Long road to a giant failed project in Norristown

NORRISTOWN, Pa. -- The project to transform an old Norristown shopping center into a movie studio was supposed to bring the glitz and fortune of Hollywood to the sagging seat of Montgomery County.

Build it and filmmakers will come. Build it and jobs will come and lift Norristown to prosperity.

That dream fizzled like a box-office bomb last May, when the project's investor filed for foreclosure against the developer.

The forlorn shopping center, Logan Square, sits half-empty, its fate likely to be announced in the coming weeks. The county is grappling with how to recoup the $25 million it sank into the project - including $10 million in federal funds it must repay - and its lawyers are preparing a lawsuit against the developer. And prosecutors are scrutinizing the deal to see if more than bad luck and poor judgment were to blame.

Interviews with former and current county officials, along with county and state records, provide a clearer glimpse of the project's rise and fall.

The pinch on taxpayers is already being felt. Some interest payments were made last year, and this year's county budget includes a $510,000 payment on a $6.2 million debt - with similar sums due every year until 2030.

The $24.5 million in grants, loans, and loan guarantees the county invested was projected to kick-start the economy and create jobs. That money was supposed to bring, if not a tour de force, at least a happy ending.

"We got caught up in the possibilities," James R. Matthews, former chairman of the county commissioners, said last month. "Possibilities don't come to Norristown every day."

THE BEGINNING

Logan Square opened in the mid-1950s, two miles north of downtown Norristown, where there was plenty of free parking. Sears Roebuck & Co. soon moved there from Main Street, then left in the 1980s for King of Prussia.

As other stores came and went at Logan Square, owner Joseph F. Butera put the property up for sale, recalled Jerry Nugent, executive director of the county's Redevelopment Authority.

In January 2008, developer Charles Gallub created a corporation called Johnson & Markley Redevelopment, named after the two streets where the shopping center stands, and bought the property for about $18 million, according to county records. Most of the money Gallub used to buy it came from a private investor, Logan Lender L.P.

Even before the purchase, Gallub had pitched the project - Studio Centre - to the county, figuring the plan could benefit from tax credits then-Gov. Ed Rendell backed to promote moviemaking.

The plan and the tax credits were attractive enough to encourage Raleigh Studios in California and some homegrown filmmakers to partner with Gallub: "The vision is to . . . create one of the best film studios on the East Coast of the United States," the developer said in 2007.

"There was a great amount of enthusiasm," Nugent said. "Studio people would fly in from California and spout their excitement."

But in March 2009, he and several colleagues urged county leaders to be fiscally cautious.

In a memo, they questioned the plan's "financial feasibility" and whether the county and town should back the project without a financial guarantee from Gallub if it fell apart.

County Commissioner Bruce L. Castor Jr. said he was not given the memo. In recent interviews, Castor also said, as did Matthews, that they were unaware the county had agreed to let the private investor, Logan Lender, get repaid first if the plan fell apart.

That practice, known as subordination, isn't an uncommon tool in public redevelopment financing. But, experts say, it must be done after scrutinizing a project's feasibility and financial safeguards.

The same year, lawmakers shrank the tax-credit program, and Raleigh Studios backed out of the deal.

The studio plan collapsed.

When the state withdrew its promised $10 million Redevelopment Assistance Capital Program grant, Gallub focused on renovating the Sears building into office space. The centerpiece of the project became a plan to build a new structure for the maintenance company USM, which already was located at Logan Square but looking for new quarters, and a parking garage.

Despite the changes, taxpayer dollars flowed into the modified plan.

THE TAB

In 2010, the state gave the modified project a reduced state capital grant of $7 million.

The county gave Gallub:

— A $2 million loan in July 2010. That money won't be repaid unless it comes through a lawsuit.

— The $6.2 million loan made in November 2010 by the county guaranteeing a Redevelopment Authority bond sale. That is the debt the county begins paying down this year.

— A $10 million loan through the U.S. Department of Housing and Urban Development's Section 108 program. Local governments that borrow money guaranteed by that program, according to HUD, "must pledge their current and future CDBG (Community Development Block Grant) allocations to cover the loan amount as security for the loan."

HUD is waiting for the county to say how it wants to repay the $10 million loan, spokeswoman Niki Edwards said.

That $10 million won't impact the county budget, which currently stands at $375.7 million. The cost comes in what Montgomery County chief financial officer Uri Z. Monson calls "the opportunities lost" by using block-grant dollars for the debt instead of putting it toward other needs.

The county commissioners at the time - Matthews, Castor, and Joseph M. Hoeffel III - supported the new, office-campus plan.

In recent interviews, all three said the prospect of creating jobs in Norristown, with or without a studio, was too promising to reject. About 19 percent of the town's population lived in poverty from 2008 to 2012, according to the U.S. Census.

"If any place needs a kick in the butt," Matthews said, "it's Norristown."

THE CONNECTIONS

At the same time he was getting county support, Gallub was a generous political contributor to county officials.

Through one partnership, he gave $15,000 to the Friends of Joe Hoeffel committee in 2009 - one of the biggest contributions in Hoeffel's bid for governor. The same year, he gave Matthews $4,500; the Friends of Bruce Castor got $1,250 from him in 2010 and 2011.

All three said those contributions did not influence their decision-making.

There was one more political connection: Gallub's attorney on the project was Marcel Groen, longtime chairman of the Montgomery County Democratic Party, who often represents developers on high-profile real estate deals in the region.

Gallub also was given a seat on the Montgomery County Strategic Economic Development Policy Task Force, a group charged with drafting a plan for the county's economic transformation.

Among other things, the group recommended boosting the same funding sources the county later tapped for Gallub's project.

THRIFT STORE

One of the bigger tenants at Logan Square now is a thrift store. Other businesses include a deli, a pharmacy, a Social Security Administration office, and an outpost for State Rep. Matt Bradford.

The most visible sign of Gallub's ownership is in the parking lot, where the sleek, new headquarters of USM glistens. The company added 34 more jobs there last month, increasing its total on site to 468. Hoeffel said retaining those jobs proves the investment was a success.

"The bottom line is it's costing the county taxpayers more per job than I had wanted it to," Hoeffel said. "But it was under the terms we felt we had to agree to to make the project work."

Nugent doesn't hesitate when asked if the public money for the project was well-spent: "Obviously not."

Matthews and Hoeffel opted not to seek reelection in 2011. The next year, their successors, including holdover Castor, rejected Gallub's request for an additional $11 million.

"We didn't think it warranted throwing good money after bad," current Commissioners Chairman Josh Shapiro said.

In October, private investor Logan Lender bought the old shopping center for the value of the debt it was owed and $8,000 in cash for fees at a sheriff's auction. What happens next to the site is likely to be decided "sometime in the first quarter of 2014," said Richard S. Roisman, the Philadelphia attorney for the property's new owner.

Meanwhile, the county is working with Norristown officials to take legal action against Gallub.

"We need to do it jointly," Monson said.

There is no timetable on when that lawsuit may be filed - or on how long the District Attorney's Office might scrutinize the deal.

Montgomery County District Attorney Risa Vetri Ferman said last month that her office was still investigating the project, but she wouldn't say what or whom prosecutors were reviewing.

Logan Square could have a bright future, said former Upper Darby resident Christopher Leinberger, a fellow at the Brookings Institution who is an expert on downtown redevelopment.

Raze the shopping center, build housing in its place, create a grid of streets, and turn the property into a walkable, urbanized community: That, Leinberger said, is "the biggest development trend in the country."

