China sees rocky export rebound, shrinking surplus

BEIJING/SHANGHAI (Reuters) - China's exports face a "hard and tortuous" path to recovery as uncertainties dog the global economy's gradual return to health, with this year's trade surplus set to shrink from last year's record, the Commerce Ministry said.

Commerce Minister Chen Deming told a conference on Saturday that China's trade surplus was expected to fall to $180 billion to $190 billion this year from last year's record $295.5 billion.

The surplus was $136.4 billion in the first nine months of the year.

With China's economic recovery relying heavily on government spending to boost domestic demand, imports have seen greater improvement than exports in recent months.

Exports in September were 15.2 percent below their level a year earlier, beating forecasts of a 21 percent fall, although the government expects a double-digit fall for all of 2009.

In a statement released late on Friday on the ministry's website (www.mofcom.gov.cn), it said the full-year fall in exports compared with the previous year should be less than 20 percent.

"In 2010, the world economy will hopefully see a gradual recovery, and the environment for Chinese trade will gradually improve," it said.

"But as there is not yet sufficient strength in the global economic recovery, many problems and contradictions have yet to be basically resolved. The recovery will be hard and tortuous, and it will be hard to see an obvious recovery in international demand in the short term."

Net exports shaved 3.6 percentage points off headline GDP growth of 8.9 percent in the third quarter as Chinese manufacturers continued to reel from a slump in global trade.

Protectionism in these straightened times was a particular worry, as was increasing competition, the ministry said.

"At present some nations are conducting probes into Chinese goods, which is causing yet further obstruction for a recovery in Chinese exports," it said.

A U.S. trade panel on Friday approved the eighth government investigation this year into charges of unfair Chinese pricing practices in a case in which U.S. companies want a nearly 100 percent duty or more on $382 million of imported steel pipes.

Still, there were signs for optimism, the ministry added.

The government was continuing to provide help to exporters in the form of export tax rebates, and numerous new markets awaited Chinese firms.

"There is a bright future for developing trade with newly emerging markets," it said.

Exclusive: Fidelity preserves income with deep cuts

BOSTON (Reuters) - Operating income at FMR LLC, parent of Fidelity Investments, fell just 7 percent to $1.4 billion in the first nine months of 2009, even as revenues plunged, according to a confidential prospectus obtained by Reuters for a debt offering by the privately held firm.

The results far exceed the performance of the mutual fund operator's largest publicly traded rivals, as all try to weather fallout from the financial crisis and recession.

The entire industry has suffered as management fees plummeted along with the stock market's steep drop in 2008.

But the figures also show the deep cuts Boston-based Fidelity had to make to achieve those results.

Fidelity, which manages some $1.5 trillion, said in the filing that it had slashed expenses, largely through staff cuts.

Two major rounds of lay-offs, along with attrition, trimmed employee headcount in financial services to 38,000 as of June 30, 2009, 16 percent down from 45,200 a year earlier.

"Our company is very healthy and very strong, in large part because we're positioned well with a very diverse business line and because we took steps to manage through an unprecedented worldwide economic crisis," Anne Crowley, Fidelity spokeswoman, told Reuters.

Fidelity's operating revenue for the Jan-Sept 2009 period totaled $12 billion, down from $15.1 billion in the corresponding period in 2008. Operating expenses were $10.6 billion, down 22 percent from $13.6 billion.

RIVALS STRUGGLE

Among Fidelity's competitors, BlackRock Inc. which oversees $1.4 trillion in assets, saw its operating income drop 29 percent to $889 million for the first nine months of the year on revenues that fell 21 percent to $3.2 billion.

Franklin Resources, manager of $523 billion in assets, said its operating income plunged 43 percent over the past 12 months as operating revenues declined by 30 percent for the same period.

Fidelity's results have been bolstered by its broader array of businesses, including the fees it collects from clients of its online brokerage and for administering corporate retirement plans.

Fidelity closely guards details about its financial results but was required to disclose the information to a small group of potential investors in offering documents obtained by Reuters for an upcoming private placement of debt.

In interviews in August, the company's president, Rodger Lawson, had touted its growing total assets as evidence of its ability to come through the financial crisis in good shape, but had given only a limited number of other financial details.

Lawson gave asset details as of June 30, but even since then total assets under management have risen $116 million to $1.474 billion at September 30, according to the filing, due to market gains.

Fidelity's debt was recently downgraded to A2 from A1 by Moody's Investors Service, which expressed concerns about Fidelity's complicated business platform and its high level of debt -- $10.2 billion, according to the company's filing. "Fidelity's leverage and net profitability measures have not trended as anticipated for the rating level," Moody's said in an October 19 note.

Asked about the company's operating performance, however, Moody's analyst Matthew Noll said via e-mail that "the resilience of Fidelity's business through the financial crisis has been a testament to the company's diversification."

The operating results exclude the performance of certain companies that Fidelity owns such as COLT Telecom Group SA in Europe, which has long been a drag on the company's results.

The filing states that Fidelity took a $299 million impairment charge on COLT in the first quarter of 2009.

The filing also confirmed that Fidelity dramatically altered its structure to convert to a so-called Subchapter S Corporation in October, 2007.

Under Internal Revenue Service rules, "S" corporations generally pay no federal taxes, instead passing tax obligations down to their shareholders.

The document revealed little new information about Fidelity's ownership structure, noting that the company's voting stock remains owned 51 percent by employees and 49 percent by descendants of founder Edward C. Johnson 2d, including his son Edward "Ned" Johnson 3d, the company's current chairman and CEO.

Fidelity said its upcoming private placement of debt will be co-managed by Barclays Capital and Citigroup Global Markets.

Proceeds of the debt will be used for "general corporate purposes," including paying off maturing debt obligations, bolstering its liquidity in case of future market disruptions, and for making potential acquisitions.

Ford seen narrowing loss, focus on cash burn

DETROIT (Reuters) - Ford Motor Co (F.N) is expected to post a narrower quarterly loss with support from the U.S. government "cash for clunkers" program, but the focus will be on the outlook for the U.S. economy and auto industry sales.

Ford's cash burn rate, and the fate of its labor costs -- with a United Auto Workers union ratification vote on concessions headed toward failure -- also will be a close focus for investors.

Uncertainty over the strength of the U.S. economic recovery has grown in recent weeks, and several of the top U.S. auto dealership groups have pointed to a much slower recovery in U.S. auto industry sales next year than Ford has projected.

Analysts on average expect Ford to post a loss of 12 cents per share from continuing operations and excluding one-time items in the quarter, compared with a loss of $1.31 per share a year earlier, according to Thomson Reuters I/B/E/S.

But Ford could produce a positive surprise after gaining market share and sales from the "clunkers" program and raising production in North America, said Autoconomy.com analyst Erich Merkle, who expects Ford to post an annual profit in 2010.

"I think they could have their profitability moment here in the third quarter, but it will still be a little tricky," Merkle said. "Will it be sustainable and how much of it will be because of cash for clunkers?"

Merkle expects U.S. auto industry sales to be substantially higher in 2010 than this year, rising to more than 12 million vehicles from slightly above 10 million in 2009.

Ford, the only large U.S. automaker not to reorganize with a government-supported bankruptcy this year, has planned on U.S. auto industry sales of more than 12 million vehicles in 2010, roughly 1 million vehicles above some dealer forecasts.

The ability to avoid the bankruptcies that engulfed General Motors Co GM.UL and Chrysler has given Ford a leg up, but now may be working against it in a union vote on whether to approve concessions that would bring its costs in line with rivals.

Ford's U.S. factory workers at several UAW locals have rejected making further concessions to the automaker and the overall vote may fail. If the vote fails, Ford's long-term labor costs would not be in line with rivals.

In February, Ford completed a revised labor agreement with the UAW that cut costs by about $500 million per year. The automaker has said it needs additional concessions to keep it cost-competitive with GM and Chrysler over the long term.

The proposed agreement workers are chafing at includes a "no-strike" clause on wages and benefits and a reduction in job classifications for skilled trades workers, as well as some production commitments and a $1,000 one-time bonus.

