

Chrysler, the smallest of the Detroit automakers, saw its growth rate slow somewhat after several months of reporting double-digit increases.

The company said that it sold 139,000 vehicles in February, a 4 percent improvement over a year earlier. That is a smaller increase than Chrysler has reported in previous months.

“In spite of a cautious ramp-up of some of our most popular products, which limited inventory last month, we still managed to record our strongest February in five years,” said Reid Bigland, head of United States sales for Chrysler.

Chrysler’s best performers during the month were passenger cars such as the new Dodge Dart. Sales of its Ram pickup increased 3 percent, while sales of its Jeep SUVs dropped 16 percent.

The big Japanese automakers were to report results later Friday. Analysts expected Toyota and Honda to continue their steady comeback from inventory disruptions because of the earthquake and tsunami in Japan two years ago.

Volkswagen, the German automaker that is rapidly expanding its American operations, said it sold 31,000 vehicles in February, a 3 percent increase from a year earlier.

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DealBook: For S.E.C., a Setback in Bid for More Time in Fraud Cases

The Supreme Court on Wednesday delivered a swift and decisive rejection of the Securities and Exchange Commission’s argument that it should operate under a more forgiving statute of limitations in pursuing penalties in fraud cases.

As a result of the decision, the agency will have to find a long-term solution to give itself more time to investigate cases.

In Gabelli v. Securities and Exchange Commission, Chief Justice John G. Roberts Jr. wrote in the unanimous decision rejecting the S.E.C.’s argument that a federal statute that limits the government’s authority to pursue civil penalties should commence when a fraud is discovered, not when it occurred.

The S.E.C. was hoping that the court would apply what is known as the “discovery rule.” In 2010, the Supreme Court endorsed this rule in a private securities fraud class-action suit, Merck & Co. v. Reynolds, stating “that something different was needed in the case of fraud, where a defendant’s deceptive conduct may prevent a plaintiff from even knowing that he or she has been defrauded.”

The discovery rule is an exception to the protection afforded by a statute of limitations, which puts an endpoint on potential legal liability for conduct. Unlike most cases, when fraud is involved, it may not be apparent to the victims that they were harmed because the primary goal of deceptive conduct is to keep it from being exposed.

In the Gabelli case, the S.E.C. filed fraud charges in 2008 against the mutual fund manager Marc Gabelli and a colleague, Bruce Alpert, saying they had violated the Investment Advisers Act of 1940 for permitting an investor to engage in market timing. Ten years ago, a major scandal erupted when it came to light that some advisers had permitted select investors to buy shares at favorable prices to take advantage of pricing disparities in the securities held by mutual funds.

In its complaint, the S.E.C. sought civil monetary penalties based on market timing that it claimed had taken place from 1999 to 2002, and resulted in the preferred investor purportedly reaping significant profits while ordinary investors suffered large losses. The defendants denied the charges and filed a motion to dismiss the case because it was not brought in time.

A federal statute, 28 U.S.C. § 2462, provides that “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued.” The provision dates to 1839, and applies to any government agency.

A decision by the United States Court of Appeals for the Second Circuit in Manhattan allowed the case to proceed by applying the discovery rule to a governmental action. Coincidentally, that decision was written by Judge Jed S. Rakoff, who despite being an occasional thorn in the S.E.C.’s side, accepted the agency’s argument to avoid a strict application of the five-year statute of limitations.

The Supreme Court, however, saw things differently. This week, it issued its opinion less than two months after it heard oral argument in the case in January, a clear sign the justices found no merit in the S.E.C.’s contention that the agency should be treated the same as private plaintiffs in trying to get around the statute of limitations.

According to the Supreme Court, victims in securities fraud cases should have a longer period to file a claim – from when the fraud was discovered. “Most of us do not live in a state of constant investigation,” the court wrote. “Absent any reason to think we have been injured, we do not typically spend our days looking for evidence that we were lied to or defrauded.”

Chief Justice Roberts explained that “the S.E.C. as enforcer is a far cry from the defrauded victim the discovery rule evolved to protect.” One of the reasons the agency exists is to detect and penalize violations, with tools that the ordinary investor simply does not have, like the authority to compel testimony and the production of documents. The message is simple. When it’s your job to investigate fraud, you cannot argue that your failure to do so is a justification for not meeting a statute of limitations.

The Supreme Court’s decision puts increased pressure on the S.E.C. to pursue its investigations with greater alacrity and not let them gather dust, which can occur as a result of staff turnover or other pressing issues. The market timing case is a good example of how an investigation might get lost in the shuffle as corporate accounting frauds at large companies like Enron and WorldCom, which also came to light in 2002, strained the S.E.C.’s investigative resources.

There are a couple of options to deal with this issue in the long run, apart from a substantial increase in the agency’s budget – an unlikely prospect in the face of the looming federal budget sequestration deadline.

The S.E.C. can obtain an agreement to stop the statute of limitations, known as tolling, from those it is investigating, something it has done in the past. For example, in its insider trading and securities fraud case against Samuel E. Wyly, his now deceased brother, Charles J. Wyly Jr., and two other defendants, the S.E.C. got an agreement that let it pursue claims beyond the normal five-year limitations period.

A permanent solution would be to seek legislation from Congress that would give the S.E.C. a longer window to complete its investigations. The statute of limitations is not a constitutional protection, so Congress can amend it as it sees fit, which it has done in other areas involving fraud.

The limitations period for banking crimes, for example, was extended to 10 years during the savings and loan crisis because of the crush of cases that made it difficult to finish investigations in the five-year window to initiate criminal prosecutions. The Fraud Enforcement and Recovery Act of 2009 added mail and wire fraud affecting a financial institution to the list of crimes that get the benefit of the 10-year limitations period, again because of fear that cases would be lost because of the number of investigations taking place after the financial crisis.

The issue of the statute of limitations may even come up at the confirmation hearings of Mary Jo White, who has been nominated to be chairwoman of the S.E.C. That could be an early indicator of whether she would be willing to push for relief from the effect of the Gabelli opinion to help out the enforcement division.

In the short run, the Supreme Court’s decision will cause defendants in government enforcement actions to examine whether they might be able to take advantage of the five-year limitations period. Given how slowly the government has been known to move on occasion, it may be that some cases will fall by the wayside because of the Gabelli decision.

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State of the Art: A Review of Cookoo, G-Shock and Other Smartwatches

Clockwise from top left: The Cookoo, I'm Watch, Meta Watch, Casio G-Shock GB-6900 and Martian.

Every time you look, our computers have moved closer to us.

In the beginning, they existed only in corporate headquarters. Then came the desktop PC — three feet away. Then the laptop — one foot. Then the smartphone — in our pockets. What’s next — computers on our wrists?

Exactly. As though by silent agreement, the gadget industry seems to have decided that 2013 will be the year of the smartwatch.

The central idea is sound. You already have an iPhone or Android phone. Wouldn’t it be neat if your watch could communicate with it wirelessly?

Imagine: the watch could beep or vibrate whenever you get an incoming call, text message or e-mail. No more, “Sorry I didn’t get your call; my phone was in my backpack.” No more fumbling for your phone when that would be inconvenient or unsafe — like while you’re skiing, skateboarding or driving.

These watches can also make your phone beep loudly when it’s lost in the house. That’s much quicker than using Find My iPhone, which involves logging into a Web site.

They can also serve as a digital “leash”: if you wander away, accidentally leaving your phone on some restaurant table, the watch buzzes to warn you.

I tested the Meta Watch ($180), Cookoo ($130), Casio G-Shock GB-6900 ($180), Martian ($300), and I’m Watch ($400, coming in July). More contenders, like a Kickstarter favorite, Pebble Watch, are on the way. (The Martian, Cookoo and Meta Watch also began life on Kickstarter, the Web site where inventors seek financing from the public.) Even Apple is said to be toying with an iWatch.

The designs are all over the map. Some have touch screens. Some look like regular analog watches; others are basically iPod Nanos with straps. Some require daily charging; others take watch batteries.

They do have some things in common. First, these early smartwatches are thick and chunky — a desirable quality in a stew, maybe, but not for the delicate of wrist.