Whatever the plan for Logan Square, there's little chance of another big county investment.

"I would listen to any proposal," Shapiro said, "but I would not be willing to put any public money at risk."

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Drama Club blazed trail for Houma's gay community

HOUMA, La. -- Ten years ago, the Drama Club broke hard ground as the first gay bar to advertise publicly and display the rainbow flag in Houma. It recently closed, leaving a world much different than the one it entered in late 2003.

For the thousands who visited the bar, squeezing between its colorful walls to dance away balmy Cajun nights, the closing was a bittersweet milestone in the acceptance of gay culture into the Houma's mainstream.

Now there is a new bar in town, on Main Street, just over a mile away from the seat of parish government.

Drama Club owner Randy Chestnut celebrated his 70th birthday on Feb. 15, the bar's last night. He opened it on a whim after he found out the only gay bar at that time, Kicks, was planning to close.

It was the seventh bar that Chestnut owned and managed in his career, and it became his pride.

"My goal was to have a place where the gay community could enjoy themselves," Chestnut said. "This was my favorite bar out of all the ones I have owned. It was my crown jewel and now it's my swan song."

Chestnut said he was overwhelmed with emotion as he prepared to move to Lafayette to be with his children.

"There are a lot of sad people tonight," Chestnut said. "This was the first place a lot of people came out to. Drama Club loves Houma, we wish everybody the best in the world."

The decision to close was a long time coming, Chestnut said. The club had been losing money since the BP oil spill shocked the local economy.

Chestnut said the opening of Main Street Lounge did not influence his decision to close. But many say it was Chestnut's bar that made the newer one possible.

The night before Drama Club closed, Todd Carvell sat at a packed bar inside Main Street Lounge. "Drama Club paved the way for this club to open," said Carvell, 37. "Ten years ago I would've never imagined coming to Houma and going to a gay bar on Main Street."

BREAKING NEW GROUND

The Drama Club, with its neon sign and loudmouth message board, was a departure from the clandestine nightspots before it.

"South Louisiana has been accepting of gay bars for some time, but in the past they were always off to the side, across the railroad tracks or wherever. You had to know the address just to find the place," Drama Club bar manager Ronnie Williams said.

The club was also the first to attract a significant number of straight customers, who would often stop by just to experience the novelty of being in a gay bar or to take in one of its drag shows. The club's slogan invited customers to "bring yo mama and yo drama."

Only one gay bar, Kicks, had managed to stay open longer. It was open for 11 years, starting in the early 1990s; it closed after Drama Club opened.

Keeping Drama Club open was not always easy. Shortly after it opened, a dispute between two customers led to a raid by armed Alcohol, Tobacco and Firearms agents.

"We came very close to closing," Chestnut said. "I heard from authorities that they intended to close the club down, because the powers at be did not want us here. I was not going to have that — we have a right to do businesses just like anyone else."

The club eventually made a peaceful arrangement with local law enforcement. But during the raid, patrons were confronted with automatic weapons and made to stand outside the club, in full view of cars passing by on North Hollywood Road, eroding the sense of security and privacy that many customers depend on.

"After the raid, there was almost nobody in the bar," Chestnut said. "But we persevered. Little by little people starting coming back."

He said, "I think Drama Club did a very good job bringing Houma into the 21st century. We brought the whole community forward."

'A WHOLE NEW WORLD'

Gay bars were once social lifelines in small towns, but the Internet has augmented options for gay people growing up away from big cities.

"When I was growing up, you had to go out to a gay bar to meet people," Williams said. "Now, I meet gay people everywhere I go — in line at Wal-Mart, on the street — who I have never seen in this bar before."

Mixing of gay and straight crowds has also become more common, and new bars are competing by offering flashy lights and an increasingly upscale atmosphere.

Less than a half a mile away from the Drama Club, the Main Street Lounge has enjoyed growing crowds almost every week since it opened on Halloween night. It is financed by Ray Cheramie, who had previously owned Back Tracks, a gay-only club that closed in the mid-1990s.

The interior of the new lounge is bold and bright. Modern artwork adorns the walls, and laser lights pulsate over a small dance floor.

The Drama Club was known for welcoming straight patrons, who also make up a significant portion of the customer base at Main Street.

"On any given night, 40 or 50 percent of our customers are straight," Cheramie said. "We are a gay bar, definitely, but we don't want to restrict our image by labeling ourselves."

Main Street Lounge features the drag queen parties that the Drama Club was famous for, but Cheramie also plans karaoke and pool nights and Monday Night Football specials in the fall.

The two bars had similar impulsive starts. Cheramie had been living in New Orleans when a friend suggested he open a bar in Houma. He was driving down Main Street, saw a "for sale" sign, called the number and inquired.

Less than three months later, the lounge was had speakers, lights, fresh furniture and bathrooms.

The flashy, clean-cut interior is designed to appeal to a broader crowd, Cheramie said.

"Main Street Lounge is a much different place than Drama Club," Chestnut said. "It is a much smaller lounge. Drama Club is a big, huge club. It requires a ton of overhead."

At Drama Club, dancers and drag queens performed on a wide stage backed by velvet curtains and high-top tables, disco balls turned and the DJ stood in an enclosed booth overhead.

Main Street Lounge features leather chairs and lounge tables. The DJ is in the middle of the dance floor, and LED lights glow inside and outside.

Last week, Cheramie opened a reconstructed patio behind the bar. It faces Bayou Terrebonne, and he plans to install water fountains below.

After the drag show ended Feb. 14, straight couples, gay couples, white, black and Native American customers took to the dance floor.

DJ Clarence Denenea blasted a mix of Deep South hip hop, top 40s hits and electronic dance music.

Several black girls joined a clan of gay men in a twerk-off in one corner, gyrating to New Orleans bounce rapper DJ Jubilee. Meanwhile, a middle aged man courted a professional-looking woman wearing sequins and high heels.

"It's always a party in here," Carvell said. "Ray always does things to keep the place fresh. He worked in New Orleans and hired bartenders who worked on Bourbon Street. There's always new people coming in and out. Even people from New Orleans will come down here to party in Houma."

Cheramie joined the Valentine's Day revelry, bouncing behind the bar while throwing rose petals onto customers like confetti.

"The Drama Club is what gay bars used to be," Carvell said. "You come to Main Street, and it's a whole new world."

Buffalo rebranding itself as hockey mecca

BUFFALO, N.Y. -- Amid the maze of scaffolding and the diesel-engine rumble of construction taking place immediately outside the Buffalo Sabres' downtown arena, Dave Ogrean didn't need to see the finished product to envision HarborCenter's transformational potential for the city and hockey.

To Ogrean, USA Hockey's executive director, the Sabres-backed facility represents the future of the sport he oversees.

"This is going to become a mecca of sorts," Ogrean said during a recent visit to Buffalo. "I don't even think they know yet everything that they might do. But the potential is enormous."

In a rustbelt city renowned for chicken wings and harsh winters, Buffalo is poised to add something more substantial to its reputation by branding itself as a hockey destination.

HarborCenter, named so because of its proximity to Buffalo's redeveloping harbor front overlooking Lake Erie, is a $172 million hockey and entertainment complex being privately funded by Sabres owner Terry Pegula.

It is the Pennsylvania natural gas magnate's gift to the city he adopted since purchasing the Sabres three years ago, and it's a project that falls in line with Pegula's objective of raising hockey's profile across America.

