Monday, September 15, 2008

AT & T buries customer rights in 2,500-page 'guidebook'

David Lazarus, Consumer Confidential

AT&T has sent customers an 8,000-word service agreement that, among other things, says people will be given 30-day notice of price increases only when "commercially reasonable" and that you can't sue the company.

Oh, and if you don't like AT&T's terms -- providing you can make your way through the company's 2,500-page "guidebook" -- your only recourse is to cancel service.

State regulators aren't happy about this and are looking into whether the AT&T service agreement violates the law and unfairly limits the rights of customers.

Meanwhile, the California Public Utilities Commission's Division of Ratepayer Advocates is preparing to protest an attempt by AT&T to remove numerous services from regulatory scrutiny before they're offered to customers.

The developments are contained in commission documents and e-mails that made their way to my hands.

Chris Witteman, a staff attorney for the PUC who also represents the Division of Ratepayer Advocates, confirmed that staffers recently reviewed AT&T's service agreement and that some believe regulatory action is needed to protect consumers.

"We want AT&T to be required to revisit and reformulate the agreement so it doesn't violate the law," he said.

H. Gordon Diamond, an AT&T spokesman, defended the agreement, saying it "provides customers with more direct information on their rights and . . . information on the services they purchase from us."

However, because the agreement serves as a contract between the firm and its customers, he acknowledged that "it was unavoidable to include some legal terminology."

Two years ago, regulators voted to give phone companies more freedom in pricing and marketing decisions -- thus opening the door to AT&T's new agreement. The rationale was that this would create a more competitive marketplace, which would benefit consumers.

However, the Division of Ratepayer Advocates concluded in a recent report that "significant rate increases" have occurred since the market was deregulated.

Witteman said a key problem with AT&T's service agreement is that the company doesn't list all the terms and conditions that apply to customers. Rather, AT&T says customers must review a separate "guidebook."

That guidebook is available only online, Witteman said, and runs about 2,500 pages. "What consumer is going to slog through that?" he asked.

Moreover, the service agreement says AT&T will "generally" provide written notice of price increases at least 30 days in advance, except when such notice isn't "commercially reasonable."

Witteman said the online guidebook and ambiguous notification policy appear to violate a California statute requiring that consumers "be given sufficient information to make informed choices."

AT&T's service agreement is written in dense legalese and essentially gives the company as much latitude as possible -- while limiting customers' ability to seek redress.

"If you do not agree with the provisions of this agreement, your sole option is to cancel your services . . . within 30 days after receipt of this agreement," it says.

An analysis of the agreement prepared for PUC staffers found fault with a variety of AT&T's provisions, including this one: "You also agree to pay for all charges for services provided under this agreement even if such calls were not authorized by you."

The analysis said this "is in direct violation to cramming laws," which protect consumers from having unauthorized charges placed on their bills.

Under the provision, the analysis concluded, "AT&T, or any other billing agents, could impose unauthorized phone calls on a consumer's bill." It said consumers would have "little chance in both avoiding and fighting against this type of fraud."

AT&T's Diamond said that the company complies with state cramming laws and that "customers have always been responsible for paying the charges that appear on their bills." He added, though, that "if customers believe they are not liable for the charges, we will be happy to discuss that with them."

The analysis was prepared by a PUC intern but was regarded by senior staffers as an accurate overview of problems with the AT&T document.

Verizon Communications Inc. is also preparing to inform regulators of services it wants to remove from regulatory oversight before offering them to customers. The company started mailing out its own service agreement last week.

That agreement is much easier to understand than AT&T's, although it too steers customers to an online "product guide" that runs hundreds of pages. According to Jon Davies, a Verizon spokesman, the guidebook will be posted sometime next month.

One of the biggest differences between the AT&T and Verizon agreements is that AT&T's includes a provision that says customers are "waiving the right to a trial by jury and to participate in a class action" and may resolve grievances only by arbitration.

Davies said the company made a "business decision" not to include an arbitration requirement in its agreement. "If consumers have a grievance, they can work it out with us, take it to the commission or take it to the courts," he said.

AT&T's agreement says its arbitration requirement doesn't apply where "it has been deemed unenforceable by the highest court in the state."

The California Supreme Court ruled in 2005 that many such provisions are "unconscionable" because they deny basic legal rights to consumers. But the court left the door open to some arbitration clauses' being permitted under certain circumstances.