Second, they communicate with your phone over Bluetooth. You have to “pair” the watch to your phone on the first day — and whenever you exit Airplane Mode. Most models require a companion phone app for this purpose.

Most of these watches use Bluetooth 4.0, which means your phone will lose only a small amount of battery charge each day — maybe 5 or 10 percent — but only recent models, like the iPhone 4S and 5, are compatible.

Finally, the instruction manuals are terrible or nonexistent; it’s as if, in their zeal to make these things work, the companies forgot all about explaining it to you.

Wrists ready? Here we go.

CASIO G-SHOCK GB-6900 ($180). This watch closely resembles Casio’s other G-Shocks: popular, masculine, rugged, waterproof digitals.

But this one can beep or vibrate when calls or e-mail come to your iPhone (Android is in the works) — though not, alas, text messages. There’s no Caller ID; a cramped scrolling display says only “Incoming call.” For e-mail, the sender’s address scrolls slowly. You can dismiss these alerts with a double-tap on the glass — that’s the only thing this watch’s “touch screen” does.

The watch can also set itself as you cross time zones by checking in with your phone.

These limited functions are solid and power-stingy; one watch battery lasts two years. The watch has four buttons — the usual user-hostile digital watch assortment, like Mode, Adjust and Split/Reset — but they get the job done.

COOKOO WATCH ($130). The round face and analog hands offer spartan good looks; only the watch’s alarming thickness (three-quarters of an inch) and four edge buttons let you know that it’s not a Swatch.

There’s no screen. Instead, icons dimly appear on the watch’s black background as notifications of incoming calls, calendar reminders or Facebook posts. (E-mail and text notifications are coming soon, says the company.) If you want to know what they are or who they’re from, you have to get out your phone.

E-mail: pogue@nytimes.com

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DealBook: Wall Street Pay Rises – for Those Who Still Have a Job

It’s nice work – if you can get it.

Wall Street has cut thousands of jobs over the past year or so. On Tuesday, JPMorgan Chase, one of the country’s biggest banks, announced that it was eliminating 4,000 more jobs through layoffs and attrition, adding its name to a string of large banks that continue to cut jobs to reduce expenses.

The good news? For the employees who remain, pay is up, according to a report released Tuesday by the New York State comptroller.

This may seem surprising given the outcry over high compensation during the financial crisis. In recent years, however, faced with greater regulation, a slow economic recovery and the loss of once big moneymaking businesses like selling products tied to mortgages, the banks have tried instead to cut people rather than pay, which they argue is needed in order to retain talent that might otherwise leave for better paying jobs at hedge funds or elsewhere.

The average cash bonus for people employed in New York City in the financial industry rose by roughly 9 percent, to $121,900, in 2012 and cash bonuses in total are forecast to increase by roughly 8 percent to $20 billion this year, said Thomas P. DiNapoli, the comptroller.

In recent years some firms have deferred cash payments to employees, and Mr. DiNapoli said part of the increase in the 2012 numbers was cash promised in recent years was actually paid out in 2012. He said that it was “tough” to break out what percentage of the total are deferrals but he believed that it was still a small part of the total.

All told, the average pay package for securities industry employees in New York was $362,900 in 2011, the last year for which data is available, almost unchanged from 2010.

Wall Street jobs are harder to get than they were just a few years ago, but for those who can get their foot in the door finance remains the best paying sector in New York City, Mr. DiNapoli told reporters during a confernce call

“Profits and bonuses rebounded in 2012, but the industry is still restructuring. Despite its smaller size, the securities industry is still a very important part of the New York City and New York state economies,” he said.

The current economic recovery, he said, is being driven by industries other than Wall Street, which he said has regained only 30 percent of the jobs lost during the downturn. The securities industry in New York City lost 28,300 jobs during the financial crisis and has added only 8,500 since, a net loss of 19,800 jobs. New York City financial industry employment totaled 169,700 at the end of 2012.

Before the start of the financial crisis, business and personal income tax collections from Wall Street related activities accounted for up to 20 percent of New York State tax revenues. In 2012, that contribution fell to just 14 percent.

“Wall Street is still in transition, but it is very slowly adjusting to changes in its economic and regulatory environment,” he said.

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NBC’s Ratings Plummet From First to Worst

Will Hart/NBC

Megan Hilty, left, and Katharine McPhee in “Smash,” which is back for a second season but is still struggling.

With every passing week, the sudden blossoming of prime-time success that NBC experienced last fall is looking more like a mirage.

Patrick Harbron/NBC

“Do No Harm,” with Stephanie Roth Haberle and Steven Pasquale, was canceled quickly.

The ratings of last September through December, when NBC shocked the television industry by winning 13 of 15 weeks, have dissipated to numbers so small they have not been seen before by any broadcast network — certainly not during a rating period known as a sweeps month, when networks present their strongest programming.

When the official numbers are completed Thursday, NBC will finish this sweeps month not only far behind its regular network competitors, but also well behind the Spanish-language Univision. No broadcast network has ever before finished a television season sweeps month in fifth place.

NBC executives expected a falloff after the N.F.L. season, but last December they expressed hope that some momentum could be sustained. Now, the network is playing by the silver-linings playbook.

“This February was tough, but thankfully the fall did as well as it did,” said Jeff Bader, the chief scheduling executive for NBC. “If we had the fall we were expecting — which was an improvement, but not to be No. 1 — this month would have been a lot harder to take. This is just frustrating.”

It is also likely to be costly. NBC executives previously acknowledged that their entertainment operation has been losing hundreds of millions a year. The financial picture is exacerbated by the dearth of popular shows NBC owns that it can sell in syndication, an area that generates hundreds of millions in profits for competitors, especially CBS.

Advertising executives note that ratings this month on many shows are so low they may force NBC to offer a spate of what are known as make-goods — free commercials to cover shortfalls from rating guarantees. And in less than three months NBC must unveil a new schedule for advertisers, one that will emphasize the improvements of last fall, but will also contain a short list of holdover shows with attractive ratings to sell. That will put great pressure on the lineup of new shows NBC selects.

The network’s prime-time record this month is a litany of ratings sorrows: Shows that looked like hits last fall, like the new comedy “Go On,” have collapsed. New shows, like the comedy “1600 Penn,” started weak and have fallen fast. NBC even had the lowest-rated new network drama of all time, “Do No Harm,” which was rated 0.9 in the 18-49 category for its premiere this month and fell to 0.7 in its second week.

It was canceled after two episodes.

Perhaps more painful, because it was the favorite project of NBC’s top programmer, Robert Greenblatt, has been the fate of the Broadway drama “Smash.” Introduced last winter with great expectations — and a hugely expensive promotion campaign — “Smash” returned three weeks ago to audience indifference. Last week’s episode could not eke out even a 1 rating among viewers aged 18 through 49, the audience NBC sells to advertisers.

Over all, the network’s ratings have fallen so far that no episode of any show on NBC in February came within one million viewers of a show on PBS: “Downton Abbey.” And forget approaching the numbers of a cable hit like AMC’s “The Walking Dead.”

Nothing NBC has put on in prime time has matched even the appeal of the “Talking Dead,” a show with people simply discussing “The Walking Dead.” That show managed a 2.2 rating in the 18-49 audience. NBC’s best prime-time number for the month has been a 2.1, achieved by episodes of “The Biggest Loser” and “The Office,” a comedy that is about to go off the air.

Remarkably, the best-rated show on NBC all month has been “Saturday Night Live,” which produced two original versions in February, both times hitting a 2.3 rating, topping everything else on the network. “SNL,” though, is not even in prime time — and it is 38 years old.

This article has been revised to reflect the following correction:

Correction: February 25, 2013

A picture caption with an earlier version of this article misspelled the given name of an actress in the canceled show “Do No Harm.” She is Stephanie Roth Haberle, not Stepanie.

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Major Banks Aid in Payday Loans Banned by States

Major banks have quickly become behind-the-scenes allies of Internet-based payday lenders that offer short-term loans with interest rates sometimes exceeding 500 percent.

With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates.

While the banks, which include giants like JPMorgan Chase, Bank of America and Wells Fargo, do not make the loans, they are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. In some cases, the banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals.

“Without the assistance of the banks in processing and sending electronic funds, these lenders simply couldn’t operate,” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York.