Once completed in the spring of 2015, HarborCenter will feature two rinks taking up much of the sixth and seventh floors of the building, 11 locker rooms, a state-of-the-art 3,200-square-foot training facility, a hockey academy that will include classroom and meeting spaces, plus a 200-room hotel — all of which will be connected to the Sabres' home, First Niagara Center.

Having three NHL-sized rinks linked together, along with a training center, leads Ogrean to call HarborCenter a first-of-its-kind U.S. hockey facility, and has prompted him to strengthen USA Hockey's ties with the Sabres.

"This is going to be a complex unlike any other," Ogrean said. "I think this is a city where we are going to be coming back more and more frequently."

USA Hockey has already pegged Buffalo to host its annual All-American Prospects game in each of the next two years. Ogrean also indicated Buffalo will be a prime contender to host numerous other events, including the 2018 World Junior Championships.

The city had already been on USA Hockey's radar after the 2011 world juniors in Buffalo drew more than 330,000 fans, the tournament's largest turnout on U.S. soil.

The NHL has also taken notice.

Last month, Commissioner Gary Bettman told The Associated Press that, because of HarborCenter, the league is seriously considering the Sabres' pitch to relocate the NHL's annual pre-draft scouting combine from Toronto to Buffalo.

"Listen, it's an extraordinary investment in both Buffalo and hockey," said Bettman. "We have been extraordinarily fortunate to have Terry Pegula come in because, not only is he investing in the Sabres, he's investing in hockey, and he's investing in the community with HarborCenter."

Though Detroit bills itself as "Hockeytown," Buffalo continues to hold firm as one of America's stronger hockey hotbeds.

Buffalo has traditionally ranked as one of the nation's top-five TV viewing markets.

The city's proximity to hockey-enamored Canada, also serves as an ideal bridge to hockey. That was particularly evident three years ago, when tens of thousands of Canadians flocked to Buffalo to attend the 11-day world junior tournament.

HarborCenter has the potential to further capitalize on that connection by luring teams from across the border to come and play, something not lost on Buffalo's business community.

"We really are hitching our wagon to the powerhouse economy that is the Canadian market in Toronto, and hockey is one of these commonalities," Buffalo-Niagara Partnership President and CEO Dottie Gallagher-Cohen said. "Other than beer, one of the big things that joins us is hockey. So anything that positions Buffalo as America's hockey capital reinforces the relationship we want to build with Canada. ... I believe the Pegula project is just more glue that will help connect those things."

That is certainly the intention of HarborCenter President John Koelmel.

Aside from HarborCenter serving as the new home of Canisius College's Division I hockey program, Koelmel anticipates the facility will host events — tournaments, seminars and clinics — on a year-round basis.

"We talk about destination, development and impact. The destination itself will have a tremendous impact," Koelmel said. "We haven't been able to get people to come and stay, spend their money and spend their time. We're building this so they'll do more than drive by."

HarborCenter's construction comes at a time when Buffalo is showing signs of a turnaround. The city is turning into a medical hub with a large research campus being built at the north end of downtown. And HarborCenter is going up around an area where work is already being done to restore parts of Erie Canal as a tourist attraction.

And now comes hockey.

"I don't have a catchphrase for it yet, but that's where I use 'All hockey paths will lead through Buffalo,'" Koelmel said. "I really think we have a chance to establish ourselves as a real hub in the hub-and-spokes world of hockey."

FCC Won't Ask Journalists To Explain Themselves After All

hide captionCritics told Federal Communications Commission Chairman Tom Wheeler his agency's proposed news media study would threaten press freedom.

Susan Walsh/AP

It may not be in full retreat, but the Federal Communications Commission certainly seemed to be in a major strategic withdrawal from a plan that has caused a political firestorm: a study that would have asked journalists and media owners how they decide what is and isn't news.

Conservative lawmakers, talk-show hosts and bloggers had attacked the study as a threat to freedom-of-the-press rights in the First Amendment. That the FCC was starting small, with a pilot project in Columbia, S.C., hardly mattered.

Opponents raised the specter of Big Brother regulators posing intrusive questions in newsrooms. There was apparently plenty of outrage to spare after the Internal Revenue Service fiasco involving that agency's misbegotten review of political groups that sought tax-exempt status.

But it wasn't just conservatives who expressed doubts. You could even find raised eyebrows at a progressive publication like The Atlantic.

The FCC attempted to reassure Congress and others that it was merely trying to gather information for a report it owes Congress on how easy or hard it is for small businesses and entrepreneurs to take on established media companies.

But the "trust us" approach almost never works in Washington. So the FCC decided to punt.

"Last week, [FCC] chairman [Thomas] Wheeler informed lawmakers that the commission has no intention of regulating political or other speech of journalists or broadcasters and would be modifying the draft study," said FCC spokesperson Shannon Gilson in a statement. "Yesterday, the chairman directed that those questions be removed entirely.

"To be clear, media owners and journalists will no longer be asked to participate in the Columbia, S.C. pilot study. The pilot will not be undertaken until a new study design is final," Gilson's statement said.

What Gilson didn't say, but what is very likely, is that given the controversy there's likely to be much more vetting with the political powers-that-be of whatever new study the FCC comes up with.

Transcripts show Fed at times slow to grasp crisis

WASHINGTON -- The Federal Reserve agonized in 2008 over how far to go to stop a financial crisis that threatened to cause a recession and at times struggled to recognize its speed and magnitude.

"We're crossing certain lines. We're doing things we haven't done before," Chairman Ben Bernanke said as Fed officials met in an emergency session March 10 and launched never-before-taken steps to lend to teetering Wall Street firms, among a series of unorthodox moves that year to calm investors and aid the economy.

"On the other hand, this financial crisis is now in its eighth month, and the economic outlook has worsened quite significantly."

The Fed on Friday released hundreds of pages of transcripts covering its 14 meetings during 2008 — eight regularly scheduled meetings and six emergency sessions. The Fed releases full transcripts of each year's policy meetings after a five-year lag.

The 2008 transcripts cover the most tumultuous period of the crisis, including the collapse and rescue of investment bank Bear Stearns, the government takeover of mortgage giants Fannie Mae and Freddie Mac, the fateful decision to let investment bank Lehman Brothers fold in the largest bankruptcy in U.S. history and the bailout of insurer American International Group.

For all its aggressive steps in 2008, the transcripts show the Fed failing at times to grasp the size of the catastrophe they were dealing with. Bernanke and his top lieutenants often expressed puzzlement that they weren't managing to calm panicky investors.

As late as Sept. 16, a day after Lehman Brothers filed for bankruptcy, Bernanke declared, "I think that our policy is looking actually pretty good."

The Fed declined at that meeting to cut its benchmark short-term rate. Yet just three weeks later, after the Fed had rescued AIG, Bernanke felt compelled to call an emergency conference call. In it, he won approval for a half-point rate cut.

Early in the year, some Fed officials had yet to appreciate the gravity of the crisis. In January, Frederic Mishkin, a Fed governor, missed an emergency conference call because he was "on the slopes."

"I think in Idaho somewhere," Bernanke said.

The crisis had been building for months. In the Jan. 21 conference call, Bernanke rallied support for a deep cut in interest rates. He warned that market turmoil reflected investors' concerns that "the United States is in for a deep and protracted recession."

Bernanke apologized for convening the call on the Martin Luther King holiday. But he felt the urgency of the crisis required the Fed to act before its regularly scheduled meeting the next week. It approved a cut of three-fourths of a percentage point in its benchmark for short-term rates.