AT&T's Diamond said the company believes that its arbitration provision "is valid under California law" and that arbitration is more "consumer-friendly" than litigation.

But Michele Van Gelderen, a deputy state attorney general, said it was not clear whether AT&T's class-action waiver was enforceable in California.

"This is a cutting-edge area of law," she said. "The company is pushing the boundaries, and consumers need to push back."

Consumers who want to comment on the AT&T or Verizon service agreements can e-mail the PUC at public call (866) 849-8390.

Original here

Bank of America to Buy Merrill Lynch for $50 Billion

By Charlie Gasparino, On-Air Editor

By Charlie Gasparino, On-Air Editor | 14 Sep 2008 | 07:42 PM ET
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Bank of America said it agreed to buy Merrill Lynch in an all-stock deal worth $50 billion, snagging the world's largest retail brokerage after one of the worst-ever weekends on Wall Street.

BoFA [BAC 28.86 -4.88 (-14.46%) ] is buying about $44 billion of Merrill's common shares [MER 21.59 4.54 (+26.63%) ], as well as $6 billion of options, convertibles, and restricted stock units.

Bank of America said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.

The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007. The deal has been approved by directors of both companies. Three Merrill directors will join the Bank of America board.

Merrill plans to make an internal announcement to employees sometime between 8 and 9 a.m. New York Monday.

Merrill came under pressure to find a merger partner came after its liquidity began "evaporating" Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.

Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.

"It's over," said one senior Merrill official.

The deal comes as Lehman Brothers Holdings [LEH 0.206 -3.444 (-94.36%) ] prepares to file for bankruptcy after failing to find a buyer.

A Merrill Lynch spokeswoman and a Bank of America spokesman could not immediately be reached for comment. (View Charlie's round table discussion of the BoFa purchase of Merrill on the left)

Merrill, stuck with some of the same toxic debt -- much of it mortgage-related -- which torpedoed Lehman's balance sheet, has been hit hard by the credit crisis and has written down more than $40 billion over the last year.

Last month, Thain arranged to sell over $30 billion in repackaged debt securities to Dallas -based private equity firm Lone Star Funds.

"I'm surprised that Merrill Lynch would want to sell at this point," said Bill Fitzpatrick, an analyst at Optique Capital in Milwaukee. "They seem to be taking steps to improve their business. They have sold off a lot of their toxic assets. Merrill seems to be progressing to me."

In spite of these exposures, the bank is seen by some as undervalued, in part because of its massive brokerage business, which analysts have said is worth more than $25 billion.

The brokerage is the largest in the world by assets under management and number of brokers.

Merrill also has about a 45 percent stake in the profitable asset manager BlackRock, worth more than $10 billion.

"It could be a powerful fit," said Rick Meckler, chief investment officer at LibertyView Capital Management in New York.

But he added: " Merrill Lynch has significant exposures and Bank of America would need enough balance sheet to handle that."

Meckler also noted that the due diligence Bank of America would need to do on Merrill's books would be a serious undertaking, given the complexity of the company's exposure to mortgage-related securities and other complex debt.

With the brokerage and the BlackRock shares worth more than $35 billion combined, and Merrill's market capitalization at around $26 billion, investors are ascribing a negative value to the investment bank, implying huge potential embedded losses.

On the other hand, it would not be the first time Bank of America has done a quick acquisition.

In 2005, the bank bought credit card company MBNA after less than a week of due diligence, with Lewis saying the company was comfortable with the acquisition because it knew the people and business well.

Bank of America under Lewis has in fact become renowned for large acquisitions and it has spent over $100 billion since 2004 buying other companies.

Most recently it acquired troubled mortgage lender Countrywide Financial Corp and -- although many were skeptical about this purchase -- veteran analyst Dick Bove said last week the takeover could prove to be a master stroke by Lewis, since the government takeover of mortgage agencies Fannie Mae and Freddie Mac could fuel business for other lenders.

Original here

Fed, Street Draft Deal To Buy Lehman's Bad Assets

By Charlie Gasparino On-Air Editor

A deal has been drafted to buy Lehman Brothers' bad assets and clear the way for an eventual sale of the troubled firm, CNBC has learned.

Under the terms of the proposal, which could still blow up, all the major Wall Street firms would pitch in $30 billion total to purchase Lehman's bad real estate assets and create what's knows as a "bad bank."