CASH BURN KEY

Morningstar analyst David Whiston said the automaker's touting of increased U.S. market share and improved quality may be working against it in the UAW vote. He does not believe a rejection would have an impact on Ford's stock performance.

"Ford has a lot of good things going," Whiston said, adding that he believes Ford has a good chance to post a profit in 2010, one year ahead of its target.

Ford posted net losses totaling $30 billion from 2006 through 2008 and has said it expects to return to at least break-even in 2011, which would make a stunning rebound after the deepest U.S. economic downturn in decades.

Until the U.S. economic recovery takes off, cash will remain king for Ford, which borrowed more than $23 billion in late 2006 to finance its turnaround and believes it has enough money to complete its restructuring.

Ford burned through $4.7 billion of cash in the first half of the year. Ford has said it expects the second half outflow to be substantially slower than it was in the first half.

J.P. Morgan believes Ford could turn a third-quarter profit, with a faster-than-expected return to profitability in North America also possible.

Ford has been restructuring since 2005, trimming excess production capacity, hourly and salaried workers and divesting brands to focus on Ford, Lincoln and Mercury.

Earlier this week, Ford announced that Zhejiang Geely Holding Group was its preferred bidder to acquire the automaker's Swedish brand Volvo. Volvo is the last remaining brand from Ford's former premier auto group.

Nine U.S. banks seized in largest one-day haul

LOS ANGELES (Reuters) - U.S. authorities seized nine failed banks on Friday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation's banking industry are being crippled by bad loans.

The move brought the total number of failed banks in 2009 to 115 -- their highest annual level since 1992 -- with analysts expecting more to come. Among the lenders seized Friday was Los Angeles-based California National Bank, in what was the fourth-largest U.S. bank failure this year.

The largest institution to fail in the current financial crisis was Washington Mutual, which boasted $307 billion in assets when it was shuttered in September 2008.

U.S. Bancorp on Friday acquired the nine banks that had been held by FBOP Corp, picking up $18.4 billion in assets and $15.4 billion of deposits.

Visibly worried employees lined up to file into Cal National's head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers' fate explained to them, regulators said.

"We're getting ready to turn everything over to U.S. Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP's assets. "They will continue to operate as normal in the interim," she added, referring to lenders acquired from FBOP.

U.S. Bancorp -- which has been buying up distressed assets this year -- is picking up the lenders once owned by FBOP, a private Illinois group with over $18 billion in assets that owned banks in Texas, Illinois, Arizona and California.

Cal National is FBOP's largest bank by branches. Others that will now go under the U.S. Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.

"This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions," said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp.

"This transaction adds scale to our current California, Illinois and Arizona footprints."

NEXT BIG HEADACHE

In the "near future," all nine lenders' branches will be re-branded U.S. Bank, which is the California-focused unit of U.S. Bancorp's that operates a network of more than 770 branches across Illinois, Arizona and California.

U.S. Bancorp did not specify what would happen to the new employees it inherits.

Cal National operates 68 branches across Southern California with more than $7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover on Friday.

Cal National lost about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.

According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat $7 billion of assets.

A bank official who answered the main number at Cal National's headquarters said they could not talk at the time.

Banks are still cleaning up their balance sheets from the recent credit boom that fueled banks' appetite to extend loans, many with poor underwriting and triggers that caused borrowers' payments to spike to unaffordable levels.

More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.

Banks held about $1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 percent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.

Banks that analysts say could risk big losses include Salt Lake City's Zions Bancorp, Columbus, Georgia's Synovus Financial Corp and Dallas-based Comerica Inc.

Before FBOP, U.S. Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, U.S. Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added.

(Additional reporting by Mary Milliken; Editing by Bernard Orr and Dean Yates)

Ford hopes dim as workers veto changes

DETROIT (AP) -- Ford Motor Co.'s hopes for a cost-cutting labor agreement grew dimmer, with a key local union in Kentucky rejecting changes to workers' contracts.

AP - In this Oct. 26, 2009 photo, the Ford logo is seen on the automaker's headquarters in Dearborn, Mich. ...

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Eighty-four percent of workers at United Auto Workers Local 862 in Louisville voted against the changes, local President Rocky Comito said late Friday. Comito said workers felt they were being asked to give more than the company's executives.

"Some want to see management give more at the upper level," Comito said. The Louisville local represents 5,000 workers.

Another large local in Ford's home city of Dearborn also was voting Friday. By late Friday night, officials hadn't announced the results for UAW Local 600, which represents 8,000 Ford workers. But workers at the Dearborn Truck Plant, one of the plants represented by Local 600, rejected the contract by a 93 percent vote, according to Gary Walkowicz, a member of the bargaining committee at the plant who has been leading opposition to the contract changes.

The votes continued a string of defeats for Ford and the UAW, which reached the cost-cutting agreement two weeks ago but need workers to ratify it. Ford has a total of 41,000 workers represented by the UAW.

Exact tallies weren't available, but at least 11 UAW locals representing about 19,500 workers have voted down the deal, many overwhelmingly. Only about four locals with a total of 7,000 members have favored the pact.

Speaking at a community event in Detroit on Friday, UAW President Ron Gettelfinger said there won't be a revote if the contract changes fail.

"If it fails, there would be no reason to go back to the bargaining table," Gettelfinger said. "We have a democratic process in place. People have a right to express themselves. We recognize there's a lot of misinformation about it out there, but that is what it is."

Ford sought the deal to bring its labor costs in line with Detroit rivals Chrysler Group LLC and General Motors Co., both of which won concessions from the union as they headed into bankruptcy protection earlier this year. If the agreement fails, Ford will have higher labor costs than competitors and therefore a tougher time turning a profit.

The no votes came even as Ford reached a similar cost-cutting agreement with the Canadian Auto Workers union Friday. The CAW has agreed to cuts in benefits in exchange for product guarantees, but that agreement must be ratified by Canadian workers.

Ford has said it won't comment on the proposed changes until balloting is over. The company is scheduled to release its third-quarter results Monday, the same day the UAW had asked locals to wrap up voting.

Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass., said it's extremely rare for union members to vote against the leadership. But he said Ford asked for too much too soon after workers already agreed to concessions earlier this year.

He also said Ford lacks credibility because its financial situation wasn't as dire as GM and Chrysler.

"They made such a strong case about not going to bankruptcy court and turning the corner, so they couldn't go to the workers and say, 'We need this to turn the corner,'" he said.

Comito said workers objected to a limit on the right to strike and questioned why Ford was seeking further changes. Workers also approved a new contract with concessions in 2007, and made health care concessions in 2005.

"They're concerned about giving up too much without justification," Chaison said.

Chaison said the vote is an embarrassment to Gettelfinger, who personally campaigned in Louisville last weekend. He started his career at the local, which represents workers at the Kentucky Truck and Louisville Assembly plants, which make the Ford Explorer and Ford Super Duty pickup. Both plants have received assurances of future work from the company.

Workers would get a $1,000 bonus if the deal is ratified, but the proposal also would freeze entry-level wages and require some skilled-trades workers to do more than one job. The union also agreed not to strike Ford if the two sides disagree on wage or benefit increases, although the UAW could still strike over other issues.

Gettelfinger told The Associated Press last week that the deal saves 7,000 union jobs with new product commitments at several plants, and that Ford could withdraw those promises if the deal is rejected.

But on Friday, Gettelfinger said, "it's not a big deal one way or the other."

"This was a positive contract for our membership. It gave them long-term job security and that's what it was all about," he said. "We'll continue to work with the company, regardless of how it goes."

Workers at factories in Chicago; Claycomo, Mo.; and Livonia, Plymouth, Sterling Heights, Flat Rock, Ypsilanti Township, Mich., have rejected the deal thus far. Locals in Wayne, Mich.; Cleveland; Indianapolis and St. Paul, Minn., have voted in favor.

Associated Press Writers Corey Williams in Detroit and Janet Cappiello Blake in Louisville contributed to this report.

Madoff: Had 'too much credibility' with SEC

WASHINGTON (AP) -- As Bernard Madoff sat in jail a few months after pleading guilty to fraud, he sounded faintly boastful.

AP - FILE - In this July 17, 2009 file photo, Bernard Madoff's accountant David Friehling exits Manhattan federal court ...