The transcripts show that Bernanke enjoyed the support of Janet Yellen, who succeeded him this month as Fed chair, for the unconventional policy actions he was pushing. At the time, Yellen was head of the Fed's San Francisco regional bank.

At an Oct. 28-29 Fed meeting, Yellen noted the dire events that had occurred that fall. With a nod to Halloween, she said the Fed had received "witch's brew of news."

"The downward trajectory of economic data," Yellen went on, "has been hair-raising — with employment, consumer sentiment, spending and orders for capital goods, and homebuilding all contracting."

Market conditions had "taken a ghastly turn for the worse," she said. "It is becoming abundantly clear that we are in the midst of a serious global meltdown."

Yellen had downgraded her economic outlook and was predicting a recession, with four straight quarters of declining growth. The recession was later determined to have begun in December 2007. It lasted until June 2009.

The Fed's moves failed to prevent colossal damage from the crisis. The U.S. economy sank into the worst recession since the 1930s. But Fed officials and many economists have argued that without the Fed's aggressive actions, the Great Recession would have been more catastrophic, perhaps rivaling the Great Depression.

"I really am extremely nervous about the current situation," Mishkin said at a July meeting. "We've been in this now for a year, but, boy, this is deviating from most financial disruptions or crisis episodes in terms of the length and the fact that it really hasn't gotten better. We keep on having shoes dropping."

Even as they grappled with a floundering financial system and an economy in freefall, Fed policymakers wondered how history would judge them. Bernanke, acknowledging that they were operating in "the fog of war," said in late October: "I would defend what we've done in terms of the general direction, acknowledging that execution is not always perfect and that communication is not always perfect."

But Bernanke wrestled with doubts, too. At an April meeting, he said: "I play Jekyll and Hyde quite a bit and argue with myself in the shower and other places."

By the end of 2008, the Fed had made seven rate cuts, leaving its benchmark short-term rate on Dec. 16 at a record low near zero. It remains there today. Many economists don't think the Fed will start raising rates until late 2015 at the earliest.

The Fed that year also launched other never-before-tried programs to get money flowing to parts of the economy that were desperate for credit.

Yet Fed policymakers fretted over the unprecedented steps being taken. Thomas Hoenig, head of the Fed's Kansas City regional bank, expressed concern during a July 24 conference call that the Fed might continue its extraordinary lending to Wall Street firms into 2009.

"This seems to take us away from, rather than toward, backing out — and I really am a bit concerned about that," Hoenig said.

Bernanke countered that the Fed was "not in this business indefinitely ... But at the moment, conditions do not seem considerably better, and I don't think that at this moment we really should be reducing our support to the market."

Jeffrey Lacker, head of the Richmond Fed, worried at the March 10 meeting about accepting mortgage bonds as collateral for Fed loans to Wall Street firms. "This proposal crosses a bright line that we drew for ourselves in the 1970s in order to limit our involvement in housing finance," Lacker said.

But Timothy Geithner, then head of the New York Fed, countered that the Fed was a stronger institution than in the '70s. "We need to be flexible and creative in the face of what are really extraordinary challenges," Geithner said.

On Oct. 7, Bernanke called an emergency conference call to seek approval for a half-point cut in the benchmark rate. Five other central banks in Europe and Canada had agreed to take similar steps.

"It's just a sign of the extraordinary times that we're currently living through," Bernanke said. "Virtually all the markets — particularly the credit markets — are not functioning or are in extreme stress."

The proposal was unanimously approved. Some Fed officials worried that it still wouldn't be enough.

"I don't think that anything that we do today — cutting the funds rate 50 basis points or whatever — is going to make the next couple of months in terms of the overall economy any less painful," said Charles Plosser, head of the Philadelphia Fed.

Plosser said it was important for the Fed to invoke broader economic concerns to justify its actions beyond the turmoil in the stock market.

One Fed official asked Bernanke if the sharp rate cut meant further cuts would occur at forthcoming meetings.

"I feel rather unconfident about predicting the path of rates six months in the future," Bernanke replied, "because I'm not quite sure what is going to happen tomorrow at this point."

AP Business Writers Christopher S. Rugaber and Marcy Gordon contributed to this report.

Endo Health to pay $192.7M in gov't settlement

Endo Health will pay almost $193 million to resolve claims that it improperly marketed the shingles treatment Lidoderm for unapproved uses like treating lower back pain.

The Malvern, Pa., drugmaker will pay $171.9 million in civil false claims settlements largely to the federal government, with $34.2 million from that total going to 47 states and the District of Columbia. Endo also agreed to pay $20.8 million as part of a deferred prosecution agreement.

Federal prosecutors said Friday that Endo Health Solutions Inc. marketed the drug for unapproved uses between 2002 and 2006.

Endo said it was pleased to resolve the issue, and it has programs in place to help it comply with the agreements. The drugmaker had already set aside $194 million to cover settlement costs.

Doctors can prescribe medicines for any use, but drug makers cannot promote them in any way that is not approved by the U.S. Food and Drug Administration.

Shares of Endo Health climbed 2.3 percent, or $1.78, to $78.21 Friday afternoon, while broader trading indexes were largely flat. The stock had reached a new 52-week high of $78.28 earlier in the session.

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Transcripts show Fed at times slow to grasp crisis

WASHINGTON (AP) — The Federal Reserve agonized in 2008 over how far to go to stop a financial crisis that threatened to cause a recession and at times struggled to recognize its speed and magnitude.

The Fed on Friday released hundreds of pages of transcripts covering its meetings during 2008 — the most tumultuous period of the crisis. This includes the government takeover of mortgage giants Fannie Mae and Freddie Mac, the fateful decision to let investment bank Lehman Brothers collapse and the bailout of insurer American International Group.

For all its aggressive steps in 2008, the transcripts show the Fed failing at times to grasp the size of the catastrophe. Bernanke and his top lieutenants often expressed puzzlement that they weren't managing to calm panicky investors.

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How Ukraine's economic decay fueled protests

FRANKFURT, Germany (AP) — The battle in Kiev is largely a fight for the country's economic future.

Ukraine's protesters want to pry their country away from Russian influence and move closer to the European Union. Following the collapse of the Soviet Union, the Ukraine sank in a swamp of corruption, bad government and short-sighted reliance on cheap gas from Russia.

Protests broke out in November after President Viktor Yanukovich backed out of signing an agreement with the EU that would have brought the economy closer in line with European standards. After violent protests resulted in scores of deaths, the government and the opposition signed an agreement on Friday.

It is unclear whether it will succeed in providing a stable government that can heal the rifts and improve the economy.

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Mexico to trump Japan as No. 2 car exporter to US

CELAYA, Mexico (AP) — Mexico is on track to become the United States' top source of imported cars by the end of next year, overtaking Japan and Canada in a manufacturing boom.

The boom is raising hopes that Mexico can create enough new jobs to pull millions out of poverty as northbound migration slows sharply, but critics caution that most of the new car jobs are low-skill and pay too little.

Mexico's low and stagnant wages have helped kept the poverty rate between 40 and 50 percent since the passage of the North American Free Trade Agreement two decades ago.

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US home sales plunged 5.1 percent in January

WASHINGTON (AP) — Sales of existing U.S. homes plummeted in January to the worst pace in 18 months.

Cold weather, limited supplies of homes on the market and higher buying costs held back purchases.

The National Association of Realtors said Friday that sales fell to a seasonally adjusted annual rate of 4.62 million units last month. That was down 5.1 percent from the December pace. The sales rate declined 5.1 percent over the previous 12 months.