The proposal is being drafted Saturday night and will be discussed Sunday morning, according to sources close to CNBC. If Wall Street agrees on the terms, which would amount to around $3 billion per firm, it would clear the way for the sale of Lehman Brothers itself to one of several suitors, including Bank of America, Barclays Plc and HSBC.

Executives remained less than pleased with the proposal as they left the New York Federal Reserve around 6 p.m. to convene again Sunday morning. Contingency planning for no deal getting done, potential bankruptcy and defaults continues as Lehman continues its search for a buyer.

"Why should we give up capital so Barclays and Bank of America can buy a clean bank," said one Wall Street executive.

Despite the grumbling, those in the know expect the deal to get done Sunday, with Barclays in the lead to buy the rest of Lehman, including Neuberger. No price has been set just yet.

One Wall Street executive involved in the meetings put it this way: "I'm thinking logically; if they do nothing it's Armageddon. That means they do a deal. It will be announced at 6 p.m. (ET) Sunday."

Most people think the deal will come together sometime between 2 p.m. and 4 p.m. ET Sunday, though the structure is fluid, so the deal could change.

Barclays, along with Bank of America, HSBC and private equity firms have all expressed interest in purchasing Lehman Brothers, though far below the $70 share price that Lehman enjoyed earlier in the year.

Executives from these outfits have met with company officials who began to shop the firm after it became clear that a recent plan to add more capital wouldn't be enough to strengthen the firm, which holds around $40 billion in bad real estate assets on its books.

But with firms like Bank of America and Barclays refusing — at least so far — to budge on their position that they will only buy Lehman without the beaten down real estate assets, and the street balking on the government plan, which calls on the big firms to chip in a total of around $3 billion to purchase the Lehman assets, people with direct knowledge of the meeting say a deal may not get done.

  • Cramer: What Banks You Should Buy
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  • Another problem: officials from the Federal Reserve and the Treasury were holding fast to their position that the government won't guarantee any of Lehman's bad assets, as they did with Bear Stearns, a move that allowed JP Morgan to purchased that troubled brokerage firm in March.

    But the Fed's stance might soon soften — as might the position of Wall Street — because the consequences are so dire.

    Without a deal, many market analysts predict Lehman will have to file for bankruptcy. Already, there is a near uprising at the firm. Top executives are saying they won't show up to work on Monday. It's unclear if other firms on the Street will continue to trade with Lehman and if Lehman can get loans from major financial players to fund its operations.

    Making matters worse, if Lehman does file for bankruptcy, top Wall Street executives involved in the meetings with government officials say they fear another financial firm may be next. All eyes have been on Merrill Lynch, which, despite a recent plan to strengthen its balance sheet, still has exposure to bad assets.

    Merrill, of course, is much more diversified firm than Lehman. It has the largest brokerage salesforce of any Wall Street firm, and a major investment in money management powerhouse, Blackrock.

    Merrill recently raised billions of dollars in new capital, in part by selling its interest in Bloomberg LP, and it sold much of its bad debt to outside buyers in a complex plan that forced the firm to take a huge writedown.

    But Merrill may not be out of the woods just yet. The firm still has some exposure to bad real estate, and short sellers may soon be targeting its stock, which has tanked in recent days, though top executives on Wall Street say Merrill could easily find a buyer such as a large bank because of the strength of its businesses.

    CNBC's Steve Liesman contributed to this report.

    Original here

    Last Gasp of a Doomed Currency

    In the latest example of financial market madness, the recent government “bailout” of Freddie Mac and Fannie Mae has perversely resulted in a sharp rise in the value of the U.S. dollar. If the markets were functioning rationally, the transference of staggering new liabilities to the U.S. Treasury would have been immediately seen as catastrophic for the dollar. Instead the markets have ignored the obviously negative long-term implications and have remained fixated on the more immediate effects. However, rather than solving the problems, the government’s actions merely confirm my worst fears, and increase the chances for a hyper-inflationary outcome.

    By transforming $5.5 trillion of suspect mortgage-backed securities into seemingly bullet-proof Treasury bonds, the move has sparked a relief rally in the dollar as foreign investors no longer have to worry about defaults or markdowns. In fact, to holders of Fannie and Freddie debt, it no longer matters what happens to the housing market. Home prices can drop another 50%, every single homeowner can default on their mortgage, and bond holders will not lose one dime. This has emboldened foreign investors, and temporarily increased demand for both dollars and Freddie and Fannie debt.