The only problem with officials at the Securities and Exchange Commission's Washington headquarters, he said, is that he had "too much credibility with them and they dismissed" the idea that he was scheming people out of billions of dollars.

A document released Friday details a prison interview conducted June 17 by the SEC inspector general in which Madoff says he had the impression that "it never entered the SEC's mind that it was a Ponzi scheme."

Madoff seemed convinced SEC staff did not suspect him, despite the agency's numerous probes of his business. He said in the interview that the SEC examiners "never asked" for basic records to corroborate his operations.

The disgraced financier also confided that he didn't bring an attorney with him when he testified in an inquiry by the SEC's enforcement division because he believed he didn't need one -- and he was trying to fool the government investigators into thinking he had nothing to hide.

The details emerged in a summary of Inspector General David Kotz's interview with Madoff at the Metropolitan Correctional Center in New York, released along with hundreds of other documents related to Kotz's extensive investigation of the SEC's stunning failure to detect Madoff's fraudulent scheme for 16 years.

Kotz also issued a statement Friday saying his probe found no evidence to support Madoff's claim of having a "close relationship" with SEC Chairman Mary Schapiro, who previously headed the Financial Industry Regulatory Authority, the brokerage industry's self-policing organization. In the interview, Madoff called Schapiro a "dear friend," saying she "probably thinks, I wish I never knew this guy."

Like the SEC, FINRA made periodic exams of Madoff's brokerage operation, which functioned separately from his investment business hidden from regulators' view. An internal review by FINRA found a regulatory breakdown on the part of the organization in the Madoff case.

As the SEC inspectors carried out probe after probe of his business, Madoff said in the interview he was "worried every time" that he'd be caught. "It was a nightmare for me," he said. "I wish they caught me six years ago, eight years ago."

Madoff, 71, a former Nasdaq stock market chairman, pleaded guilty in March to charges that his secretive investment-adviser operation was a multibillion-dollar Ponzi scheme that destroyed thousands of people's life savings and wrecked charities. It was possibly the largest-ever Ponzi: the classic scheme in which investors are paid with other investors' money rather than actual profits on their investment.

He is serving a 150-year sentence in federal prison in North Carolina.

The new details from Kotz's inquiry came the same day as word that Madoff's longtime auditor is expected to plead guilty next week in a cooperation deal. Prosecutors told a federal judge in New York that accountant David Friehling was expected to offer a guilty plea at a conference Tuesday to revised charges that accuse him of securities fraud, investment adviser fraud, making false filings to the SEC, and obstructing or impeding administration of the Internal Revenue laws.

The charges carry a prison term of up to 108 years, though significant cooperation with prosecutors can bring leniency.

In his interview with Kotz, Madoff said the SEC never asked him about his tiny accounting firm. It seemed incongruous that, with more than $65 billion in private investments he claimed he oversaw for thousands of people, Madoff used what seemed to be a small-time auditor with a minuscule office in suburban New City, N.Y. Authorities say that Friehling appeared to have rubber-stamped Madoff's records.

Kotz's report of his investigation, made public in early September, painstakingly detailed how the agency's investigations of Madoff were bungled, with disputes among inspection staffers over the findings, lack of communication among SEC offices in various cities and repeated failures to act on credible complaints from outsiders forming a sea of red flags.

An inspection of Madoff's operation in 2003-04, for example, "was put on the back burner" even though the exam team still had unresolved questions, Kotz found.

Madoff's former finance chief, Frank DiPascali, is cooperating with prosecutors after pleading guilty in August to helping Madoff carry out his fraud. Madoff was asked in the interview whether he was concerned about DiPascali's testimony. His answer: "No, he didn't know anything was wrong, either."

Obama highlights fresh signs of economic growth

WASHINGTON (AP) -- President Barack Obama said Saturday that reports the economy is growing again and that more than 1 million jobs were saved or created by his stimulus plan show "we are moving in the right direction."

AP - President Barack Obama speaks in the Diplomatic Reception Room of the White House in Washington, Friday, Oct. ...

But he tempered his upbeat message with a cautious word about further job losses and progress yet to be made.

Unemployment hit a 26-year high of 9.8 percent in September, and the October report due next week could show it topping 10 percent.

The government reported this week that the economy grew 3.5 percent from July through September, the first signs of growth in a year and unofficial confirmation that the economic slide that began in December 2007 is over. Separately, the White House said Obama's $787 billion stimulus plan -- a mix of spending and tax cuts -- had saved or created more than 1 million jobs.

That news, "while not cause for celebration, is certainly reason to believe that we are moving in the right direction," Obama said in his weekly radio and Internet address.

"It is easy to forget that it was only several months ago that the economy was shrinking rapidly and many economists feared another Great Depression," the president said.

Obama's assessment came a day after an independent federal board reported that nearly 650,000 direct jobs have been saved or created because of stimulus program money provided to businesses, contractors, state and local governments, nonprofit groups and universities.

The new data released late Friday represents 156,614 federal contracts, grants and loans worth a total of $215 billion that went to more than 62,000 recipients. The largest number of jobs were created or saved by state governments. About half of the reported jobs were among teachers and other education employees. With state budgets in crisis, federal aid helped governors avoid major cuts in education, which officials said spared many teachers and school workers from the unemployment line.

The 1 million jobs cited by Obama include those from direct economic assistance, plus those linked to the economic boost from $288 billion in tax cuts under the stimulus program, according to White House economic adviser Jared Bernstein.

Republicans expressed doubt on the administration's job-creation claim. GOP Senate leader Mitch McConnell described the jobs reports as "bewildering" when 3 million jobs have been lost since Congress approved the stimulus program.

In his address, Obama acknowledged that economic growth is no substitute for job growth. He also telegraphed what is expected to be sour unemployment news when the October figures are released next Friday, saying: "We will likely see further job losses in the coming days."

"But we will not create the jobs we need unless the economy is growing," he said.

Job creation also depends on the willingness of consumers to open their wallets and purses. But on Friday, the Commerce Department reported a 0.5 percent decline in consumer spending in September. It was the first drop in five months and the biggest since last December.

Obama said his administration has taken steps to help get credit to people and businesses of all sizes, stem home foreclosures, cut taxes, create jobs and help people who need it, such as seniors and the unemployed.

"So we have made progress," he said. "At the same time, I want to emphasize that there's still plenty of progress to be made. For we know that the positive news for the economy as a whole means little if you've lost your job and can't find another, if you can't afford health care or the mortgage, if you do not see in your own life the improvement we are seeing in these economic statistics."

Winfrey, Clooney among first White House guests

WASHINGTON (AP) -- Celebrities George Clooney and Oprah Winfrey and prominent lobbyists, corporate executives and Democratic fundraisers were among the first to score visits with President Barack Obama, his wife Michelle or top aides at the White House, newly released records show.

AP - FILE - In this Feb. 23, 2009, file photo Actor George Clooney walks out of the West Wing ...

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The White House late Friday afternoon posted a list of roughly 480 records in response to questions about whether specific people visited the president's home. It plans to start disclosing comprehensive visitor lists in coming months.

The records are a step toward making good on Obama's promise of transparency. But they also show that despite a campaign pledge to reduce special-interest influence on policymaking, lobbyists are getting face time with him and his aides.

The visits included in the records released Friday include roughly eight dozen with Obama.

Among the guests:

-- Microsoft co-founder Bill Gates. The wealthy philanthropist had a March 25 meeting with Obama in the Oval Office. The subject isn't disclosed. The Bill & Melinda Gates Foundation gives about $200 million a year in elementary and secondary education grants and is pressing for some of the same changes that Obama wants, such as paying teachers based on student test scores.

-- Labor leader and Obama supporter Andrew Stern, president of the Service Employees International Union. Twenty-two Stern visits to the White House are reflected in the records, including at least seven with Obama. Most of the visits with Obama were for group events; the subjects of most of his visits to other people weren't disclosed.

-- Ed Yingling, the chief executive of the American Bankers Association and a registered lobbyist. Yingling attended at least four meetings with Obama. One meeting included several bank CEOs; the subjects of the others included credit cards and housing.