The banking industry says it is simply serving customers who have authorized the lenders to withdraw money from their accounts. “The industry is not in a position to monitor customer accounts to see where their payments are going,” said Virginia O’Neill, senior counsel with the American Bankers Association.

But state and federal officials are taking aim at the banks’ role at a time when authorities are increasing their efforts to clamp down on payday lending and its practice of providing quick money to borrowers who need cash.

The Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are examining banks’ roles in the online loans, according to several people with direct knowledge of the matter. Benjamin M. Lawsky, who heads New York State’s Department of Financial Services, is investigating how banks enable the online lenders to skirt New York law and make loans to residents of the state, where interest rates are capped at 25 percent.

For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts. Roughly 27 percent of payday loan borrowers say that the loans caused them to overdraw their accounts, according to a report released this month by the Pew Charitable Trusts. That fee income is coveted, given that financial regulations limiting fees on debit and credit cards have cost banks billions of dollars.

Some state and federal authorities say the banks’ role in enabling the lenders has frustrated government efforts to shield people from predatory loans — an issue that gained urgency after reckless mortgage lending helped precipitate the 2008 financial crisis.

Lawmakers, led by Senator Jeff Merkley, Democrat of Oregon, introduced a bill in July aimed at reining in the lenders, in part, by forcing them to abide by the laws of the state where the borrower lives, rather than where the lender is. The legislation, pending in Congress, would also allow borrowers to cancel automatic withdrawals more easily. “Technology has taken a lot of these scams online, and it’s time to crack down,” Mr. Merkley said in a statement when the bill was introduced.

While the loans are simple to obtain — some online lenders promise approval in minutes with no credit check — they are tough to get rid of. Customers who want to repay their loan in full typically must contact the online lender at least three days before the next withdrawal. Otherwise, the lender automatically renews the loans at least monthly and withdraws only the interest owed. Under federal law, customers are allowed to stop authorized withdrawals from their account. Still, some borrowers say their banks do not heed requests to stop the loans.

Ivy Brodsky, 37, thought she had figured out a way to stop six payday lenders from taking money from her account when she visited her Chase branch in Brighton Beach in Brooklyn in March to close it. But Chase kept the account open and between April and May, the six Internet lenders tried to withdraw money from Ms. Brodsky’s account 55 times, according to bank records reviewed by The New York Times. Chase charged her $1,523 in fees — a combination of 44 insufficient fund fees, extended overdraft fees and service fees.

For Subrina Baptiste, 33, an educational assistant in Brooklyn, the overdraft fees levied by Chase cannibalized her child support income. She said she applied for a $400 loan from Loanshoponline.com and a $700 loan from Advancemetoday.com in 2011. The loans, with annual interest rates of 730 percent and 584 percent respectively, skirt New York law.

Ms. Baptiste said she asked Chase to revoke the automatic withdrawals in October 2011, but was told that she had to ask the lenders instead. In one month, her bank records show, the lenders tried to take money from her account at least six times. Chase charged her $812 in fees and deducted over $600 from her child-support payments to cover them.

“I don’t understand why my own bank just wouldn’t listen to me,” Ms. Baptiste said, adding that Chase ultimately closed her account last January, three months after she asked.

A spokeswoman for Bank of America said the bank always honored requests to stop automatic withdrawals. Wells Fargo declined to comment. Kristin Lemkau, a spokeswoman for Chase, said: “We are working with the customers to resolve these cases.” Online lenders say they work to abide by state laws.

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Many States Say Cuts Would Burden Fragile Recovery

States are increasingly alarmed that they could become collateral damage in Washington’s latest fiscal battle, fearing that the impasse could saddle them with across-the-board spending cuts that threaten to slow their fragile recoveries or thrust them back into recession.

Some states, like Maryland and Virginia, are vulnerable because their economies are heavily dependent on federal workers, federal contracts and military spending, which will face steep reductions if Congress allows the automatic cuts, known as sequestration, to begin next Friday. Others, including Illinois and South Dakota, are at risk because of their reliance on the types of federal grants that are scheduled to be cut. And many states simply fear that a heavy dose of federal austerity could weaken their economies, costing them jobs and much-needed tax revenue.

So as state officials begin to draw up their budgets for next year, some say that the biggest risk they see is not the weak housing market or the troubled European economy but the federal government. While the threat of big federal cuts to states has become something of a semiannual occurrence in recent years, state officials said in interviews that they fear that this time the federal government might not be crying wolf — and their hopes are dimming that a deal will be struck in Washington in time to avert the cuts.

The impact would be widespread as the cuts ripple across the nation over the next year.

Texas expects to see its education aid slashed hundreds of millions of dollars, which could force local school districts to fire teachers, if the cuts are not averted. Michigan officials say they are in no position to replace the lost federal dollars with state dollars, but worry about cuts to federal programs like the one that helps people heat their homes. Maryland is bracing not only for a blow to its economy, which depends on federal workers and contractors and the many private businesses that support them, but also for cuts in federal aid for schools, Head Start programs, a nutrition program for pregnant women, mothers and children, and job training programs, among others.

Gov. Bob McDonnell of Virginia, a Republican, warned in a letter to President Obama on Monday that the automatic spending cuts would have a “potentially devastating impact” and could force Virginia and other states into a recession, noting that the planned cuts to military spending would be especially damaging to areas like Hampton Roads that have a big Navy presence. And he noted that the whole idea of the proposed cuts was that they were supposed to be so unpalatable that they would force officials in Washington to come up with a compromise.

“As we all know, the defense, and other, cuts in the sequester were designed to be a hammer, not a real policy,” Mr. McDonnell wrote. “Unfortunately, inaction by you and Congress now leaves states and localities to adjust to the looming threat of this haphazard idea.”

The looming cuts come just as many states feel they are turning the corner after the prolonged slump caused by the recession. Gov. Martin O’Malley of Maryland, a Democrat, said he was moving to increase the state’s cash reserves and rainy day funds as a hedge against federal cuts.

“I’d rather be spending those dollars on things that improve our business climate, that accelerate our recovery, that get more people back to work, or on needed infrastructure — transportation, roads, bridges and the like,” he said, adding that Maryland has eliminated 5,600 positions in recent years and that its government was smaller, on a per capita basis, than it had been in four decades. “But I can’t do that. I can’t responsibly do that as long as I have this hara-kiri Congress threatening to drive a long knife through our recovery.”

Federal spending on salaries, wages and procurement makes up close to 20 percent of the economies of Maryland and Virginia, according to an analysis by the Pew Center on the States.

But states are in a delicate position. While they fear the impact of the automatic cuts, they also fear that any deal to avert them might be even worse for their bottom lines. That is because many of the planned cuts would go to military spending and not just domestic programs, and some of the most important federal programs for states, including Medicaid and federal highway funds, would be exempt from the cuts.

States will see a reduction of $5.8 billion this year in the federal grant programs subject to the automatic cuts, according to an analysis by Federal Funds Information for States, a group created by the National Governors Association and the National Conference of State Legislatures that tracks the impact of federal actions on states. California, New York and Texas stand to lose the most money from the automatic cuts, and Puerto Rico, which is already facing serious fiscal distress, is threatened with the loss of more than $126 million in federal grant money, the analysis found.

Even with the automatic cuts, the analysis found, states are still expected to get more federal aid over all this year than they did last year, because of growth in some of the biggest programs that are exempt from the cuts, including Medicaid.

But the cuts still pose a real risk to states, officials said. State budget officials from around the country held a conference call last week to discuss the threatened cuts. “In almost every case the folks at the state level, the budget offices, are pretty much telling the agencies and departments that they’re not going to backfill — they’re not going to make up for the budget cuts,” said Scott D. Pattison, the executive director of the National Association of State Budget Officers, which arranged the call. “They don’t have enough state funds to make up for federal cuts.”

The cuts would not hit all states equally, the Pew Center on the States found. While the federal grants subject to the cuts make up more than 10 percent of South Dakota’s revenue, it found, they make up less than 5 percent of Delaware’s revenue.

Many state officials find themselves frustrated year after year by the uncertainty of what they can expect from Washington, which provides states with roughly a third of their revenues. There were threats of cuts when Congress balked at raising the debt limit in 2011, when a so-called super-committee tried and failed to reach a budget deal, and late last year when the nation faced the “fiscal cliff.”