    Had the government done the right thing and not guaranteed Freddie and Fannie debt, I believe we would now be experiencing an outright financial crisis. The dollar would be falling sharply along with real estate prices, gold would be soaring and the recession would be deepening. However, by nationalizing Freddie and Fannie, the government has merely delayed the crisis. The borrowed time will cost us dearly, as the day of reckoning will now likely involve much steeper losses for our currency.

    The Freddie and Fannie takeover does nothing to address the underlying problems that forced the companies into bankruptcy in the first place. All of the bad mortgage debt still exists. In fact, based on this bailout, there will be trillions more in bad mortgages insured over the next few years. The only thing that has changed is how the losses will be distributed. Instead of falling solely on bond holders, who had chosen to invest in mortgage debt, they will now be dispersed among U.S. taxpayers and all holders of U.S. dollars, who made no such choices.

    Over the next year or two, my prediction is that several trillion dollars of existing mortgages, not currently insured by Freddie or Fannie, will be transferred to the pile. Going forward the vast majority of new mortgages made to Americans will be bought by Fannie or Freddie. Therefore in a few short years the $5.5 trillion of initially transferred liabilities could grow to more than $10 trillion of new obligations for the U.S. Treasury.

    The defenders of the bailout claim that Fannie and Freddie debt does not represent true obligations because they are fully collateralized by homes. But anyone with a casual interest in the current real estate market knows that homes are now only worth a fraction of outstanding mortgage debt. And that fraction gets smaller every day. My guess is that $10 trillion of federally insured mortgages could result in $2 trillion of losses, which amounts to more than $25,000 per American family.

    Also, there is no reason to believe that the bailout merry-go-round will end with Fannie and Freddie. Faltering investment bank Lehman Bros. is now positioned to receive the kind of Federal backstop that smoothed the purchase of Bear Stearns back in March. Bailouts of automotive and airline companies can’t be long in coming. Once the market perceives a Federal magic wand, it becomes politically impossible to stop waving it.

    In addition to adding new sources of debt in the form of mortgage backed securities, the government is also piling on debt the old fashioned way…through budget deficits. Recent projections put the 2008 deficit at $410 billion, not counting the Iraq war or any costs related to financial bailouts. It is my guess that the annual Federal budget deficit will soon approach, and then exceed, $1 trillion, and that the national debt, including actual bonds and guaranteed mortgages, will soon exceed $20 trillion. When these untenable obligations force Treasury and agency investors to shift focus from default risk to inflation risk, a mass exodus from both Treasuries and mortgage-backed securities (now Treasuries in disguise) will ensue. The stampede will trample the dollar.

    When the dust settles, the Federal government will be left with staggering liabilities that will be impossible to repay with legitimate means (taxation or borrowing). To make good, they must rely on the printing press to create money out of thin air. The rapid expansion in money supply will push the dollar down mercilessly.

    Right now every asset on the planet is being sold except the U.S. dollar. To me this rally looks like the last gasp of a dying currency. Just like a toy rocket ship, once the dollar runs out of fuel it will crash back down to Earth.

    For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”

    Original here

    With White House Push, U.S. Arms Sales Jump


    WASHINGTON — The Bush administration is pushing through a broad array of foreign weapons deals as it seeks to rearm Iraq and Afghanistan, contain North Korea and Iran, and solidify ties with onetime Russian allies.

    Petty Officer First Class Scott Cohen/United States Navy

    President Hamid Karzai of Afghanistan, right, at a ceremony on Feb. 2, 2007, for the United States’ transfer to the Afghan Army of 213 Humvees and more than 12,000 light weapons.

    From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005.

    The trend, which started in 2006, is most pronounced in the Middle East, but it reaches into northern Africa, Asia, Latin America, Europe and even Canada, through dozens of deals that senior Bush administration officials say they are confident will both tighten military alliances and combat terrorism.

    “This is not about being gunrunners,” said Bruce S. Lemkin, the Air Force deputy under secretary who is helping to coordinate many of the biggest sales. “This is about building a more secure world.”

    The surging American arms sales reflect the foreign policy tides, including the wars in Iraq and Afghanistan and the broader campaign against international terrorism, that have dominated the Bush administration. Deliveries on orders now being placed will continue for several years, perhaps as one of President Bush’s most lasting legacies.