-- Camden Fine, chief executive of the Independent Community Bankers of America and a Washington lobbyist for the group. Fine also had at least four Obama meetings, including the ones with bank CEOs and on housing.

-- Clooney, a U.N. messenger of peace, met with Obama and Vice President Joe Biden on Feb. 23 to discuss the humanitarian crisis in Sudan's Darfur region. Clooney has said he asked Obama to appoint a full-time regional envoy to report directly to the White House.

-- Steve Elmendorf, a Democratic strategist, lobbyist and former House staffer. Elmendorf, whose lobbying clients include Ford Motor Co., UnitedHealth Group and Verizon, attended a June 29 Obama reception and had at least four meetings with others at the White House complex.

Lobbyists and Democratic fundraisers Anthony and Heather Podesta made several visits to Obama aides. Anthony Podesta, whose brother, John, headed Obama's transition team, visited the White House complex at least five times, all on behalf of lobbying clients.

"The small number of meetings that I've been to at the White House -- I go to the White House every other month on the average -- have been on issues that the White House cared about," Anthony Podesta said in a phone interview Friday night when asked whether his fundraising and his brother's ties to Obama helped land the meetings.

"I understand that you could interpret it otherwise," he added.

Podesta said the first meeting, one in February at the Old Executive Office Building, was to present a report by Securing America's Future Energy, a group lobbying the government to reduce U.S. dependence on foreign oil.

Podesta said that neither SAFE nor his lobbying clients at a May meeting asked for any action. The May meeting at the White House with Obama aide Pete Rouse and Podesta clients Cessna and NetJets focused on a severe drop in small-plane sales, he said.

Podesta said he didn't consider the meeting lobbying.

"We weren't saying, `Please give us money' or 'Please set up a special program for us,'" Podesta said. "We were just letting the administration know there was this difficult situation in the small-jet manufacturing market."

Podesta does consider two other sit-downs -- both for client Sallie Mae with Obama education adviser Robert Gordon -- lobbying. Podesta said he and Sallie Mae urged the administration to let multiple firms handle student loan originations rather than one company, Accenture. The administration didn't, so it was failed lobbying, he said.

Podesta said he didn't recall having the other meeting listed, one with Obama economic adviser Jason Furman at the White House in March. Podesta's wife, Heather, made at least three visits, all to Obama aides at the Old Executive Office Building in the White House complex, the records show. The subjects weren't disclosed.

Among other visitors, talk show host Winfrey, who campaigned for Obama, interviewed the first lady Feb. 17 and was on the guest list for an inaugural reception.

Microsoft CEO Steve Ballmer met with Obama economic adviser Larry Summers and technology adviser John Holdren in June and had a West Wing tour in April, the records show.

The list also includes some names that would draw attention at first glance: Michael Jordan, Michael Moore, William Ayers and Jeremiah Wright. The White House was quick to note that the visitors were not actually the basketball star, the documentary filmmaker or the controversial activist and preacher -- just people who share their names.

Boehner: GOP offering the right health care ideas

WASHINGTON (AP) -- Republicans have the answers to lower health costs and expanded coverage, not the Democrats hold power in Washington and are creating more problems as they "recklessly pursue" a government takeover of the health care system, a GOP leader said.

AP - FILE - In this Oct. 29, 2009 file photo House Minority Leader John Boehner of Ohio stands behind ...

The top House Republican, Rep. John Boehner of Ohio, outlined his party's alternative in the GOP's weekly radio and Internet address Saturday. Democratic proposals are gaining momentum in Congress and Republicans are scrambling for support to try to block them.

Taking aim at House Speaker Nancy Pelosi's plan, Boehner said it would put Washington in charge of health care decisions, add to the bureaucracy, raise premiums and cut Medicare benefits.

"Enough is enough. Breaking the bank and taking away the freedoms Americans cherish is not the answer to the challenges we face," Boehner said.

Debate could begin this coming week on legislation developed by House Democrats that extends coverage to 96 percent of Americans, imposes new requirements on individuals and employers to get insurance and provides subsidies for lower-income people. The bill rolled out Thursday includes a new public insurance plan that would pay providers and hospitals at rates negotiated by the health and human services secretary.

The Democratic-controlled Senate is expected to begin debate within two weeks on a bill crafted by Majority Leader Harry Reid, D-Nev.

Boehner said there is a choice to be made: "We can come together to implement smart, fiscally responsible reforms to improve Americans' health care or we can recklessly pursue this government takeover that creates far more problems than it solves."

Boehner said a number of steps could be taken, such as letting people buy health insurance across state lines, allowing people and organizations to pool together to buy insurance for lower prices and reining in malpractice lawsuits.

MetLife posts 3Q loss on investment losses

NEW YORK (AP) -- MetLife Inc. on Thursday reported a loss of $650 million for the third quarter, driven by losses in its investment portfolio.

AP - FILE - In this April 16, 2009 file photo, the MetLife skyscraper overlooks an older building in New ...

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Symbol	Price	Change
MET	36.84	+2.68

{"s" : "met","k" : "c10,l10,p20,t10","o" : "","j" : ""}

Investment losses totaled $1.42 billion, compared with investment gains of $483 million in the prior-year quarter. The losses were primarily related to complex investments known as derivatives, which are used to offset changes in interest rates and foreign currencies.

The performance of the investment portfolio, however, improved over the second quarter, when the company recorded $2.56 billion of investment losses, as the financial markets stabilized. The total value of the portfolio increased 5 percent to $338.3 billion.

For the period ended Sept. 30, MetLife reported a net loss of $650 million, or 79 cents per share, compared with a profit of $600 million, or 83 cents per share, a year earlier. It was the third quarterly loss in a row for the New York-based insurer.

Excluding investment gains and losses, operating earnings rose 18 percent over the third quarter of last year to $718 million, or 87 cents per share. That was in line with the average analyst estimate, which typically excludes one-time, unusual items.

MetLife emphasizes operating income because it is considered more reflective of the company's performance.

Still, investors seemed slightly disappointed with the results, sending shares down 52 cents to $36.32 in after-hours trading. Shares had jumped $2.68, or 7.9 percent, to close the regular session at $36.84 before the report was released.

Life insurers make money by investing premiums before they must pay out when policyholders die or begin collecting on annuities. The turmoil in the stock market at the end of last year and the beginning of 2009 saddled MetLife and other insurers with hefty investment losses instead of profits.

But the benchmark Standard & Poor's 500 index rose nearly 15 percent during the third quarter, compared with a nearly 9 percent drop a year earlier.

Total revenue dipped 1 percent to $12.41 billion, slightly better than expected.

Premiums, fees and other revenue in MetLife's institutional business declined 8 percent to $4.2 billion, while the individual business saw premiums, fees and other revenue grow 5 percent to $2.2 billion.

In the international business, revenue was down 5 percent to $1.1 billion, but up 9 percent on a constant currency basis.

MetLife also declared an annual dividend of 74 cents, unchanged from last year's.

MetLife is viewed as one of the stronger insurance companies, weathering the economic downturn better than many of its peers. The company shied away from government assistance this year, even as other life insurers sought aid in the wake of escalating investment losses.

MetLife's stock has more than tripled since March, but is down about 11 percent from a 52-week high of $41.45 reached last month.

ap Financial overhaul bill gets wary reception

WASHINGTON (AP) -- An Obama administration plan to dissolve large, struggling financial firms rather than bail them out is encountering Republican resistance, Democratic doubts and only qualified support from regulators.

AP - Treasury Secretary Timothy Geithner speaks during the Securities Industry and Financial Markets Association conference, Tuesday, Oct. 27, 2009, ...

At a Financial Services Committee hearing in the House of Representatives on Thursday, lawmakers from both parties worried that the proposal would give regulators and the executive branch unprecedented power.

"I'm not a man that fears this administration or you," Democratic Rep. Paul Kanjorski told Treasury Secretary Timothy Geithner. "But I do fear the accumulation of power exercised by someone in the future that can be extraordinary."

Others argue that by singling out financial firms important to the economy, the government could inevitably set itself up to bail them out, and that even dismantling rather than rescuing them would require taxpayer money.

"Apparently, the `too big to fail' model is too hard to kill," quipped Republican Rep. Ed Royce.