The flagging sales suggest a deceleration from the momentum for much of 2013, when 5.09 million homes were sold, the most in seven years.

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FDA looks to reboot nonprescription drug system

WASHINGTON (AP) — The Food and Drug Administration is looking to revamp its system for regulating hundreds of over-the-counter drugs, saying the decades-old process is not flexible enough to keep pace with modern medical developments.

In a federal posting Friday, the agency announced a two-day meeting next month to discuss overhauling the system.

Regulators have acknowledged that the process has proven extremely time-consuming and leaves many common pain relievers, cough medicines and even sunscreen formulas technically under review. The system also is unable to address the need to quickly add warning labels about emerging safety risks.

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Widespread weather delays cap lousy travel week

DALLAS (AP) — In a fitting end to a miserable week for travelers, airlines have canceled more than 1,200 flights and another 6,000 are running late.

The airlines blamed storms along the East Coast and high winds in the country's interior on Friday.

At New York's LaGuardia Airport and in Philadelphia, about one-fourth of flights were scrubbed and many more delayed. At O'Hare Airport in Chicago, where there was a high-wind advisory, nearly one-third of takeoffs were late.

This week, 6,000 flights have been canceled and 35,000 delayed, according to FlightAware. That's a record since the government started keeping track in 1987-1988. And there's still a month of winter left.

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Under Armour extends speedskating suit deal

NEW YORK (AP) — Athletic gear maker Under Armour Inc. has signed an eight-year deal with U.S. Speedskating to provide uniforms despite controversy over the suit it provided the team at the Sochi Olympics.

Under Armour spent years developing a new speedskating suit that debuted during the Olympics but flopped. U.S. speedskaters didn't medal and some blamed the suit. The team reverted to an older Under Armour suit, but results have not yet improved.

The company said Friday it is ready to try again and will outfit the U.S. speedskating team for the next two Winter Olympics.

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By The Associated Press=

The Dow Jones industrial average fell 29.93 points, or 0.2 percent, to close at 16,103.30. The Standard & Poor's 500 index fell 3.53 points, or 0.2 percent, to 1,836.25. The Nasdaq composite dropped 4.13 points, or 0.1 percent, to 4,263.41.

Benchmark U.S. crude for April delivery fell 55 cents to close at $102.20 a barrel on the New York Mercantile Exchange. Wholesale gasoline fell 1.8 cents to close at $3.003 a gallon. Natural gas rose 7.1 cents to close at $6.135 per 1,000 cubic feet. Heating oil fell 4.4 cents to close at $3.039 a gallon. Brent crude, a benchmark used to set prices for international varieties of crude used by many U.S. refineries, was down 45 cents to close at $109.85 a barrel in London.

As 2008 economic disaster loomed, Yellen first for aggressive action, transcripts show

By Kevin G. Hall McClatchy Newspapers

WASHINGTON -- When the financial crisis deepened in September 2008, Federal Reserve leaders initially viewed it as a problem that would reverse itself. Janet Yellen, now the new Fed chair, was the earliest voice for aggressive action, transcripts released Friday show.

Like her colleagues, Yellen didn’t foresee the huge spike in unemployment or a profound recession around the corner in the aftermath of the bankruptcy of Lehman Brothers, the event that triggered the economic crisis of 2008. But within weeks, she recognized that the threat as more than storm clouds and became the most forceful advocate of what would become efforts to stimulate the economy through unconventional means.

The legacy of those efforts remains today, as it falls to Yellen to pull back on the massive bond-buying program that was used to drive interest down in an effort to spur more consumption and lending. That program is still unfolding at a pace of $65 billion a month, and Yellen must find a way to rein it in that’s least disruptive to nervous financial markets. It’s a fitting challenge, since the transcripts of the Fed’s 2008 meetings show her as a vocal advocate for an aggressive approach almost from the outset.

The Fed releases the transcripts of its meetings annually on a five-year delay, and those from 2008 were highly anticipated, since they would provide the first unvarnished view of discussions that occurred as the financial markets were in a state of near collapse.

Among the details the transcripts reveal is that while the bank’s governors discussed at length how the Fed’s actions might affect the markets, there was no discussion of what political impact those actions might have, even though a contentious presidential election was less than two months away, one that would put a little-known senator from Illinois, Barack Obama, in the White House. That’s likely to prove meaningful in the current congressional debate over whether to audit the Fed’s monetary policymaking meetings.

When the interest-rate setting Federal Open Market Committee, a rotating panel of Fed bank presidents and governors, met on Sept. 16, 2008, a day after investment bank Lehman Brothers filed for bankruptcy and the very day the Fed rescued insurance behemoth American International Group, there were worries about market turmoil but no predictions of the deep economic downturn that followed.

Yellen was then president of the San Francisco Federal Reserve; she’d become Fed vice chair in 2010 and then the first woman to lead the Fed this month. She argued forcefully against cutting interest rates, predicting the economy would show “a little more strength in 2009” after a slowdown in the second half of 2008.

Some Fed governors were less optimistic. Kansas City Fed President Thomas Hoenig predicted that “we are going to have many lessons from this. Part of the problem has been very lax lending and, obviously now, weakness in some of the (regulatory) oversight.”

Elizabeth “Betsy” Duke, a Fed governor and former private-sector banker, seemed the most aware of what would follow. Talking about the housing market, she noted that loans originated by mortgage brokers, instead of banks themselves, “are 100 percent loss (sic).” Of states that’d later be the epicenter of the housing crisis, she said, “Florida is a bottomless hole – speculation combined with insurance problems. In Arizona, so much land was available that they can’t find a bottom there.”

Then-Fed Chairman Ben Bernanke, hailed for his leadership during the crisis, closed that meeting by suggesting it was likely that the economy was already in recession. But he argued against another interest rate cut, and the rate stayed at 2 percent.

That all changed just three weeks later, when the Federal Open Market Committee met on a conference call Oct. 7. The members were asked to get behind a plan in which the Fed, the European Central Bank and four other central banks would announce a surprise coordinated drop in lending rates, a positive shock for markets and the economy.

By then, Bernanke had determined it was “more than obvious that we have an extraordinary situation,” adding that virtually all markets “are not functioning or are in extreme stress.” The deteriorating conditions demanded a rate cut, he said.

“I should say that comes as a surprise to me. I very much expected that we could stay at 2 percent for a long time,” he told the other members of the committee.

During the call, Yellen emerged as the committee’s strongest voice for even more action.

“In my opinion, a larger action could easily be justified and is ultimately likely to prove necessary,” she said.

Three weeks later, at a regularly scheduled two-day meeting, members for the first time began discussing quantitative easing, the controversial program under which the Fed purchased government and mortgage bonds in an attempt to simulate what would be negative interest rates.

Jeffrey Lacker, the president of the Federal Reserve Bank in Richmond, Va., raised the issue, asking if the Fed might soon be at the point where that step would need to be taken. Bernanke answered, “We’re pretty close, yes.”

Yellen again she repeated her call for more aggressive action.

“Given the seriousness of the situation, I believe that we should put as much stimulus into the system as we can, as soon as we can,” she concluded.

Bernanke offered a gloomy outlook. He told colleagues that the post-World War II record for recessions was 16 months in 1980-81, and “I think we have a reasonable chance to break that record.” He also said the largest swing ever in the unemployment rate was 3.6 percentage points and “I think we have a chance to come close to that number.”

The Great Recession’s swing was actually a record 6.4 percent points from peak to bottom. It would last officially 19 months.