    The United States is far from the only country pushing sophisticated weapons systems: it is facing intense competition from Russia and elsewhere in Europe, including continuing contests for multibillion-dollar deals to sell fighter jets to India and Brazil.

    In that booming market, American military contractors are working closely with the Pentagon, which acts as a broker and procures arms for foreign customers through its Foreign Military Sales program.

    Less sophisticated weapons, and services to maintain these weapons systems, are often bought directly by foreign governments. That category of direct commercial sales has seen an enormous surge as well, as measured by export licenses issued this fiscal year covering an estimated $96 billion, up from $58 billion in 2005, according to the State Department, which must approve the licenses.

    About 60 countries get annual military aid from the United States, $4.5 billion a year, to help them buy American weapons. Israel and Egypt receive more than 80 percent of that aid. The United States has also recently given Iraq and Afghanistan large amounts of weapons and other equipment and has begun to train fledgling military units at no charge; this assistance is included in the tally of foreign sales. But most arms exports are paid for by the purchasers without United States financing.

    The growing tally of international weapon deals, which started to surge in 2006, is now provoking questions among some advocates of arms control and some members of Congress.

    “Sure, this is a quick and easy way to cement alliances,” said William D. Hartung, an arms control specialist at the New America Foundation, a public policy institute. “But this is getting out of hand.”

    Congress is notified before major arms sales deals are completed between foreign governments and the Pentagon. While lawmakers have the power to object formally and block any individual sale, they rarely use it.

    Representative Howard L. Berman of California, chairman of the House Committee on Foreign Affairs, said he supported many of the individual weapons sales, like helping Iraq build the capacity to defend itself, but he worried that the sales blitz could have some negative effects. “This could turn into a spiraling arms race that in the end could decrease stability,” he said.

    The United States has long been the top arms supplier to the world. In the past several years, however, the list of nations that rely on the United States as a primary source of major weapons systems has greatly expanded. Among the recent additions are Argentina, Azerbaijan, Brazil, Georgia, India, Iraq, Morocco and Pakistan, according to sales data through the end of last month provided by the Department of Defense. Cumulatively, these countries signed $870 million worth of arms deals with the United States from 2001 to 2004. For the past four fiscal years, that total has been $13.8 billion.

    In many cases, these sales represent a cultural shift, as nations like Romania, Poland and Morocco, which have long relied on Russian-made MIG-17 fighter jets, are now buying new F-16s, built by Lockheed Martin.

    At Lockheed Martin, one of the largest American military contractors, international sales last year brought in about $6.3 billion, or 15 percent of the company’s total sales, up from $4.8 billion in 2001. The foreign sales by Lockheed and other American military contractors are credited with helping keep alive some production lines, like those of the F-16 fighter jet and Boeing’s C-17 transport plane.

    Fighter jets made in America will now be flying in other countries for years to come, meaning continued profits for American contractors that maintain them, and in many cases regular interaction between the United States military and foreign air forces, Mr. Lemkin, the Air Force official, said.

    Sales are also being driven by the push by many foreign nations to join the once-exclusive club of countries whose arsenals include precise, laser-guided missiles, high-priced American technology that the United States displayed during its invasions of Iraq and Afghanistan.

    In the Persian Gulf region, much of the rearmament is driven by fears of Iran.

    The United Arab Emirates, for example, are considering spending as much as $16 billion on American-made missile defense systems, according to recent notifications sent to Congress by the Department of Defense.

    The Emirates also have announced an intention to order offensive weapons, including up to 26 Black Hawk helicopters and 900 Longbow Hellfire II missiles, which can knock out enemy tanks.

    Saudi Arabia, this fiscal year alone, has signed at least $6 billion worth of agreements to buy weapons from the United States government — the highest figure for that country since 1993, which was another peak year in American weapons sales, after the first Persian Gulf war.

    Israel, long a major buyer of United States military equipment, is also increasing its orders, including planned purchases of perhaps as many as four American-made coastal warships, worth $1.9 billion.

    In Asia, as North Korea has conducted tests of a long-range missile, American allies have been buying more United States equipment. One ally, South Korea, has signed sales agreements with the Pentagon this year worth $1.1 billion.

    So far, the value of foreign arms deliveries completed by the United States has increased only modestly, reaching $13 billion last year compared with an average of $12 billion over the previous three years. Because complex weapons systems take a long time to produce, it is expected that the increase in sales agreements will result in much greater arms deliveries in the coming years. (All dollar amounts for previous years cited in this article have been adjusted to reflect the impact of inflation.)