Rep. Brad Sherman, another Democrat, called the bill "TARP on steroids," referring to the government's $700 billion Wall Street rescue fund from the administration of Republican President George W. Bush.

"You've got permanent, unlimited bailout authority," he told Geithner.

Geithner disagreed.

"The only authority we would have would be to manage their failure," he told the committee.

The debate comes as Congress works on legislation to respond to the financial crisis that clobbered Wall Street last year and fed the recession.

For the committee's chairman, Democratic Rep. Barney Frank, who wrote the proposal in close coordination with Treasury, the broad skepticism illustrates the delicate work needed to tackle such a big task.

The legislation would let federal regulators identify and monitor big financial firms and step in to wind them down before they collapsed. If the government must use public money to dissolve a company, Treasury would recoup those costs by imposing a fee on firms with assets of at least $10 billion.

When to create such a fund has become a significant point of contention.

Frank and the administration recommended that any taxpayer infusion be recovered after the fact from large institutions.

But Sheila Bair, head of the Federal Deposit Insurance Corp., which would conduct such a wind-down, said the industry should pay into an insurance-like fund ahead of time.

Large financial firms, however, oppose an upfront payment. And Geithner said a prepaid fund would increase the temptation -- or "moral hazard" -- for companies to take excessive risks with the expectation that the government will step in to protect them.

Las Vegas Sands posts wider 3Q loss as taxes rise

LAS VEGAS (AP) -- Casino operator Las Vegas Sands Corp. on Thursday reported a larger third-quarter loss as gambling markets continued to struggle, taxes increased and the company pressed ahead on developing a resort in Singapore.

AP - FILE - This Aug. 28, 2006 file photo shows Sheldon Adelson, chairman and chief executive officer of Las ...

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Symbol	Price	Change
BYD	8.06	+0.34
LVS	14.76	+1.59

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The Las Vegas-based company led by billionaire Sheldon Adelson benefited from more gamblers visiting Macau, the Chinese gambling enclave, but was hurt in its home market of Las Vegas where bettors have stayed away from tables and rooms have been less profitable.

However, comments by Adelson that casinos' bad luck may be turning around sent shares up more than 8 percent in aftermarket trading.

Las Vegas Sands posted a loss of $123 million, or 19 cents per share, for the three months ended Sept. 30. It said those results were hurt by increased income tax expenses, which cost the company $73.7 million. The results compared with a loss of $32.2 million, or 9 cents per share, a year earlier.

The company said its adjusted income -- which does not include many one-time items including the taxes, interest expenses or stock dividends -- totaled $20.1 million, a profit of 3 cents per share. That beat analyst expectations for losses of one penny per share, according to a Thomson Reuters poll.

Its revenue rose 3 percent to $1.14 billion from $1.11 billion during the same quarter last year, but came in slightly shy of analysts' $1.17 billion estimate.

New casinos in Bethlehem, Pa., and Macau helped the company grow its overall gambling revenue more than $100 million to $908 million. But casino revenue at its Venetian and Palazzo resorts on the Las Vegas Strip fell to $99 million from $113.2 million a year earlier.

Sands' revenue fell in food and beverage, hotel rooms and retail, while the company's overall expenses rose slightly.

Adelson told investors he was seeing strong signs that bad times might be turning around in Las Vegas because of a return of convention business and group bookings.

"Just like night follows day and day follows night, there are peaks and valleys throughout the economic cycle and virtually everything in life," Adelson said. "There is no doubt whatsoever that the economy is returning and will return."

The outlook sent shares of Sands up $1.27 to $16.02 in aftermarket trading after closing Thursday at $14.76, up $1.59, 12 percent.

Adelson said Sands has booked more room nights for groups and conventioneers for 2010 compared with what it expects to fill for this year.

Group bookings account for a significant chunk of business for casino-resorts, and are at the center of Sands' strategy in Las Vegas. But fewer business travelers have come to Las Vegas this year because of several factors, including money and wanting to avoid scrutiny for traveling to tourist destinations.

Rob Goldstein, a Sands executive vice president in charge of operating its Las Vegas properties, said the company was gradually increasing its room rates and trying to avoid price cuts generally made to keep rooms filled.

"We turn down a lot of business these days because we don't want the rate," Goldstein said.

Rooms cost more than $170 on average during the quarter at the Venetian and Palazzo, though slightly more at the Palazzo. The rooms were just under 90 percent occupied for the quarter.

Adelson said the company was focusing on its future developments, including the $5.5 billion Marina Bay Sands to open in Singapore next year.

The company said it is continuing to cut costs but already has made 90 percent of the cuts it plans; in all, the cuts are to save the company $500 million per year.

Sands also is working to lower its $11.76 billion in debt as of Sept. 30 by raising capital, selling noncore assets and cutting costs at its resorts.

Several large Las Vegas-based casino companies have reported this week that they are struggling as consumers remain conservative in their spending, especially on leisure and gambling.

The world's largest casino company, Harrah's Entertainment Inc., said Tuesday it lost $1.6 billion for the quarter, including accounting for a $1.33 billion drop in the value of its assets. Profit also fell at Wynn Resorts Ltd. and Boyd Gaming Corp., which said it will wait at least three years before finishing its $4.8 billion Echelon project, which sits empty on the Las Vegas Strip.

Deflation Signs Spur Fears of a Drag on Japan's Recovery

TOKYO -- As the world resumes economic growth after the steep global downturn, a familiar problem may keep Japan from following: deflation.

Economists expect the Bank of Japan in its semiannual outlook Friday to forecast that the core consumer-price index will fall for the fiscal year ending in March 2012, at a rate of at least 0.5%. That represents three years of expected deflation. The central bank has projected a decline of 1.5% for the current fiscal year and 1% for the next.

Economists see little immediate risk of Japan entering a deflationary spiral, in which price declines accelerate as demand drops and economic activity ebbs. An extended period of deflation can keep consumers from spending and companies from investing as they wait for prices to fall further.

"We are very concerned about deflation being a drag on [Japan's] economic growth," said Randall Jones, an economist heading research on Japan and South Korea at the Organization for Economic Cooperation and Development. He urged the BOJ to keep its policy rate close to zero and "focus on trying to stop deflation."

Japan's core CPI fell for six straight months, on a year-to-year basis, ending with a record 2.4% decline in August. A similar decline is projected for September, though the size of the declines are projected to narrow afterward, reflecting changes in energy prices. Excluding both food and energy, Japan's CPI fell 0.9% in August from a year earlier.

Though Japan remains expensive, signs of deflation can be found throughout the economy. Workers' cash earnings fell 2.7% in August from a year ago. Year-end bonuses paid by 218 large companies listed on the Tokyo Stock Exchange will fall 13.1% this year, the largest drop at least since 1970, according to a survey by the Institute of Labor Administration.

"The continued drops in income are making households more thrifty," says Ryutaro Kono, an economist for BNP Paribas Securities in Tokyo. "Companies are responding by cutting prices, sensing they wouldn't survive otherwise."

In the fashion industry, Uniqlo, Fast Retailing Co.'s casual-clothing brand, ignited a price war this year, introducing a new line of jeans for 990 yen ($10.80) a pair. Soon, Seiyu Ltd., a Wal-Mart Stores Inc. unit, cut its price to 850 yen, followed by Don Quijote Co., a discount chain, with a 690-yen price tag this month.

Food prices are declining. Desperate to spur sales, supermarket and convenience chains are replacing national-brand products with cheaper private-brand options, offering smaller packages and turning their stores into shops that advertise most items at 100 yen.

"Of course, I compare prices because I am a housewife," says Shizuko Shibata, a 74-year-old pensioner who lives with her daughter in Setagaya, a Tokyo residential area. Ms. Shibata had just come out of a new 100-yen supermarket, where she bought a bag of frozen edamame, among other things. "I am not crazy about the quality at these stores, but these small packages are just the right size for us. "

Overall retail sales fell for the 13th straight month in September, with a 1.4% year-on-year drop.

There are some positive signs for Japan. On Thursday, Japan reported industrial output rose 1.4% in September, the seventh straight month of gains, as global stimulus spending supported demand.