John E. Nixon, the director of Michigan’s budget office, said that all the uncertainty made the state’s planning more difficult. “If it’s going to happen,” he said, “at some point we need to rip off the Band-Aid.”

Fernanda Santos contributed reporting.

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Iglo and Birds Eye Pull Meals After Finding Horse Meat

LONDON — Another big food producer was ensnared in the scandal over horse meat in beef products Friday when the company that owns the Iglo and Birds Eye brands withdrew a dozen types of prepared meals from stores in four European countries.

Iglo Foods Group, the parent company, said it took the action after a chilli con carne dish, produced by a Belgian company called Frigilunch and on sale in Belgium, was found to contain about 2 percent horse meat.

“As a precautionary measure, we will withdraw all other beef products produced for us by Frigilunch,” Iglo Foods said. “Whilst this is not a food safety issue, it is clearly unacceptable.”

In addition to the chilli con carne, seven more Iglo products were removed from Belgian supermarkets, and one from stores in the Netherlands. Meanwhile, three Birds Eye meals — spaghetti Bolognese, shepherd’s pie and lasagne — were withdrawn in Britain and Ireland.

The announcement came as the Food Standards Agency in Britain released updated figures for tests conducted by the food industry in that country, showing that just 1 percent of beef products sampled contained 1 percent or more of horse meat.

With food suppliers and regulators stepping up their monitoring, new cases of beef products tainted with horse meat, which is significantly less expensive than beef, are being found almost every day.

This past week, Nestlé, one of the best-known food companies in the world, said it was removing pasta meals from store shelves in Italy and Spain. Already most of the big supermarket chains in Britain have withdrawn products, including millions of hamburgers. About a dozen European countries have been touched by the scandal.

In Britain there was growing concern about the contents of school meals. On Friday, local governments in Scotland were urged by the procurement agency, Scotland Excel, “not to use any current stocks they hold of frozen beef products, including frozen beef mince, or order any new stocks, until the outcome of further, detailed investigations.”

That announcement followed the discovery of traces of horse DNA in a frozen burger taken from a school kitchen in North Lanarkshire.

There was more reassuring news Friday from the Food Standards Agency, which said it had now received 3,634 test results from manufacturers, retailers, caterers and wholesalers. These results showed an additional six products containing horse DNA since the first set of industry tests was announced last week.

Over all, the agency said, “35 results, representing 13 products, contained horse DNA at or above the 1 percent threshold. These products have already been named and withdrawn from sale.”

While the horse meat crisis has revolved around issues of fraud and mislabeling, there are worries that a powerful equine painkiller, phenylbutazone, or bute, may have entered the food chain.

Eight horses slaughtered for food in Britain tested positive for the drug, according to reports this month. Six of those carcasses had already been exported to France for human consumption.

But the Food Standards Agency said Friday that tests on samples containing horse DNA so far had not found traces of phenylbutazone.

“The overwhelming majority of results, over 99 percent, have come back negative for the presence of horse DNA above the threshold of 1 percent, which is reassuring for consumers,” said Catherine Brown, the agency’s chief executive. She said the agency’s work “is far from done,” with other testing being carried out by the local authorities on behalf of the agency already “well under way.”

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Ramping Up U.S. Production, Ford Expands in Ohio

DETROIT — Ford Motor Company is adding 450 jobs and expanding an engine plant in Ohio to feed the growing demand for more fuel-efficient cars and S.U.V.'s in the American market.

Ford, the nation’s second largest automaker after General Motors, said Thursday it would spend $200 million to renovate its Cleveland engine plant to produce small, turbocharged engines for use in its top-selling models.

The move is the latest by automakers to expand production in the United States, where sales have increased 14 percent so far this year compared with 2012.

Last month, G.M. announced plans to invest $600 million in its assembly plant near Kansas City, Kan., one of the company’s oldest factories. And Chrysler, the smallest of the Detroit car companies, is adding a third shift to its Jeep plant in Detroit.

The expansions are another tangible sign of the steady recovery in the American auto market, which fell to historic lows during the recession.

Both G.M. and Chrysler were forced to declare bankruptcy in 2009 in exchange for big government bailouts. While Ford survived the industry’s financial crisis without help, it still cut thousands of jobs and shuttered several factories to reduce costs and bring production more in line with shrinking sales.

But the tide has turned in car showrooms across the United States, prompting automakers to strategically increase output in their remaining plants.

In Ford’s case, the company added about 8,000 salaried and hourly jobs last year, and has said it plans to hire about 2,200 white-collar workers in 2013. Ford is also moving some vehicle production from Mexico to a Michigan plant, where it will add 1,200 jobs.

The investment in Cleveland is indicative of how Ford and other carmakers have trimmed labor costs in the United States and improved productivity since the recession.

Just a few years ago, the company was forced to consolidate two engine plants into one in northern Ohio and to close a major component operation.

“No question we have been through a lot in northern Ohio,” said Joe Hinrichs, the head of Ford’s Americas region, in an interview. “But now our North American business is very competitive with the best in the world.”

Ford plans to centralize production of its 2-liter, EcoBoost engine — used in popular models such as the Fusion sedan and Explorer S.U.V. — at the Cleveland facility by the end of next year. Currently, the company makes the engines at a plant in Spain and ships them to America.

While Ford is adding jobs and production domestically, it is racing to reduce costs in its troubled European division. Workers who previously built the small engines in Spain will be moved to a nearby assembly plant that is taking on work from a plant to be closed in Belgium.

Mr. Hinrichs said that a new agreement with the United Automobile Workers union local in Cleveland paved the way for the expansion there. The plant now employs about 1,300 workers.

“This is about servicing more demand in the U.S.,” Mr. Hinrichs said. “And with our competitive labor agreements, we can bring business to the U.S. from Spain and Mexico.”

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DealBook: Office Depot and OfficeMax Announce Plans to Merge, After Erroneous Release

11:12 a.m. | Updated

Office Depot and OfficeMax announced plans to merge on Wednesday, just hours after an erroneous news release about the deal surfaced briefly.

Under the terms of the deal, Office Depot said it would issue 2.69 new shares of common stock for each share of OfficeMax. At that level, the transaction would value OfficeMax at $13.50 a share, or roughly $1.19 billion, a premium of more than 25 percent to the company’s closing price last week.

The deal has been anticipated, as the companies face an increasingly difficult competitive environment. Both companies, which are burdened with big real estate footprints, have struggled against lower-priced rivals like Amazon.com and Costco. By uniting, the two companies should be able to reduce costs and better negotiate prices.

“In the past decade, with the growth of the Internet, our industry has changed dramatically,” Neil R. Austrian, chairman and chief executive of Office Depot, said in a statement. “Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors and increase stockholder value.”

While the deal has been years in the making, it was initially announced prematurely. A news release announcing the merger of the companies was posted on Office Depot’s Web site early on Wednesday morning, but it quickly disappeared.

Several news organizations reported the terms disclosed in the errant news release for Office Depot’s earnings. The details were buried on page four of the release, under the header “Other Matters.”

As the details filtered through the market, shares of the companies jumped. In premarket trading, Office Depot’s stock rose more than 7 percent, while OfficeMax shares were up more than 8 percent.

In a call with analysts, Mr. Austrian said that Office Depot’s webcast provider “inadvertently” published his company’s fourth-quarter earnings “well ahead of schedule.”

The episode is reminiscent of other times that companies’ earnings releases were published prematurely. Last fall, Google‘s third-quarter earnings were published three hours early, which the technology giant blamed on a mistake by R.R. Donnelley & Sons, the company’s printer.

Representatives for Office Depot and OfficeMax were not immediately available for comment on the erroneous release.

Strategically, the deal makes sense, as the companies face a changing competitive environment.

Combined, the companies reported about $4.4 billion in revenue for their third quarter of 2012; in comparison, Staples disclosed $6.4 billion in revenue for the same period.

Office Depot has also been under pressure from an activist hedge fund, Starboard Value, which sent a letter to the retailer’s board last fall. In it, Starboard called for more cost cuts and a greater focus on higher-margin businesses like copy and print services. With a 14.8 percent stake, Starboard is the company’s biggest investor.