    The flood of sophisticated American military equipment pouring into the Middle East has evoked concern among some members of Congress, who fear that the Bush administration may be compromising the military edge Israel has long maintained in the region.

    Not surprisingly, two of the biggest new American arms customers are Iraq and Afghanistan.

    Just in the past two years, Iraq has signed more than $3 billion of sales agreements — and announced plans to buy perhaps as much as $7 billion more in American equipment, financed by its rising oil revenues.

    Lt. Col. Almarah Belk, a Pentagon spokeswoman, said that making these sales served the interests of both Iraq and the United States because “it reduces the risk of corruption and assists the Iraqis in getting around bottlenecks in their acquisition processes.”

    Over the past three years, the United States government, separately, has agreed to buy more than $10 billion in military equipment and weapons on behalf of Afghanistan, according to Defense Department records, including M-16 rifles and C-27 military transport aircraft.

    Even tiny countries like Estonia and Latvia are getting into the mix, playing a part in a collaborative effort by 15 countries, mostly in Europe, to buy two C-17 Boeing transport planes, which are used in moving military supplies as well as conducting relief missions.

    Boeing has delivered 176 of these $200 million planes to the United States. But until 2006, Britain was the only foreign country that flew them. Now, in addition to the European consortium, Canada, Australia and Qatar have put in orders, and Boeing is competing to sell the plane to six other countries, said Tommy Dunehew, Boeing’s C-17 international sales manager.

    In the last year, foreign sales have made up nearly half of the production at the California plant where C-17s are made. “It has been filling up the factory in the last couple of years,” Mr. Dunehew said.

    Even before this new round of sales got under way, the United States’ share of the world arms trade was rising, from 40 percent of arms deliveries in 2000 to nearly 52 percent in 2006, the latest year for which the Congressional Research Service has compiled data. The next-largest seller was Russia, which in 2006 accounted for 21 percent of global deliveries.

    Representative Berman, who sponsored a bill passed in May to overhaul the arms export process, said American military sales, while often well intended, were sometimes misguided. He cited military sales to Pakistan, which he said he feared were doing more to stoke tensions with India than combat terrorism in the region.

    Travis Sharp, a military policy analyst at the Center for Arms Control and Nonproliferation, a Washington research group, said one of his biggest worries was that if alliances shifted, the United States might eventually be in combat against an enemy equipped with American-made weapons. Arms sales have had unintended consequences before, as when the United States armed militants fighting the Soviets in Afghanistan, only to eventually confront hostile Taliban fighters armed with the same weapons there.

    “Once you sell arms to another country, you lose control over how they are used,” Mr. Sharp said. “And the weapons, unfortunately, don’t have an expiration date.”

    But Mr. Lemkin, of the Pentagon, said that with so many nations now willing to sell advanced weapons systems, the United States could not afford to be too restrictive in its own sales.

    “Would you rather they bought the weapons and aircraft from other countries?” he said. “Because they will.”

    Original here

    Death toll rises to 24 in Los Angeles train crash

    By Deena Beasley

    LOS ANGELES (Reuters) - The death toll in the head-on crash of a commuter train and a freight train outside Los Angeles has risen to 24 and more fatalities are expected, officials said on Saturday.

    The Friday afternoon crash -- the worst commuter train crash in Los Angeles history -- was likely caused by the passenger train engineer's failure to stop at a red light, officials said.

    "We have confirmed 24 dead and are still working to extricate bodies," said Los Angeles Fire Department spokesman Ron Myers.

    The collision also injured 135 people, including 45 who were in critical condition.

    "At this moment we must acknowledge that it was a Metrolink engineer that made the error that caused yesterday's accident," Denise Tyrrell, a spokeswoman for the train line, said at a news conference.

    She said the engineer worked for a subcontractor used by Metrolink. The engineer was believed to have died in the crash.

    There were 222 people on the Metrolink train, and three Union Pacific employees aboard the freight train, according to media reports.

    Fire Department officials said workers were continuing efforts to extricate the bodies from the twisted wreckage.

    The force of the crash pushed the locomotive engine pulling the commuter train backward into a passenger car, and both toppled over, igniting in flames. At least seven cars from the freight train derailed, although most remained standing across the tracks.

    Both trains were traveling at about 40 miles per hour (65 kph), according to Tyrrell.