When prices rose in 2006, Japanese policy makers had signaled that deflation appeared to be tamed. Much of that growth is now attributed to then-rising commodities prices.

The deflation can be blamed on Japan's long-term structural problems, including an aging population and one of the lowest birth rates in the developed world. Japan's new government has proposed an ambitious program of $185 billion in spending each year to spur consumption at home, though many economists say longer-term growth initiatives and economic overhauls are needed.

The BOJ is expected to forecast near-flat growth in gross domestic product for the fiscal year ending in March 2012. Previously, it forecast a growth rate of 1.2% for fiscal 2011 after a 3.2% decline this fiscal year.

"Expectations for long deflation may be making companies more cautious about their capital-investment plans," says Junko Nishioka, a RBS Securities economist in Tokyo.

Deflation can benefit consumers and companies by making goods and services more affordable. But it also hurts people with debts—whether an individual with a home mortgage or a nation with a fiscal deficit—by inflating the value of their debts in real terms.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

Asian Stocks Extend Losses

Asian markets ended with deep losses Thursday after large declines on Wall Street sapped investors' risk appetite.

Japan's Nikkei 225 ended 1.8% lower at 9891.10, finishing below 10000 for the first time since Oct. 8 after shedding at least 1.3% in each of the previous two sessions. Australia's S&P/ASX 200 dropped 2.4% to also end at its lowest level in three weeks. South Korea's Kospi gave up 1.5% and Taiwan's Taiex lost 2.4% bringing the two indexes to their worst closing level this month.

"Global equity markets are selling off as that dirty four letter word -- R-I-S-K -- reasserts itself after a monstrous rally that has far exceeded macro fundamentals," said Gluskin Sheff Chief Economist David A. Rosenberg.

Elsewhere, Hong Kong's Hang Seng Index skidded 2.3% while the Shanghai Composite contracted 2.3%, Singapore's Straits Times Index lost 0.6% and India's Sensex sank 1.4%, taking little comfort from the Dow Jones Industrial Average futures, which were recently up 20 points in screen trade after shedding more than 100 points in three of the last four sessions.

Indonesia's JSX index was also hit hard, falling more than 5% in early trading before recovering to end down 0.5%. "The selloff could show that some investors, mostly foreigners, are switching their portfolios from high-risk assets in emerging markets to international bonds in the U.S.," said Adrian Russian, a director at Sucorinvest Securities.

DBS Vickers strategist Yeo Kee Yan said concerns about a rising U.S. dollar as a safe-haven play were also a factor. "We have seen the hot money flowing into Asia and commodity plays recently, but if the U.S. dollar rises, these dollar carry trades will unwind."

The U.S. dollar extended its recent gains against major currencies during the session, before slipping back. The dollar-index, which tracks the greenback against a trade-weighted basket of six major currencies, was recently 0.2% lower at 76.31.

The euro was recently buying $1.4739 from $1.4704 late in New York, after falling as low as $1.4682 earlier in the day. It was also fetching 133.80 yen from 133.55 yen in New York. The Australian dollar fell as low as 89.58 U.S. cents before also rebounding. It was recently buying 90.24 cents. RBS Strategist Greg Gibbs said the Australian dollar remained firmly in an uptrend. "The basic underlying tenets of the Australian dollar recovery this year are still very much in place."

Metal and mining stocks were among Thursday's leading decliners across the region after commodity prices dropped sharply overnight in the face of U.S. dollar strength. Nippon Light Metal lost 3.6% in Tokyo, Rio Tinto skidded 4.9% and Newcrest Mining fell 4.3% in Sydney. Posco tumbled 5.1% and Korea Zinc shed 4.7% in Seoul. Aluminum Corp. of China fell 6.4% and Jiangxi Copper lost 5% in Shanghai, and 3.3% and 2.4% respectively, in Hong Kong.

Hyundai Steel fell 5.8% after the company said it would cut hot-rolled coil prices from November 1 due to a drop in prices of steel scrap and imports, while SK Energy shed 2.7% on news of a 46% drop in third quarter net profit.

NEC Electronics sank 8.3% in Tokyo after its net loss for the fiscal second-quarter widened on year and the company said it now expected a much wider loss for the full business year. Advantest lost 6.6% after the memory-chip testing systems specialist posted a net loss of 3.30 billion yen for the fiscal second-quarter, as cost cuts and other steps failed to offset a slump in sales.

Several financials outperformed after a set of strong quarterly results across the region. Nomura Holdings gained 0.5% in Tokyo, Oversea-Chinese Banking Corp. climbed 1.6% in Singapore trading and Bank of Baroda added 1.1% in Mumbai after their quarterly results Wednesday.

Australia & New Zealand Banking Group rose 0.9% in Wellington and fell 2.1% in Sydney, but still outperformed the market and other major banks. ANZ's full-year net profit fell 11%, but the bank showed increasing confidence that loan losses were beginning to stabilize.

Real-estate developers tumbled in Shanghai on concerns of a potential decline in the number of property sales as Beijing's property transaction tax cut measures will expire at the end of the year. Beijing Huaye Real Estate fell 6% and Poly Real Estate shed 3.8%.

Nine Dragons plunged 11.5% in Hong Kong, resuming trade after announcing it was raising $2.87 billion Hong Kong dollars ($370 million) through a share sale. In a weak Taipei market, Fubon Financial Holding fell 4.4% as investors grew impatient with the delay in the cross-Straits financial memorandum of understanding that many had expected to be signed soon.

Japanese government bonds were supported by the drop in Tokyo shares. The lead futures contract was up 0.33 at 138 points, while the 10-year cash yield fell 1.5 basis points to 1.405%.

Crude extended its losses after a fall of more than $2 in New York which came on an unexpected build in gasoline stocks and a stronger U.S. dollar. Nymex December crude was recently down 32 cents at $77.14 a barrel on Globex. Spot gold, meanwhile, climbed $3.70 to $1,031.40.

Write to Shri Navaratnam at shri.navaratnam@dowjones.com, Philip Vahn at philip.vahn@dowjones.com and V. Phani Kumar at phani.kumar@dowjones.com

Slump Sinks Visa Program

A coveted visa program that feeds skilled workers to top-tier U.S. technology companies and universities is on track to leave thousands of spots unfilled for the first time since 2003, a sign of how the weak economy has eroded employment even among highly trained professionals.

The program, known as H-1B, has been a mainstay of Silicon Valley and Wall Street, where many companies have come to depend on securing visas for computer programmers from India or engineers from China. Last year, even as the recession began to bite, employers snapped up the 65,000 visas available in just one day. This year, however, as of Sept. 25 -- nearly six months after the U.S. government began accepting applications -- only 46,700 petitions had been filed.

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Engineers Anna Li, left, and Jason Schlosser look over data in a lab in San Diego. Ms. Li is from Singapore and has been in the U.S. for five years on an H1-B visa.

In addition to the weak economy, companies have curbed applications in the face of anti-immigrant sentiment in Washington and rising costs associated with hiring foreign-born workers.

Usually, all visas are allocated within a month or two from April, when applications for the following fiscal year are first accepted. But this year, six months later, "you can still walk in with an application and you're still highly likely to get approved," said R. Srikrishna, senior vice president for business operations in North America for HCL Technologies Ltd., an Indian outsourcing company.

The sagging economy, which has pushed U.S. unemployment to 9.8%, has crimped expansion in the technology sector, traditionally the biggest user of the H-1B program. Julie Pearl, a corporate immigration lawyer in San Francisco, said that at least a third of her clients have cut their hiring of H-1B visa holders in half from a year ago.

"Most companies just aren't hiring as many people in general," Ms. Pearl said.

For Indian outsourcing companies, historically the largest recipients of H-1B visas, the economy as well as political pressures have prompted a cutback in applications. The recession has trimmed technology budgets at their U.S. clients; at the same time, Washington has scrutinized hiring from abroad more closely amid high unemployment at home.

Instead of bringing over Indian engineers, HCL has been hiring American employees who otherwise might have been let go by clients switching the work to HCL, Mr. Srikrishna said. Last year, HCL hired more than 1,000 employees from clients and received just 87 H-1B visas, he said.