In announcing the deal, the two companies emphasized their new financial heft.

With the merger, the retailers expect to generate $400 million to $600 million in annual cost savings. The combined entity would also have $1 billion in cash, providing additional firepower to invest in the business.

“We are excited to bring together two companies intent on accelerating innovation for our customers and better differentiating us for success in a dynamic and highly competitive global industry,” Ravi K. Saligram, chief executive of OfficeMax, said in a statement. “We are confident that there will be exciting new opportunities for employees as part of a truly global business.”

Each company will have an equal number of directors on the board of the combined retailer. Before the deal closes, OfficeMax will pay a special dividend of $1.50 a share to its shareholders.

OfficeMax was advised by JPMorgan Chase and the law firms Skadden, Arps, Slate, Meagher & Flom and Dechert. Office Depot was counseled by Simpson Thacher & Bartlett, while its board was advised by the Peter J. Solomon Company, Morgan Stanley and Kirkland & Ellis. Perella Weinberg Partners provided financial advice to the board’s transaction committee.

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European Parliament Approves Plan to Bolster Carbon Trading

LONDON — Lawmakers in Brussels moved Tuesday to shore up the sagging market for carbon emissions permits, a key component of the European Union’s efforts to reduce air pollution.

Prices of carbon allowances, which permit companies to emit greenhouse gases, fell last month to as low as €2.80 per ton, or $3.75, compared with €9 per ton a year ago and €30 per ton in 2008. To reduce the supply of permits and drive up the price, the environmental committee of the European Parliament voted to allow the European Commission to reduce the number of allowances to be auctioned over the next three years.

After the committee’s vote, prices fell to around €4.60 per ton, from a close of €5.13 on Monday. But the panel’s vote had been expected, and the plan still needs approval from the full European Parliament and the governments of the Union’s 27 member states.

“It is really the first step in a long, long process,” said Kash Burchett, an analyst at the energy research firm IHS.

The committee’s vote — 38 to 25, with 2 abstentions — is “a lifeline for the carbon market and for emissions trading as a policy tool for curbing emissions,” said Stig Schjoelset, head of carbon analysis at Thomson Reuters Point Carbon, a market research firm in Oslo.

If the vote had gone the other way, Mr. Schjoelset said, the Emissions Trading System would have been “more or less dead.”

The European Union introduced the system in 2005 in a bid to force polluters like utilities and manufacturers to reduce their carbon emissions. Under the system, companies are allocated a certain number of permits, each allowing them to emit one metric ton of carbon dioxide per year. If emissions exceed the level allowed by the permits, the companies must buy additional permits. Companies that do not comply face heavy fines.

The total number of permits is scheduled to be reduced over time, forcing a corresponding reduction in emissions. The Union is on track to meet its goal of reducing emissions in 2020 to 80 percent of 1990 levels, but that is mainly because the recession has reduced industrial activity and energy use. As a result, companies have a surplus of permits on hand, which depresses their price.

It is widely believed that the European Commission has handed out too many credits. In 2012, for example, ArcelorMittal, the Luxembourg-based steel maker, sold 21.8 million tons of credits — about one quarter of the number it received from the commission — for $220 million. The company said it spent the proceeds on energy-saving investments.

Advocates say that carbon pricing, if properly managed, is the most efficient way to lower emissions. By putting a hefty price on carbon, the system lets investment decisions drive emissions reductions, rather than having governments dictate investment in particular clean energy sources like solar or wind.

But industrialists and analysts say that single-digit prices for carbon permits do not provide sufficient incentive for companies to switch to cleaner fuels and energy-efficient technology.

“Driving energy investment in Europe through a higher carbon price will lower costs,” said David Hone, the chief climate adviser to Royal Dutch Shell and the chairman of the International Emissions Trading Association in Geneva. “That price signal isn’t there today.”

Mr. Schjoelset said a price of €30 to €40 per ton was needed to encourage electricity producers to switch from coal to natural gas, a cleaner fuel. He said it would take a price of €60 to €150 per ton to push utilities to invest in expensive carbon-reducing technologies like carbon capture and storage.

Politicians and analysts said the Parliament committee’s vote might be the first step in restoring the credibility of the Emissions Trading System, which is still considered the world’s flagship carbon program.

“It is important that we get this right, and the sooner we get it right the better,” the European climate action commissioner, Connie Hedegaard, said during an interview Monday.

The plan approved Tuesday would take 900 million carbon credits that are now scheduled to be auctioned from 2013 to 2015 and “backload” them so they are auctioned in 2019 and 2020. That will put a dent in the surplus of carbon credits, which is estimated at two billion tons.

This article has been revised to reflect the following correction:

Correction: February 19, 2013

An earlier version of this article misidentified an analyst at IHT, an energy research firm. He is Kash Burchett, not Kass Burchett.

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DealBook: Reader's Digest Files for Bankruptcy, Again

Executives at Reader’s Digest must be hoping that the magazine’s second trip to bankruptcy court in under four years will be its last.

The magazine’s parent filed for Chapter 11 protection late on Sunday in another attempt to cut down the debt that has plagued the pocket-sized publication for years. The company is hoping to convert about $465 million of its debt into equity held by its current creditors.

In a court filing, Reader’s Digest said it held about $1.1 billion in assets and just under $1.2 billion in debt. It has provisionally lined up about $105 million in financing to keep it afloat during the Chapter 11 case.

This week’s filing is the latest effort by the 91-year-old publisher, whose magazine once resided on many an American household’s coffee table, to fix itself in a difficult economic environment.

“After considering a wide range of alternatives, we believe this course of action will most effectively enable us to maintain our momentum in transforming the business and allow us to capitalize on the growing strength and presence of our outstanding brands and products,” Robert E. Guth , the company’s chief executive, said in a statement.

Reader’s Digest last filed for bankruptcy in 2009, emerging a year later under the control of lenders like JPMorgan Chase.

That reorganization substantially cut the publisher’s debt, and afterward the company worked to further shrink its footprint. It jettisoned nonessential publications in a series of deals, including the $180 million sale of Allrecipes.com and the $4.3 million sale of Every Day With Rachael Ray, both to the Meredith Corporation.

Most of the money from those transactions went toward paying down a still significant debt burden. But the company remained pressured by what it described in a court filing as the steep declines that still bedevil the media industry. Last year, the publisher began negotiating with its lenders, including Wells Fargo, about amending some of its debt obligations. That process eventually led to a “pre-negotiated agreement” with creditors, that will be put into effect by the bankruptcy filing.

This time, Reader’s Digest is hoping to spend even less time in court. Mr. Guth said in a court filing that the publisher aims to emerge from bankruptcy protection in about four months.

The company’s biggest unsecured creditors include firms represented by Luxor Capital. The Federal Trade Commission also contends that it is owed $8.8 million in a settlement claim.

Reader’s Digest is being advised by Evercore Partners and the law firm Weil, Gotshal & Manges.

Reader's Digest bankruptcy petition (2013) by

Declaration by Reader's Digest Chief Executive by

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A First Step on Continent for Google on Use of Content

PARIS — Publishers in France say they have struck an innovative agreement with Google on the use of their content online. Their counterparts elsewhere in Europe, however, say the French gave in too easily to the Internet giant.

The deal was signed this month by President François Hollande of France and Eric E. Schmidt, the executive chairman of Google, who called it a breakthrough in the tense relationship between publishers and Google, and as a possible model for other countries to follow.

Under the deal, Google agreed to set up a fund, worth €60 million, or $80 million, over three years, to help publishers develop their digital units. The two sides also pledged to deepen business ties, using Google’s online tools, in an effort to generate more online revenue for the publishers, who have struggled to counteract dwindling print revenue.

But the French group, representing newspaper and magazine publishers with an online presence, as well as a variety of other news-oriented Web sites, yielded on its most important demand: that Google and other search engines and “aggregators” of news should start paying for links to their content.

Google, which insists that its links provide a service to publishers by directing traffic to their sites, had fiercely resisted any change in the principle of free linking.

The agreement dismayed members of the European Publishers Council, a lobbying group in Brussels, which has been pushing for a fundamental change in the relationship between publishers and Google. The group criticized the French publishers for breaking ranks and striking a separate business agreement that has no statutory standing.