Before a vote to cut rates further, the chairman spelled out what historians may come to call the Bernanke doctrine.

“We do have to continue to be aggressive. We have to continue to look for solutions,” the Fed chief said. “Some of them are not going to work. Some of them are going to add to uncertainty. I recognize that critique. I realize it’s a valid critique. But I don’t think that this is going to be a self-correcting thing anytime soon.”

In November, the Fed began aggressively buying mortgage bonds, the precursor to what later was trillions in government and mortgage bond purchases.

Then in December, the Fed cut its closely followed lending rate to zero, where it remains more than five years later.

BC-Noon Oil

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Review: Picking up Glass, Google style

NEW YORK -- The first time I was in the proximity of Google Glass was nearly a year ago at a technology conference. The people wearing the device were like cyborg members of an elite club I couldn't join.

Now, it's my turn.

I picked up my Glass on Jan. 24 at the Google Glass "base camp," a bright, airy loft on the eighth floor of Manhattan's Chelsea Market. The location serves as a product showroom and a place where users can schedule appointments to learn how to use the device.

Walk in and you are invariably greeted by a smiling receptionist wearing Google Glass. There are Glass displays on the wall, people walking around wearing Glass, and mirrors so you can see what you look like in Glass. There was a steady inflow of Glass newbies like me who were there to pick up their device for the first time or to get help with problems.

I couldn't help drawing sci-fi and Star Trek comparisons while at the same time feeling like a clumsy luddite for doing so. What if this is just how things are going to be?

Glass is still in what Google calls an "explorer" phase, which means it's not yet available to the general public. That's coming later this year. For now, it's an ever-expanding club as more and more people are invited, either by Google or people who already have Glass, to buy one for $1,500.

The thought of buying Glass with my own money never crossed my mind. Rent comes first. Beach vacations second. And despite being a tech reporter, pricey gadgets rarely make it into my top 10.

The Associated Press purchased a pair, and I plan to share my impressions in a series of stories in the coming months. I'm interested in the device's technical specifics, but more excited by the idea of exploring the cultural and social reactions to Glass. Will I be embarrassed to wear it in public? Do I look like a jerk? A cyborg? Is it actually less distracting in a conversation than a smartphone, as Glass evangelists insist? Will it change the world, like the iPhone did? Is it really worth a month's rent?

The first time I saw Glass outside of tech circles was in early January, near my office. Two 20-something guys in skinny jeans were standing in front of me at a crosswalk. The Glass one of them wore was sky blue, and he was nodding his head up and down in an exaggerated fashion.

"Okay Glass, what time is it?" he asked. "Okay Glass, what time is it?"

I looked at my iPhone to check the time. The traffic light changed. I wondered if he ever found out what time it was.

After placing my order online, I could have opted to have Glass mailed to me, but picking it up at a basecamp meant a friendly Glass-wearing Googler was there to watch me open the box and explain the basics of setting up and using the device.

Google Glass is meticulously packed in a simple, white box that evokes Apple's clean, Zen-like design sensibilities. There are no plastic clamshells or cords dangling everywhere. Lift the lid and you see your Glass covered in translucent parchment paper.

"It will all be OK," the package would say if it could talk.

Glass doesn't mean glasses. The device sits above your eye at roughly brow level, so you gaze up with you right eye to see its tiny screen. My guide showed me how to adjust the nose pads and the screen so looking into it feels a bit like looking into a rearview mirror.

There are three ways to interact with Glass: touch, speak or move. To turn it on, you press a round button that, when you're wearing the device, sits behind your right ear. Press it again to turn it off.

The screen automatically goes to sleep after a few seconds, which makes sense. The device has about 45 minutes of battery life while in continuous use. To wake it up, you can tap the touchpad with your finger or nod your head up and down. Head-nodding mystery solved.

My cheerful Glass guide showed me how to connect Glass to my Google account, and walked me through MyGlass, which is basically your Web, Android or iOS portal for the device. It lets you add apps (called "Glassware"), connect to Wi-Fi networks and, in case you misplace your device, see where it is on a map. It all seemed pretty straightforward, and I was eager to get my Glass on my forehead and explore the world through a new lens, so I bid my guide goodbye.

When I ordered Glass, I opted to add a pair of detachable sunglass lenses that Google provides at no cost. The company also offers prescription lenses and designer frames for $225 and $150, respectively. Thinking I'd be less conspicuous, I walked out of Chelsea Market with Glass on, shades attached. Nothing to see here, just a pair of sunglasses.

Next up: Baby steps.

Reach Barbara Ortutay on Twitter at http://bit.ly/1p2a5Je . Email her at bortutay@ap(dot)org with questions or comments about Google Glass.

U.S., rail industry agree on safety improvements for crude oil trains

WASHINGTON -- The Department of Transportation outlined several steps Friday aimed at improving the safety of crude oil in trains after a series of derailments sparked concern from state and local officials.

Among other measures, trains carrying crude oil in older, less reinforced tank cars will slow to 40 mph through 46 major cities.

Railroads will also conduct more frequent inspections of tracks over which crude oil shipments move, improve those trains’ braking capabilities and install new sensors along major routes to detect train defects.

The department also said it would work with railroads to determine the safest routing options for crude oil, examine emergency response capabilities and address the concerns of individual communities on a case-by-case basis.

The measures are voluntary and will be implemented by July 1.

“Every day we expect continuous safety improvement,” Joseph Szabo, who heads the Federal Railroad Administration, told McClatchy.

Transportation Secretary Anthony Foxx laid out the steps in a letter to the Association of American Railroads, the industry’s Washington advocacy group.

“Nothing is more important for all involved than safety,” he wrote.

Edward Hamberger, the rail industry group’s president and CEO, said in a statement that the industry would continue “to find even more ways to reinforce public confidence in the rail industry’s ability to safely meet the increased demand to move crude oil.”

According to Hamberger’s group, the volume of crude oil moving by rail increased to 400,000 cars last year from fewer than 10,000 in 2008. Rail has captured the bulk of crude shipments from North Dakota’s booming Bakken shale region, in large part because pipelines simply don’t go where the oil is needed and take a long time to construct.

In a statement, Roxanne Butler, a spokeswoman for BNSF Railway, said the railroad supports the steps DOT outlined Friday. On Thursday, BNSF, the continent’s leading hauler of crude oil in trains, said it would buy 5,000 new, better-reinforced tank cars for crude. Billionaire investor Warren Buffett bought the Fort Worth, Texas, company in 2009.

“The rail industry plays a critical role in helping the U.S. and North American economies achieve energy independence,” Butler said, “and this crude oil safety initiative will enable that to continue to develop with even greater safety.”

The rapid development of Bakken oil forced the use of tens of thousands of tank cars, called DOT-111A, that have long been identified as vulnerable to breaches in derailments. Regulators concluded last month that Bakken oil, extracted through hydraulic fracturing, is more flammable than conventional oils.

The results have proved destructive and deadly. In July, 47 people were killed when a train loaded with Bakken crude derailed and exploded in Lac-Megantic, Quebec. More recent derailments in Alabama, North Dakota and Pennsylvania resulted in intense fires, large spills or both. Officials from mayors to members of Congress have demanded that federal regulators respond to the new danger their communities face.

“These standards are good news for communities near rail lines, but there is more work to do,” said Rep. Rick Larsen, D-Wash., who’s on the House Transportation and Infrastructure Committee.

The committee will hold a hearing Wednesday on rail safety. Officials from the Transportation Department, the rail and petroleum industries and the National Transportation Safety Board will testify.