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“ Many domestic MBA graduates fail to perform simple Algebra. There is a lack of fundamental training in the US education system. ”

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Political pressures have come to bear among other applicants as well. Companies that receive federal bailout funds must prove they have tried to recruit American workers at prevailing wages and that foreigners aren't replacing U.S. citizens. That regulation caused Bank of America Corp., among others, to rescind job offers to dozens of foreigners.

In addition, would-be immigrants from India and China are finding new career opportunities at home as those economies grow relatively quickly while the U.S. economy sags and its political climate appears less welcoming.

Vivek Wadhwa, a visiting scholar at the University of California at Berkeley who has studied H-1B visas, said that trend has been compounded by what he sees as rising anti-immigrant sentiment in the U.S. "The best and the brightest who would normally come here are saying, 'Why do we need to go to a country where we are not welcome, where our quality of life would be less, and we would be at the bottom of the social ladder?'" Mr. Wadhwa said.

The cost and bureaucracy of applying for H-1B visas is another deterrent. Lawyers' fees, filing fees and other expenses can easily reach $5,000 per applicant.

And immigration lawyers say some would-be employers are put off by a crackdown on fraud. U.S. Citizenship and Immigration Services, which administers the H-1B program, has been dispatching inspectors on surprise company visits to verify that H-1B employees are performing the jobs on the terms specified. The fraud-detection unit in coming months is expected to inspect up to 20,000 companies with H-1Bs and other temporary worker visas.

"It's an invasive procedure that is both stressful for the employer and the foreign national employee," said Milwaukee lawyer Jerome Grzeca, whose employment-visa business is down 40% since last year.

The numbers represent a sharp turnaround for a program that many companies had complained was too stingy with its visas. Year after year, U.S. businesses braced for "visa roulette," as applications to bring in highly skilled foreign workers far outstripped demand, forcing the government to hold a lottery to award them.

High-tech companies, such as Microsoft Corp., have been lobbying Congress for years to raise the cap. At the same time, some U.S. legislators have been calling for restrictions on the program, which they say displaces American workers.

Sen. Charles Grassley, an Iowa Republican, wrote a letter this month to the new director of citizenship and immigration services, urging tighter controls on H-1B visas. In April, Mr. Grassley and Illinois Democrat Sen. Richard Durbin introduced legislation to require companies to pass more stringent labor-market tests that would ensure they make a bigger effort to hire U.S. workers.

Companies that use H-1B visas argue the market, rather than Congress, should dictate the number of visas issued. The fact that the 65,000-visa cap hasn't been reached this year shows that the market will temper demand when necessary, said Jenifer Verdery, director of work-force policy at Intel Corp., who represents a coalition of companies that use the visas.

"Contrary to the claims of H-1B critics, if importing cheap labor were the goal of H-1B visa employers, these visas would have been gone on the first day applications were accepted last spring," Ms. Verdery said. "In slow economic times, such as today, the demand decreases and the market takes over, which is as it should be."

In 2008, 44% of approved H-1B visa petitions were for foreigners working as systems analysts or programmers. The second-largest category consisted of professionals working in universities. Indians account for about half of all H-1B visa holders.

While the number of visa holders is small compared with the U.S. work force, their contribution is huge, employers say. For example, last year 35% of Microsoft's patent applications in the U.S. came from new inventions by visa and green-card holders, according to company general counsel Brad Smith.

Google Inc. also says that the H-1B program allowed it to tap top talent that was crucial to its development. India native Krishna Bharat, for example, joined the firm in 1999 through the H-1B program, and went on to earn several patents while at Google. He was credited by the company as being the key developer of its Google News service. Today, he holds the title of distinguished research scientist.

—Niraj Sheth, Geoffrey A. Fowler, S. Mitra Kalita and Pui-Wing Tam contributed to this article.

Write to Miriam Jordan at miriam.jordan@wsj.com

IMF Raises Asia Growth Forecast

AFP/Getty Images

Chinese workers at a construction site in Hefei, in eastern China's Anhui province.

SINGAPORE -- The International Monetary Fund Thursday raised its growth forecasts for Asia's economy for this year and next, but warned that a stalled recovery in advanced economies and lingering problems in the global financial system pose risks to its rosier outlook.

The Washington-based body also said Asia has three major policy challenges: striking a balance between growth and inflation, ensuring growth is sustainable, and making foreign exchange rates more flexible.

In its latest Regional Economic Outlook, the IMF forecast Asia's economy will grow 2.8% this year and 5.8% next year, higher than its previous forecasts of 1.2% and 4.3%, respectively, in May. In 2008, Asia's gross domestic product grew 5.1%.

This growth, it said, is below the 6.7% averaged over the past decade as overseas demand for Asian products remains soft.

"So far, private demand remains weak, and the outlook far from encouraging, both in Asia and abroad," the IMF said. "Consequently, Asian countries will likely need to maintain policy support for some time."

Based on its latest forecast, output in the Group of Seven economies will grow by 1.3% next year, recouping only half of the estimated contraction in 2009.

The strength of the regional economy varies across countries.

Growth in emerging Asia--which excludes advanced countries such as Japan and Australia--will likely be 5.1% this year and 7.0% next year, higher than the IMF's previous projections of 3.3% and 5.4%, respectively.

China is expected to continue leading Asia's economy, growing 8.5% in 2009 and 9.0% in 2010, fueled by a rapid expansion in investment.

India's growth could accelerate to 6.4% in 2010 from 5.4% in 2009 due to strong domestic demand.

The newly industrialized economies of Hong Kong, Singapore, Taiwan and South Korea collectively could see their GDP contract 2.3% in 2009 before recovering to growth of 3.7% next year.

The IMF also warned that financial stresses could linger if efforts to restore balance sheets aren't sustained. If this results in renewed risk aversion, capital outflows could follow, weakening equity valuations and confidence.

While the IMF cautioned against prematurely ending economic stimulus measures, it also pointed out that countries over the near term must ensure that economic support isn't kept for so long that it triggers inflationary pressures.

"Striking the right balance will be difficult," it said.

Over the medium term, countries must devise a way to return to sustained, rapid growth in a new global environment of softer G-7 demand.

Finally, Asia will need to be willing to live with smaller current account surpluses and more flexible exchange rate management.

Despite recent gains, most Asian currencies remain below their precrisis levels, both against the dollar and in real effective terms. One exception has been the yen, which has appreciated strongly over the last year.

U.S., China to Relax Trade Limits

AFP/Getty Images

US Commerce Secretary Gary Locke listens to a speech made by China's Vice Premier Wang Qishan in Hangzhou.

HANGZHOU, China—The U.S. and China agreed to relax agriculture, technology, travel and other trade restrictions ahead of President Barack Obama's first visit to Beijing in November.

The two sides made "solid progress" that helps "both of our countries achieve balanced and sustainable growth," U.S. Trade Representative Ron Kirk said Thursday at the end of a meeting of the U.S.-China Joint Commission on Commerce and Trade, or JCCT.

Chen Deming, China's commerce minister, said the two sides will "jointly oppose trade and investment protectionism."

As China and the U.S. emerge as each other's second-largest trading partners, the ties are strained by a $147.3 billion trade surplus in China's favor, based on numbers through August. The imbalance carries risks for each side and sets the economic backdrop for the summit in Beijing.

Mr. Chen said the answer is "not to restrict imports from China but to promote balance."

The JCCT is a forum for dealing on nuts-and-bolts trade items, and the agreements announced Thursday could have important implications for individual sectors. Agriculture was a highlight, with Thursday's agreements paving the way for the resumption of U.S. pork exports to China, which were halted in May on Chinese fears about H1N1 influenza, known as swine flu. U.S. pork exports to China had been growing quickly, reaching $560 million last year.

In exchange, the U.S. agreed to ease a six-year-old restriction on Chinese poultry exports to the U.S.

Reflecting the Obama administration's green-energy and technology priorities, the U.S. said it won easier access for foreign companies to sell wind-power technology in China. U.S. Commerce Secretary Gary Locke said 30,000 megawatts of generating capacity will be installed by year-end.

The U.S. also said China will take steps toward improving intellectual-property protection by re-examining an Internet music-distribution protocol, and beefing up protection of academic journals at Chinese libraries.