The deal “does not address the continuing problem of unauthorized reuse and monetization of content, and so does not provide the online press with the financial certainty or mechanisms for legal redress which it needs to build sustainable business models and ensure its continued investment in high-quality content,” Angela Mills Wade, executive director of the publishers council, said in a statement.

German publishers were also scornful, with Anja Pasquay, a spokeswoman for the German Newspaper Publishers’ Association, saying: “Obviously the French position isn’t one that we would favor. This is not the solution for Germany.”

Germany has been in the forefront of the push to get Google to share with online news publishers some of the billions of euros that the company earns from the sale of advertising. A proposed law, endorsed by the government of Chancellor Angela Merkel and working its way through the federal legislature, would grant a new form of copyright to digital publishers. If enacted, it could allow publishers to charge search engines or aggregators for displaying even snippets of news articles alongside links to other Web sites.

Mr. Hollande had vowed to introduce similar legislation this winter if Google and the publishers did not come to terms. It appears that Google, which had threatened to stop indexing French Web sites’ content if it had to pay for links, has sidelined the threat of legislation, at least for now; the agreement will be reviewed after three years, Mr. Hollande has said.

Under the deal, Google says it will help the publishers use several of its digital advertising services, including AdSense, AdMob and Ad Exchange, more effectively.

Publishers are already free to use these services, and it was not immediately clear how they would be able to generate more revenue from them; this part of the accord remains confidential, both sides say, because they are still negotiating the fine print.

“This agreement can help accelerate the move toward greater advertising revenues in the digital world,” said Marc Schwartz of Mazars, a consulting firm, who is serving as an independent mediator in the talks. “I’m not saying we have done everything, but it’s a first step in the right direction.”

More has been said about the planned innovation fund. Publishers will submit proposals to the fund, which will select ideas to finance and develop, with the involvement of Google engineers.

“The idea is that it would inject innovation into the sector in France,” said Simon Morrison, copyright policy manager at Google.

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Group of 20 Pledges to Let Markets Set Currency Values

MOSCOW — In a concerted move to quiet fears of a so-called currency war, finance officials from the world’s largest industrial and emerging economies expressed their commitment on Saturday to “market-determined exchange rate systems and exchange rate flexibility.”

In a statement issued at the conclusion of a conference here of the Group of 20, the finance ministers from the Group of 20 promised: “We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes.”

In its statement, the group also vowed to “take necessary collective actions” to discourage corporate tax evasion, particularly by preventing companies from shifting profits to avoid tax obligations. For instance, a number of big American companies, including Apple and Starbucks, have come under scrutiny recently for seeking out the friendliest tax jurisdictions.

Over all, the statement largely echoed one last week by seven top industrial nations pledging to let market exchange rates determine the value of their currencies. Currency devaluation can be used to gain competitive advantage because it makes a country’s exports cheaper.

“We all agreed on the fact that we refuse to enter any currency war,” the French finance minister, Pierre Moscovici, told reporters at the conference, which was held in a meeting center just a short walk from the Kremlin and Red Square.

In the statement on Saturday, the Group of 20 pointedly avoided any criticism of Japan, where stimulus programs backed by Prime Minister Shinzo Abe have kept interest rates near zero and flooded the economy with money — leading to a roughly 15 percent drop in the value of the yen against the dollar over the last three months.

The Japanese policies, which have reduced the cost of Japanese products around the world, were the primary cause of fears of a currency war.

In essence, the Group of 20 expressed a view that loose monetary policy, including steps that weaken currency values, are acceptable when used to stimulate domestic growth but should not be used to benefit in global trade.

Critics of that view say that it amounts to a distinction without a difference because loose monetary policies stimulate growth and bolster exports at the same time.

The United States has also used a loose monetary approach to aid in the economic recovery, in the form of “quantitative easing” by which the Federal Reserve buys tens of billions of dollars in bonds each month.

The chairman of the Federal Reserve, Ben S. Bernanke, who attended the conference in Moscow, gave brief remarks on Friday indicating support for Japan’s efforts.

Faster-growing, developing countries like Brazil and China have expressed concerns about the loose monetary policies of more established economies like Japan and the United States. The money created by policies like the Fed’s quantitative easing can prove destabilizing as it enters faster-growing economies.

The Group of 20 acknowledged this concern in its statement, saying: “Monetary policy should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates. We commit to monitor and minimize the negative spillovers on other countries of policies implemented for domestic purposes.”

As the three-day conference drew to a close, participants did not reach any new agreement on debt-cutting targets. Efforts to reach such a pact will continue at the annual Group of 20 summit meeting to be attended by President Obama and other world leaders in St. Petersburg in September.

But while the debt agreement was elusive, the Group of 20 leaders reiterated efforts to work together, promising to “resist all forms of protections and keep our markets open.”

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DealBook: Confidence on Upswing, Mergers Make Comeback

The mega-merger is back.

For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and chief executives, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms.

Cycles, however, turn, and in the opening weeks of 2013, merger activity has suddenly roared back to life. On Thursday, Berkshire Hathaway, the conglomerate run by Warren E. Buffett, said it had teamed up with Brazilian investors to buy the ketchup maker H. J. Heinz for about $23 billion. And American Airlines and US Airways agreed to merge in a deal valued at $11 billion.

Those transactions come a week after a planned $24 billion buyout of the computer company Dell by its founder, Michael S. Dell, and private equity backers. And Liberty Global, the company controlled by the billionaire media magnate John C. Malone, struck a $16 billion deal to buy the British cable business Virgin Media.

“Since the crisis, one by one, the stars came into alignment, and it was only a matter of time before you had a week like we just had,” said James B. Lee Jr., the vice chairman of JPMorgan Chase.

Still, bankers and lawyers remain circumspect, warning that it is still too early to declare a mergers-and-acquisitions boom like those during the junk bond craze of 1989, the dot-com bubble of 1999 and the leveraged buyout bonanza of 2007. They also say that it is important to pay heed to the excesses that developed during these moments of merger mania, which all ended badly.

A confluence of factors has driven the recent deals. Most visibly, the stock market has been on a tear, with the Standard & Poor’s 500-stock index this week briefly hitting its highest levels since November 2007. Higher share prices have buoyed the confidence of chief executives, who now, instead of retrenching, are looking for ways to expand their businesses.

A number of clouds that hovered over the markets last year have also been removed, eliminating the uncertainty that hampered deal making. Mergers and acquisitions activity in 2012 remained tepid as companies took a wait-and-see approach over the outcome of the presidential election and negotiations over the fiscal cliff. The problems in Europe, which began in earnest in 2011, shut down a lot of potential transactions, but the region has since stabilized.

“When we talk to our corporate clients as well as the bankers, we keep hearing them talk about increased confidence,” said John A. Bick, a partner at the law firm Davis Polk & Wardwell, who advised Heinz on its acquisition by Mr. Buffett and his partners.

Mr. Bick said that mega-mergers had a psychological component, meaning that once transactions start happening, chief executives do not want to be left behind. “In the same way that success breeds success, deals breed more deals,” he said.

A central reason for the return of big transactions is the mountain of cash on corporate balance sheets. After the financial crisis, companies hunkered down, laying off employees and cutting costs. As a result, they generated savings. Today, corporations in the S.& P. 500 are sitting on more than $1 trillion in cash. With interest rates near zero, that money is earning very little in bank accounts, so executives are looking to put it to work by acquiring businesses.

The private equity deal-making machine is also revving up again. The world’s largest buyout firms have hundreds of billions of dollars of “dry powder” — money allotted to deals in Wall Street parlance — and they are on the hunt. The proposed leveraged buyout of Dell, led by Mr. Dell and the investment firm Silver Lake Partners, was the largest private equity transaction since July 2007, when the Blackstone Group acquired the hotel chain Hilton Worldwide for $26 billion just as the credit markets were seizing up.

But perhaps the single biggest factor driving the return of corporate takeovers is the banking system’s renewed health. Corporations often rely on bank loans for financing acquisitions, and the ability of private equity firms to strike multibillion-dollar transactions depends on the willingness of banks to lend them money.