Friday’s announcement does not address the safety of the DOT-111A tank cars. The Pipeline and Hazardous Materials Safety Administration at the Transportation Department is working on new standards for them, but a final rule won’t likely come for another year.

Szabo, the federal railroad administrator, said that tank cars are “one small piece of the puzzle.”

The NTSB has noted their failures in multiple accidents over the years and recommended that they be retrofitted with extra protective shielding or replaced with new cars.

Meanwhile, BNSF and other railroads are moving in that direction. Canada’s two largest railroads last week said they would impose additional fees on shipments of crude oil in older DOT-111A tank cars.

At least two refiners have said they will only ship crude oil in newer tank cars.

The First Lady Wants to See How You Move

Four years ago, the First Lady launched Let’s Move!, a nationwide initiative to create a healthier future for our kids and families. Last night, on "The Tonight Show Starring Jimmy Fallon," she kicked off a week-long celebration to mark how far we’ve come:

"One of the things we’ve realized over four years is that there’s a new norm going on. When we took this issue over, there were a lot of people who were critical; that you couldn’t really talk about obesity, that it might not be an issue. But now, over the past four years, communities have been changing. So the day of a child’s life is different from beginning to end. Daycare centers are changing what they feed kids; they’re getting them up and moving. Schools have new lunch standards. After-school programs are getting kids engaged."

To mark the four-year anniversary, the First Lady is asking people of all ages to show her how they move through their everyday fitness routine, how they are making better food choices, or how they are helping move their community toward new standards of health for our kids. The First Lady even promised an exciting surprise: "The fun thing is, is that if we get enough of a response, we’ll have a little surprise: The President -- and maybe the Vice President -- will show us how they move."

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How to Not Pay Your Bank's ATM Fees: The Hot Wheels Hack

If it were up to me, I’d never touch another dollar bill for as long as I live. Cash is cumbersome, but in the worlds of Craigslist and manual labor, it’s still the best way to pay someone for their goods. The problem? I’m 20 minutes from my closest ATM. Rather than shell out the $3 rival banks want for the pleasure of giving me access to my own money, I have a workaround.

Grocery stores, pharmacies, and big boxes all have two things in common: They offer no-penalty cash back, and they sell Hot Wheels. Most shops with a conscience sell the diecasts for less than a buck, while most grocery stores charge the ludicrous price of $1.50. That’s still less than the transaction charge your bank nails you for. Dash in, grab whichever Hot Wheels you like, ask for $20 back, and you’re out the door with a new toy and the money you need. Flawless victory.

Could you snap up a pack of gum instead? Sure, but I have every Hot Wheels I’ve ever purchased. I can’t say the same for every stick of gum.

Originally published on RoadandTrack.com

Rockets from Syria hit outskirts of Baalbek villages

BEIRUT: Two rockets from Syria landed between the villages of Younin and Sawwaniyeh in near Baalbek, east Lebanon, security sources said. No casualties were reported.

The rockets landed on the outskirts of the two villages, causing only material damage, the sources added.

The rockets were fired from the mountain range that divides Lebanon from Syria and struck near residential areas, they said.

Gucci owner Kering profit nearly wiped out in '13

PARIS -- Kering, the corporate parent behind Saint Laurent couture and Puma streetwear, says profits were nearly wiped out last year by costs associated with disposing of its retail chains Fnac and Redcats.

The company, known until last year as PPR, reported net profit of only 50 million euros ($69 million) last year, down from 1 billion euros in 2012.

The name change is part of the group's plan to focus on high-end fashion and trendy sports brands. It owns the Gucci and Stella McCartney brands as well as surf- and skate- fashion house Volcom.

Kering lost over 800 million euros in 2013 through the sale of home electronics retailer Fnac and other costs of separating itself from Redcats.

It forecast growth in revenue and recurring operating profit in 2014.

Ag census shows boom in farm sales

WASHINGTON -- American agriculture has experienced a boom, with market values of crops, livestock and total agricultural products reaching record highs even as the amount of U.S. farmland declined, according to a new government survey.

Continuing a long-term trend, the number of U.S. farms dropped to 2.1 million in 2012, about a 4 percent drop from five years earlier. But some of the bigger farms got bigger. The average farm grew from 418 to 434 acres.

The state with the most farms: Texas, which saw the number of farms increase slightly over the five years. Still, it lost about 200,000 farmland acres over the same period.

The survey, taken every five years and released Thursday, shows some growth in nontraditional elements of agriculture. While the industry is still overwhelmingly white, there's been a rise in the number of minority-operated farms. And there are more farms in New England and many states in the Mountain West, while that number has declined in many states in traditional farm country.

In Connecticut, for example, the number of farms jumped by 22 percent over the five years.

George Krivda, legislative program manager at the state Department of Agriculture, attributes the increase in part to rising demand for locally grown food. "All of it is great, and it all speaks to the average consumer who's more in touch with where food comes," he said.

All told, U.S. farms sold nearly $395 billion in products in 2012, a third more than five years earlier. That averaged to about $187,000 per farm — or an increase of $52,000 over 2007 totals.

In Montana, Department of Agriculture Director Ron de Yong said crop prices have fallen since 2012. "It's part of the cycle, and we should cycle back up again," he said.

While most of farm country is getting older — the average farmer is 58.3 years old — more people under the age of 34 are trying their hand at farming.

Agriculture Secretary Tom Vilsack says the small boost in the number of younger farmers — around 2 percent — is partly due to increased interest and government support for locally grown foods and a thriving export market. Many younger farmers work at smaller operations, where the good farm economy and a rising consumer interest in where food is grown have helped them.

He said he wants farm country to "be aggressive" about recruiting and retaining younger people, as a third of farmers were older than 65 in 2012.

"The reality is, over time those folks won't be able to continue farming, and the question for all of us is, if they don't, who will?" Vilsack said after the report was released.

Vilsack has made the revitalization of rural America a priority at USDA. As people have moved to suburbs and cities, many communities have increasing poverty and fewer young people to take over family farms. He has also argued that the dwindling population has led to less political clout — made evident by a recent three-year congressional struggle to enact a new farm bill. President Barack Obama signed the bill, which provides farm subsidies and food stamps, into law earlier this month.

"My question is not just who is going to farm, but who is going to defend them?" Vilsack said.

Vilsack said he is most concerned about the survival of middle-sized farms, which declined in the last five years. The number of larger and smaller farms mostly held steady.

He said he believes that decline partly came from a lapse in disaster assistance while Congress haggled over the farm bill, drought in many states and rising feed costs.

Ideally, he said, many of the younger farmers who are working on smaller farms will eventually expand their operations.

One area of growth for agriculture is farms that are minority-operated. The number of farms operated by Hispanics, African-Americans, American Indians and Asians all grew between 2007 and 2012, and the number of Hispanics who were principal operators of farms grew by 21 percent. Still, farm country remains overwhelmingly white — 92 percent of farms are operated by whites, while less than 64 percent of the general population is white and the minority population is growing.

Similarly, only 14 percent of farms are operated by women, and more than 90 percent of those were smaller farms.

The survey also found:

— Most U.S. farms are small: 75 percent had sales of less than $50,000 in 2012.

— New England, Texas, Florida and many states in the Mountain West saw increases in the number of farms and some saw an increase in farmland. Many Midwestern, Southern and mid-Atlantic states saw decreases. Vilsack said much of the growth in those states comes from an increase in specialty crops, mostly fruits and vegetables, that are increasingly popular with consumers.