    Los Angeles Mayor Antonio Villaraigosa called Friday's collision "a human tragedy that is beyond words."

    Once rescue efforts conclude, the National Transportation Safety Board is poised to take over investigation of the crash.

    Workers were searching for the event recorders carried by the two trains and the dispatch station recording involving the crash were to be turned over to NTSB investigators on Saturday.

    The event recorders -- like the so-called black boxes carried by airliners -- monitor the actions of engineers on the trains and should provide investigators with crucial information regarding the cause of the collision.

    Original here

    Revealed: UK’s first official sharia courts

    ISLAMIC law has been officially adopted in Britain, with sharia courts given powers to rule on Muslim civil cases.

    The government has quietly sanctioned the powers for sharia judges to rule on cases ranging from divorce and financial disputes to those involving domestic violence.

    Rulings issued by a network of five sharia courts are enforceable with the full power of the judicial system, through the county courts or High Court.

    Previously, the rulings of sharia courts in Britain could not be enforced, and depended on voluntary compliance among Muslims.

    It has now emerged that sharia courts with these powers have been set up in London, Birmingham, Bradford and Manchester with the network’s headquarters in Nuneaton, Warwickshire. Two more courts are being planned for Glasgow and Edinburgh.

    Sheikh Faiz-ul-Aqtab Siddiqi, whose Muslim Arbitration Tribunal runs the courts, said he had taken advantage of a clause in the Arbitration Act 1996.

    Under the act, the sharia courts are classified as arbitration tribunals. The rulings of arbitration tribunals are binding in law, provided that both parties in the dispute agree to give it the power to rule on their case.

    Siddiqi said: “We realised that under the Arbitration Act we can make rulings which can be enforced by county and high courts. The act allows disputes to be resolved using alternatives like tribunals. This method is called alternative dispute resolution, which for Muslims is what the sharia courts are.”

    The disclosure that Muslim courts have legal powers in Britain comes seven months after Rowan Williams, the Archbishop of Canterbury, was pilloried for suggesting that the establishment of sharia in the future “seems unavoidable” in Britain.

    In July, the head of the judiciary, the lord chief justice, Lord Phillips, further stoked controversy when he said that sharia could be used to settle marital and financial disputes.

    In fact, Muslim tribunal courts started passing sharia judgments in August 2007. They have dealt with more than 100 cases that range from Muslim divorce and inheritance to nuisance neighbours.

    It has also emerged that tribunal courts have settled six cases of domestic violence between married couples, working in tandem with the police investigations.

    Siddiqi said he expected the courts to handle a greater number of “smaller” criminal cases in coming years as more Muslim clients approach them. “All we are doing is regulating community affairs in these cases,” said Siddiqi, chairman of the governing council of the tribunal.

    Jewish Beth Din courts operate under the same provision in the Arbitration Act and resolve civil cases, ranging from divorce to business disputes. They have existed in Britain for more than 100 years, and previously operated under a precursor to the act.

    Politicians and church leaders expressed concerns that this could mark the beginnings of a “parallel legal system” based on sharia for some British Muslims.

    Dominic Grieve, the shadow home secretary, said: “If it is true that these tribunals are passing binding decisions in the areas of family and criminal law, I would like to know which courts are enforcing them because I would consider such action unlawful. British law is absolute and must remain so.”

    Douglas Murray, the director of the Centre for Social Cohesion, said: “I think it’s appalling. I don’t think arbitration that is done by sharia should ever be endorsed or enforced by the British state.”

    There are concerns that women who agree to go to tribunal courts are getting worse deals because Islamic law favours men.

    Siddiqi said that in a recent inheritance dispute handled by the court in Nuneaton, the estate of a Midlands man was divided between three daughters and two sons.

    The judges on the panel gave the sons twice as much as the daughters, in accordance with sharia. Had the family gone to a normal British court, the daughters would have got equal amounts.

    In the six cases of domestic violence, Siddiqi said the judges ordered the husbands to take anger management classes and mentoring from community elders. There was no further punishment.

    In each case, the women subsequently withdrew the complaints they had lodged with the police and the police stopped their investigations.

    Siddiqi said that in the domestic violence cases, the advantage was that marriages were saved and couples given a second chance.

    Inayat Bunglawala, assistant secretary-general of the Muslim Council of Britain, said: “The MCB supports these tribunals. If the Jewish courts are allowed to flourish, so must the sharia ones.”

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