For years, banks, saddled by the toxic mortgage assets weighing on their balance sheets, turned off the lending spigot. But with the housing crisis in the rearview mirror and economic conditions slowly improving, banks are again lining up to provide corporate loans at record-low interest rates to finance acquisitions.

The banks, of course, are major beneficiaries of megadeals, earning big fees from both advising on the transactions and lending money to finance them. Mergers and acquisitions in the United States total $158.7 billion so far this year, according to Thomson Reuters data, more than double the amount in the same period last year. JPMorgan, for example, has benefited from the surge, advising on four big deals in recent weeks, including the Dell bid and Comcast’s $16.7 billion offer for the rest of NBCUniversal that it did not already own.

Mr. Buffett, in a television interview last month, declared that the banks had repaired their businesses and no longer posed a threat to the economy. “The capital ratios are huge, the excesses on the asset aside have been largely cleared out,” said Mr. Buffett, whose acquisition of Heinz will be his second-largest acquisition, behind his $35.9 billion purchase of a majority stake in the railroad company Burlington Northern Santa Fe in 2009.

While Wall Street has an air of giddiness over the year’s start, most deal makers temper their comments about the current environment with warnings about undisciplined behavior like overpaying for deals and borrowing too much to pay for them.

Though private equity firms were battered by the financial crisis, they made it through the downturn on relatively solid ground. Many of their megadeals, like Hilton, looked destined for bankruptcy after the markets collapsed, but they have since recovered. The deals have benefited from an improving economy, as well as robust lending markets that allowed companies to push back the large amounts of debt that were to have come due in the next few years.

But there are still plenty of cautionary tales about the consequences of overpriced, overleveraged takeovers. Consider Energy Future Holdings, the biggest private equity deal in history. Struck at the peak of the merger boom in October 2007, the company has suffered from low natural gas prices and too much debt, and could be forced to restructure this year. Its owners, a group led by Kohlberg Kravis Roberts and TPG, are likely to lose billions.

Even Mr. Buffett made a mistake on Energy Future Holdings, having invested $2 billion in the company’s bonds. He admitted to shareholders last year that the investment was a blunder and would most likely be wiped out.

“In tennis parlance,” Mr. Buffett wrote, “this was a major unforced error.”

Michael J. de la Merced contributed reporting.

A version of this article appeared in print on 02/15/2013, on page A1 of the NewYork edition with the headline: Confidence on Upswing, Mergers Make Comeback.

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DealBook: Buffett to Pay $23 Billion for Heinz, as Big Mergers Revive

10:12 a.m. | Updated

Warren E. Buffett has found another American icon worth buying: H. J. Heinz.

Berkshire Hathaway, the giant conglomerate that Mr. Buffett runs, said on Thursday that it would buy the food giant for about $23 billion, adding Heinz ketchup to its stable of prominent brands.

The proposed acquisition, coming fast on the heels of a planned $24 billion buyout of the computer maker Dell and a number of smaller deals, heralds a possible reemergence in merger activity.  The number of deals and the prices being paid for companies are still a far cry from the lofty heights of the boom before the financial crisis.  But an improving stock market, growing confidence among business executives and mounting piles of cash held by corporations and private equity funds all favor a return to deal-making. 

Mr. Buffett is teaming up with 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in a company whose business is complementary to Heinz’s: Burger King.

Under the terms of the deal, Berkshire and 3G will pay $72.50 a share, about 20 percent above Heinz’s closing price on Wednesday. Including debt, the transaction is valued at $28 billion.

“This is my kind of deal and my kind of partner,” Mr. Buffett told CNBC on Thursday. “Heinz is our kind of company with fantastic brands.”

In many ways, Heinz fits Mr. Buffett’s deal criteria almost to a T. It has broad brand recognition – besides ketchup, it owns Ore-Ida and Lea & Perrins Worcestershire sauce – and has performed well. Over the last 12 months, its stock has risen nearly 17 percent.

Mr. Buffett told CNBC that he had a file on Heinz dating back to 1980. But the genesis of Thursday’s deal actually lies with 3G, an investment firm backed by several wealthy Brazilian families, according to a person with direct knowledge of the matter.

One of the firm’s principal backers, Jorge Paulo Lemann, brought the idea of buying Heinz to Berkshire about two months ago, this person said. Mr. Buffett agreed, and the two sides approached Heinz’s chief executive, William R. Johnson, about buying the company.

“We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz,” Mr. Johnson said in a statement.

Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo.

Mr. Buffett told CNBC that 3G would be the primary supervisor of Heinz’s operations, saying, “Heinz will be 3G’s baby.”

The food company’s headquarters will remain in Pittsburgh, Heinz’s home for over 120 years.

Heinz’s stock was up nearly 20 percent in morning trading, at $72.51, closely mirroring the offered price. Berkshire’s class A stock was also up slightly, rising 0.64 percent to $148,691 a share.

Heinz was advised by Centerview Partners, Bank of America Merrill Lynch and the law firm Davis Polk & Wardwell. A transaction committee of the company’s board was advised by Moelis & Company and Wachtell, Lipton, Rosen & Katz.

Berkshire’s and 3G’s lead adviser was Lazard, with JPMorgan and Wells Fargo providing additional advice. Kirkland & Ellis provided legal advice to 3G, while Berkshire relied on its usual law firm, Munger, Tolles & Olson.

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Tool Kit: How to Make Your Video Go Viral

It would take 72 hours to watch all the videos uploaded to YouTube every minute by would-be commentators, comedians, cosmetologists and various other content creators all hoping for a breakout hit.

And, let’s be honest, most of it is cringe-worthy.

While the vagaries of taste and timing determine which videos go viral and which YouTube channels develop large and loyal followings, it’s easier to tell which videos will make viewers feel as if they can’t click away fast enough.

It boils down to narcissism. If you’re an aspiring video blogger, remember, it’s not about you, it’s about your audience. You need to be conscious and considerate of your audience and its needs, rather than getting mired in your own egotism or insecurity. (It’s good advice for life but essential to making quality video.)

Of course you want to have a decent camera. “If you have an iPhone or Android phone, you pretty much do,” said Eddie Codel, a video consultant in San Francisco, who produces content mostly for corporate clients. A hand-held video camera is nice and offers more features and flexibility, but your smartphone is fine.

The only additional equipment you might consider is a separate lavaliere or lapel microphone ($100-$200) for clearer audio. And if there isn’t enough ambient light to illuminate your face, spring for a clamp lamp ($10-$20) that you can find at most hardware stores. No one wants to watch you talking in the dark like someone in a witness protection program. For a flattering glow, Mr. Codel suggested putting wax paper in front of the lamp to diffuse the light.

O.K., so now you’re ready to perform — and you are always performing when the camera is rolling. “If you can’t communicate in an interesting, entertaining, energetic way — I don’t care how much education you have, how brilliant you are, how many degrees you have — it’s going to be painful to watch you,” said Karen Melamed, a television producer and online video consultant in Los Angeles. “Dr. Phil is not on TV because he’s the best therapist in the world, and Paula Deen is not the best chef in the world. They are good performers.”

That’s not to say you have to have an outsize personality or acting experience. But you do need to be comfortable in front of the camera, which is no easy feat. “There’s something sort of horrifying and anxiety-producing about shooting when you are alone,” said Ze Frank, who has more than 126,000 subscribers to his YouTube channel and whose quirky videos can attract as many as 20 million views.

The camera lens is a dark, bottomless void that doesn’t provide the feedback you get in normal face-to-face conversation, like a nod, a raised eyebrow and utterances like “hmmm” and “aah.” Lacking that, people tend to focus more on themselves and, in their self-consciousness, become either bland and monotone (as interesting as a lecture on the Hawley-Smoot Tariff) or hyper-excited and agitated (as annoying as a used-car commercial).

Mr. Frank, who lives in Los Angeles, said he tended to “over-gesticulate and mug too aggressively to the camera” when he first started posting Web videos in 2006. Now he has another person in the room operating the camera. “It’s wonderful to have someone else there to tell you if you are falling a little flat or that look was so cheesy it’s just ridiculous,” Mr. Frank said. Buzzfeed bought his channel last year, and he is now the company’s executive vice president for video, while continuing to create his own content.