More broadly, China agreed to ease "local content" restrictions on products sold to Chinese government agencies, as well as regard products made in China by foreign companies as domestic-made items.

Details weren't released for the series of agreements reached and instead were outlined separately by the goverments after the talks concluded in a lakeside villa in Hangzhou, in eastern China.

In a move likely to unlock Chinese spending power to the benefit of U.S. airlines and other companies, tourists from around two-thirds of Chinese provinces will be able to obtain visas to visit the U.S. in travel groups, up from a third now, officials said.

As U.S.-China trade has fallen this year—two-way trade is down about 15% from 2008—disputes have gained, raising the specter of protectionism by two of the world's largest traders.

On the eve of the Hangzhou talks, Beijing took preliminary steps that could increase tariffs on U.S.-made luxury vehicles, according to an official from the Fair Trade for Imports and Exports Bureau of China's Ministry of Commerce. If the measure leads to tariffs, it is expect to affect several thousand vehicle exports from the U.S.

"The relevant government authorities have to protect China's companies and market based on World Trade Organization rules," said Mr. Chen, China's commerce minister.

It appeared to be the latest Chinese response to a decision in September by the Obama administration to hit Chinese tire exporters with punitive tariffs to protect U.S. industry from imports.

Mr. Kirk said the action didn't stand in the way of a productive meeting.

The trade representative said the two side aren't engaged in tit-for-tat trade retaliation, saying both Beijing and Washington are "acting on their legitimate rights" to enforce their trade rules.

—Denis McMahon contributed to this article.

Write to James T. Areddy at james.areddy@wsj.com

Hong Kong Unveils Compensation Guidelines for Banking Industry

HONG KONG -- Hong Kong's banking regulator moved to tighten its oversight of banking-industry compensation in line with the U.S. and the U.K., unveiling rules on Thursday that would limit how salaries and bonuses are paid to top bankers.

Hong Kong regulators stopped short of prescribing particular remuneration levels, or placing any caps on individual pay. But under the proposed rules, guaranteed minimum bonuses would be banned except in exceptional cases, while top executives should have at least 60% of their bonuses subject to deferral for at least three years, with a clawback policy in the event of future losses.

NEW YORK (AP) -- The world's largest publicly traded oil company said Thursday that oil production is bouncing back with crude prices. AP - In this Oc

NEW YORK (AP) -- The world's largest publicly traded oil company said Thursday that oil production is bouncing back with crude prices.

AP - In this Oct. 27, 2009 photo, a sign is seen at a Mobil gas station in East Montpelier, ...

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Symbol	Price	Change
XOM	72.75	-1.09

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A worldwide glut in petroleum supplies may yet cool the latest surge in oil, squeezing refiners and keeping profits in oil patch well below their peak last year or even the past several years.

Exxon Mobil Corp. reported that profits from July to September dropped 68 percent to $4.73 billion, or 98 cents per share. The results were the best of the year so far, but they're less than a third of what Exxon earned in the same period of 2008, when crude prices spiked above $147 a barrel.

In fact, excluding the previous two quarters this year, Exxon has not reported quarterly profits this low in at least the past four years.

The Irving, Texas-based company gets most of its income from oil and gas production, and in the third quarter it increased production by 3 percent to 3.69 million barrels of oil equivalent per day. Yet the returns are not as good because crude fetched an average of $50 less per barrel when compared with the year-ago period.

Net income fell in the third quarter across Exxon's various operations.

Its oil refining business posted a loss of $203 million in the United States compared with a profit of $978 million in the same three-month period of 2008. Overall, Exxon's refining, or downstream, operation took a beating with profits falling 89 percent to $325 million compared with the year-ago period.

Exploration and production, or Exxon's upstream business, saw earnings drop 63 percent to $4.01 billion in the third quarter.

Exxon shares fell $1.63, or 2 percent, to $72.21 in morning trading.

Pelosi: New health care bill is 'historic moment'

WASHINGTON (AP) -- After months of struggle, House Democrats unveiled sweeping legislation Thursday to extend health care coverage to millions who lack it and create a new option of government-run insurance. A vote is likely next week on the plan patterned closely on President Barack Obama's own.

AP - President Barack Obama, accompanied by House Speaker Nancy Pelosi of Calif., waves as he leaves the Rotunda ...

Speaking on the steps of the U.S. Capitol, Speaker Nancy Pelosi said Congress was "on the cusp of delivering on the promise of making affordable, quality health insurance available to every American -- and laying the foundation for a brighter future for generations to come."

Officials said the measure, once fully phased in over several years, would extend coverage to 96 percent of Americans. Its principal mechanism is creation of a new government-regulated insurance "exchange" where private companies could sell policies in competition with the government. Federal subsidies would be available to millions of lower-income individuals and families to help them afford the policies.

The ceremony marked a pivotal moment in Democrats' yearlong attempt to answer Obama's call for legislation to remake the nation's health care system by extending insurance, ending industry practices such as denying coverage on the basis of pre-existing medical conditions, and slowing the growth of medical spending nationwide.

Democrats issued a statement saying their measure "lowers costs for every patient" and would not add to federal deficits. They put the cost of coverage at under $900 billion over 10 years, a total that evidently didn't include additional spending.

Pelosi was flanked by rank-and-file Democrats as she made her remarks.

Across the Capitol, Senate Democrats, too, are hoping to pass legislation by year's end. Legislation outlined by Majority Leader Harry Reid earlier this week would include an option for a government-run plan, although states could drop out if they wished, a provision not in the House measure.

With Republicans expected to oppose the measure unanimously, Pelosi and her lieutenants worked for weeks to resolve differences within the Democratic rank and file.

The toughest of them covered the terms under which the government insurance option would function. Liberals generally wanted the government to dictate the rates to be paid to doctors, hospitals and other health care providers, with the fee levels linked to Medicare.

Moderates, fearing the impact on their local hospitals, held out for negotiated rates between the government and private insurers -- and won.

Not all liberals were ready to sign on. Rep. Lynn Woolsey, D-Calif., a co-chair of the Congressional Progressive Caucus, was noncommittal about whether progressives would accept the negotiated rates. "This is not walkaway time and it is not acceptance time," she said.

Democrats control 256 seats in the House, are overwhelmingly favored to win one special election next week and are competitive for another. As a result, they can afford 30 defections or more on the legislation and still prevail.

The legislation would be financed by a combination of cuts in planned Medicare spending and an income tax surcharge of 5.4 percent on individuals making at least $500,000 annually and couples making at least $1 million.

The bill would require nearly everyone by 2013 to sign up for health coverage either through their employer, a government program or the new exchange.

In the meantime, a temporary government program would help people turned down by private insurers because of medical problems, lawmakers said. After that, insurers no longer could refuse to provide coverage to the sick, nor could they charge more because of poor health of the insured.

The plan also calls for a significant expansion of Medicaid, the federal-state health program for low-income people. And it would impose a requirement on employers to offer insurance to their workers or face penalties.

Pelosi and the leadership have yet to work out disputes over abortion services and health care for immigrants, issues that must be settled before the bill can come to a vote.

Republicans long ago decided to oppose the approach requested by Obama and taken by Democrats, and health care is expected to figure in next year's congressional election campaign.

"Americans' health care is too important to risk on one gigantic bill that was negotiated behind closed doors," said Rep. Dave Camp, R-Mich. "The Medicare cuts will hurt seniors, the tax increases will kill jobs and the government takeover of health care will increase premium costs."

Pelosi has also said the bill would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price fixing and bid rigging. Democratic officials said the bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative. The officials spoke Wednesday on condition of anonymity, saying they were not authorized to pre-empt a formal announcement.

"I'm pretty confident that we've got the right pieces in place," said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, one of the three panels that approved different versions of the legislation months ago.

"We can quibble over parts of it, but the fact is when you're taking a 60-year-old system that grew up in a rather haphazard fashion and you're trying to bring some coherence to it, these are sort of the things you have to do at the beginning of that process."

If Obama does get to sign a health overhaul bill, he will have bucked decades of failed attempts by past administrations, most recently by former President Bill Clinton in the 1990s. There's still no guarantee that Congress can complete the legislation before year's end, as the president wants.