If you don’t have the money to hire a camera operator or a willing friend to watch you record, just imagine you are talking to your typical viewer. “Your only concern should be how it’s going to benefit who is watching,” said Eileen Winnick, a media consultant and former actress whose past clients include the celebrity chefs Ina Garten and Bobby Flay. “When you do that, you take the focus off yourself and put it into what you want to get across, which changes the way you communicate,” she said.

You don’t even necessarily have to be on camera. John Mitzewich, of the YouTube channel “Food Wishes,” never appears in his cooking tutorials, which can attract as many as two million views. All you see are his hands at work in his San Francisco kitchen.

“It’s not, ‘Here I am, check out my personality.’ It’s, ‘Let’s make this thing,’ ” said Mr. Mitzewich, whose clever voice-over might compare peaking egg whites to “a voluptuous woman under a white cotton sheet.” Allrecipes.com bought his channel, which has 308,000 subscribers, last year, but he continues to have creative control. “The whole ‘follow your bliss’ thing totally works out,” he said.

Online video is different from television or film in that the audience is often watching on a small screen (laptop, tablet or smartphone). Viewers are up close, leaning in and may also be interacting with the content by posting comments, so it feels more intimate. “The viewer wants to be spoken to as a friend would talk to them,” said Ben Relles, head of programming strategy for YouTube, a division of Google. “They view these channels as friendships.”

As a result, they gravitate toward creators who seem genuine and responsive, such as Charlie McDonnell, a musician and professed nerd with soulful eyes, who has 1.8 million subscribers to the video blog, or vlog, he films in his London apartment. Or Jenna Marbles, who has attracted almost six million subscribers by her Tourette-like revelations of whatever is on her peculiar and profane mind.

Moreover, viewers appreciate content that they can’t get elsewhere. Creators are successful when they tap into “narrow but deep niches,” said Steve Woolf, senior vice president for content at Blip, a curated Web video site.

Paul Klusman, an engineer in Wichita, Kan., gained fame from his cat videos, in which he talks comically yet earnestly about the pleasures (companionship) and pains (kitty constipation) of cat ownership. The first video he made, “Engineer’s Guide to Cats,” was rejected by a short-film festival. But when he posted it on YouTube in 2008, it went viral with almost six million views and several marriage proposals.

He now has more than 33,000 subscribers with whom he regularly communicates (and sometimes dates). “I’m not a YouTube superstar, but I’m on the map,” said Mr. Klusman, who added that he also earns a nice supplemental income through advertising on his channel but “not enough for me to want to live on.”

While Mr. Klusman’s videos can be as long as seven minutes, most online media specialists say it’s better to crisply edit videos down to two to four minutes. That means getting rid of any vanity shots and self-indulgent rambling. “You want to be clean and concise, and if you don’t grab viewers in the first 15 seconds, they’re gone and aren’t coming back,” said Ms. Melamed, the producer and consultant. You don’t need fancy editing software either. Programs like iMovie and Windows Movie Maker, which come standard on many computers, are adequate.

A last bit of advice is to be consistent in churning out content. Post at least weekly if your vlog is topical. If you are more interested in building a library of content such as tutorials, the time between postings can be longer.

“Be patient and realize you are probably going to be a bit terrible in the beginning,” Mr. Frank said. “If you don’t end up making a living at it, there are other reasons to create online media. It’s certainly a validation of life.”

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DealBook Column: Relationship Science Plans Database of Names and Connections

It sounds like a Rolodex for the 1 percent: two million deal makers, power brokers and business executives — not only their names, but in many cases the names of their spouses and children and associates, their political donations, their charity work and more — all at a banker’s fingertips.

Such is the promise of a new company called Relationship Science.

Never heard of it? Until recently, neither had I. But a few months ago, whispers began that this young company was assembling a vast trove of information about big names in corporate America. What really piqued my interest was that bankrolling this start-up were some Wall Street heavyweights, including Henry R. Kravis, Ronald O. Perelman, Kenneth G. Langone, Joseph R. Perella, Stanley F. Druckenmiller and Andrew Tisch.

It turns out that over the last two years, with a staff of more than 800 people, mostly in India, Relationship Science has been quietly building what it hopes will be the ultimate business Who’s Who. If it succeeds, it could radically change the way Wall Street does business.

That’s a big if, of course. There are plenty of other databases out there. And there’s always Google. Normally I wouldn’t write about a technology company, but I kept hearing chatter about it from people on Wall Street.

Then I got a glimpse of this new system. Forget six degrees of Kevin Bacon. This is six degrees of Henry Kravis.

Here’s how it works: Let’s say a banker wants to get in touch with Mr. Kravis, the private equity deal maker, but doesn’t know him personally. The banker can type Mr. Kravis’s name into a Relationship Science search bar, and the system will scan personal contacts for people the banker knows who also know Mr. Kravis, or perhaps secondary or tertiary connections.

The system shows how the searcher is connected — perhaps a friend, or a friend of a friend, is on a charitable board — and also grades the quality of those connections by identifying them as “strong,” “average” or “weak.” You will be surprised at the many ways the database finds connections.

The major innovation is that, unlike Facebook or LinkedIn, it doesn’t matter if people have signed up for the service. Many business leaders aren’t on Facebook or LinkedIn, but Relationship Science doesn’t rely on user-generated content. It just scrapes the Web.

Relationship Science is the brainchild of Neal Goldman, a co-founder of CapitalIQ, a financial database service that is used by many Wall Street firms. Mr. Goldman sold CapitalIQ, which has 4,200 clients worldwide, to McGraw-Hill in 2004 for more than $200 million. That may explain why he was able to easily round up about $60 million in funds for Relationship Science from many boldface names in finance. He raised the first $6 million in three days.

“I knew there had to be a better way,” Mr. Goldman said about the way people search out others. Most people use Google to learn about people and ask friends and colleagues if they or someone they know can provide an introduction.

Relationship Science essentially does this automatically. It will even show you every connection you have to a specific company or organization.

“We live in a service economy,” Mr. Goldman said. “Building relationships is the most important part for selling and growing.”

Kenneth Langone, a financier and co-founder in Home Depot, said that when he saw a demonstration of the system he nearly fell off his chair. He used an unprintable four-letter word.

“My life is all about networking,” said Mr. Langone, who was so enthusiastic he became an investor and recently joined the board of Relationship Science. “How many times do I say, ‘How do I get to this guy?’ It is scary how much it helps.”

Mr. Goldman’s version of networking isn’t for everyone. His company charges $3,000 a year for a person to have access to the site. (That might sound expensive, but by Wall Street standards, it’s not.)

Price aside, the possibility that this system could lead to a deal or to a new wealth management client means it just might pay for itself.

“If you get one extra deal, the price is irrelevant,” Mr. Goldman said.

Apparently, his sales pitch is working. Already, some big financial firms have signed up for the service, which is still in a test phase. Investment bankers, wealth managers, private equity and venture capital investors have been trying to arrange meetings to see it, egged on, no doubt, by many of Mr. Goldman’s well-heeled investors. Even some development offices of charities have taken an interest.

The system I had a peek at was still a bit buggy. In some cases, it was missing information; in other cases the information was outdated. In still other instances, the program missed connections. For example, it didn’t seem to notice that Lloyd C. Blankfein, the chief executive of Goldman Sachs, should obviously know a certain senior partner at Goldman.

But the promise is there, if the initial kinks are worked out. I discovered I had paths I never knew existed to certain people or companies. (Mr. Goldman should market his product to reporters, too.)

One of the most vexing and perhaps unusual choices Mr. Goldman seems to have made with Relationship Science is to omit what would be truly valuable information: phone numbers and e-mail addresses.

Mr. Goldman explained the decision. “This isn’t about spamming people.” He said supplying phone numbers wouldn’t offer any value because people don’t like being cold-called, which he said was the antithesis of the purpose of his database.

Ultimately, he said, as valuable as the technology can be in discovering the path to a relationship, an artful introduction is what really counts.

“We bring the science,” he said. “You bring the art.”

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This post has been revised to reflect the following correction:

Correction: February 12, 2013

An earlier version of this column misspelled the surname of one of the backers of Relationship Science. He is Ron O. Perelman, not Pearlman.

A version of this article appeared in print on 02/12/2013, on page B1 of the NewYork edition with the headline: A Database Of Names, And How They Connect.

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