— The 10 states with the most farms are Texas, Missouri, Iowa, Oklahoma, California, Kentucky, Ohio, Illinois, Minnesota and Wisconsin. Only Ohio is new to the list since 2007.

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Associated Press writers Matt Volz in Helena, Mont., Stephen Singer in Hartford, Conn., and Betsy Blaney in Lubbock, Texas, contributed to this report.

Crude oil steady as US cold underpins demand

The price of oil was little changed Friday, underpinned by demand stemming from arctic weather in the U.S.

Benchmark U.S. crude for April delivery was down 14 cents at $102.61 a barrel at 0825 GMT in electronic trading on the New York Mercantile Exchange. The contract fell 9 cents to close at $102.75 on Thursday.

Brent crude, used to set prices for international varieties of crude, was down 3 cents at $110.27 a barrel.

"Market players are now looking at weather conditions in the U.S., it's quite cold and heating oil demand is getting tighter so that is supporting the crude oil prices," said Tetsu Emori, commodity markets fund manager at ASTMAZ Futures Co. in Tokyo.

He said the inventory of natural gas in the U.S. has also fallen, pushing up the price of the commodity.

On Thursday, oil prices fell after a monthly survey by HSBC found that China's manufacturing, a driver of the global economy, contracted for a second straight month.

But uncertainty about protests in Venezuela, a major U.S. oil supplier, as well as export disruptions in Libya and South Sudan kept a floor under oil prices.

Prices were also steadied by a weekly report from the U.S. Energy Department released Thursday that revealed that oil stockpiles grew about half as fast as expected, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

In other energy futures trading in New York:

— Wholesale gasoline fell 0.3 cent to $3.018 a gallon.

— Natural gas added 17.7 cents to $6.241 per 1,000 cubic feet.

— Heating oil shed 0.4 cent to $3.08 a gallon.

Animal advocates lobby state on pet shop breeders

HARTFORD, Conn. -- Animal protection activists have set their first Connecticut Voices for Animals Day to lobby state lawmakers to ban puppy mills.

The American Society for the Prevention of Cruelty to Animals scheduled lobbying efforts on Friday at the Capitol in Hartford. Advocates want an end to the sale of dogs bred in so-called puppy mills.

Mike Bober, a spokesman for the Pet Industry Joint Advisory Council, said advocates often consider the sale of animals as evidence of inhumane treatment. He says the group unsuccessfully lobbied for more state money to be spent on animal control.

A proposed ban on pet shops selling cats or dogs unless they were from an animal shelter or rescue organization failed last year. The General Assembly instead established a task force that will soon submit recommendations.

Ethiopian worker’s death raises Beirut bombing toll

BEIRUT: An Ethiopian domestic worker wounded in a double car bombing south of Beirut earlier this week died Friday, raising the death toll to 11.

A security source said Tadilish Dista died at Rafik Hariri hospital early Friday from wounds sustained in Wednesday's twin blasts near the Iranian Cultural Center in Bir Hasan.128 people were also wounded in the attack.

Lebanon has been hit by a wave of car bomb attacks linked to the Syrian crisis.

Reports: RBS to cut up to one-quarter of workforce

LONDON -- U.K. media are reporting that taxpayer-backed Royal Bank of Scotland is set to cut up to one quarter of its workforce amid massive restructuring.

The Financial Times and Daily Telegraph newspapers are reporting Friday that cuts of between 20,000 and 30,000 jobs will be announced next week when the bank, which is 80 percent owned by the taxpayer, releases its results.

The reports say the bank will further shrink its investment banking operations and leave overseas businesses in Asia.

Shore Capital Stockbrokers analyst Gary Greenwood says this would make it possible for RBS to become much for focused on U.K. operations and allow investment in new technology.

"Such a strategy is likely to result in a smaller but more efficient, higher return and less risky bank," he said.

Coal company, feds reach $441,000 settlement

PIKEVILLE, Ky. -- An eastern Kentucky coal company and the federal government have reached a $441,000 settlement over unpaid civil penalties accrued over more than three years.

Viper Coal, located in Floyd County, will pay the bill to clear off its books 259 Mine Safety and Health Administration citations accumulated from January 2008 through August 2011.

The citations were for a variety of safety violations and violations of the federal Mine Act.

Federal prosecutors sued Viper Coal in July after sending 21 letters demanding the company pay the penalties.

The two sides filed the agreed judgment Thursday in U.S. District Court in Pikeville.

BNSF plans to upgrade tanker fleet after accidents

BILLINGS, Mont. -- BNSF Railway Co. said it intends to buy a fleet of 5,000 strengthened tank cars to haul oil and ethanol in a move that would set a higher benchmark for safety within an industry that's seen multiple major accidents.

The voluntary step by the Texas-based subsidiary of Warren Buffett's Berkshire Hathaway, Inc. comes as railroads in the U.S. and Canada are under intense pressure to improve safety for hazardous materials shipments.

There's been a string of recent train accidents involving oil and ethanol, punctuated by a crude shipment that derailed in Quebec last July and killed 47 people.

A boom in domestic oil drilling and rising ethanol production spurred a dramatic increase in shipments of the materials by rail. Much of it is being hauled by an old fleet of some 78,000 tank cars that are prone to split during accidents.

Thursday's announcement marks a potential major step in addressing that problem. However, it would not mean those older cars would go away, and there's already a two-year backlog on new tank car construction.

In announcing that it will ask manufacturers to submit bids for the new cars, BNSF indicated it was unwilling to wait for the U.S. Department of Transportation to finalize pending regulations on improved tank cars.

The company said it hoped to accelerate the transition to a new generation of safer tank cars and give manufacturers a head start in designing them as federal officials consider changes to the current standards.

Typically, railroads don't own the tank cars they pull, making BNSF's proposal somewhat unusual. But whether it will spur other shipping companies or railroads to follow suit was uncertain, said Tom Simpson, president of the Railway Supply Institute, a trade association representing tank car manufacturers and owners.

"Everyone has the right to go to a tougher standard," Simpson said. "We'll see how it plays out."

BNSF spokeswoman Roxanne Butler said the request for bids on new cars reflects the company's "commitment to crude-by-rail growth and improving the overall safety of crude transportation."

In addition to the older tank cars that are prone to fail, there are about 14,000 cars being used that were built according to a more stringent standard established by the industry in 2011. BNSF's proposal would go further still.

Among the added safety features being sought by the company are ½-inch thick steel shields that would go on either end of the tank cars to help prevent them from cracking open during accidents. The new cars also would have pressure-relief valves capable of withstanding an ethanol-based fire and a tank body made of thicker steel than existing cars.

Butler said she had no time frame on when the tank cars could be built and put into use.

A spokeswoman for the Association of American Railroads said the group does not comment on individual railroad business decisions, but urged federal officials to finalize work on new tank car regulations as soon as possible. Spokeswoman Holly Arthur said that would "provide certainty to the marketplace."

Museum plans to display sinkhole-damaged cars

Curious to see the damage that a huge sinkhole inflicted on eight classic cars at the National Corvette Museum? The Kentucky attraction plans to give visitors a close look.

Museum spokeswoman Katie Frassinelli says the cars will go on display before they're taken to Michigan for repairs. She says the museum has heard from people wanting to see the damage.

The vehicles were consumed when the earth opened up last week beneath a display area when the Bowling Green museum was closed. No injuries were reported.

Frassinelli says work to retrieve the cars nearest the surface could start in a couple of weeks.

She says the museum plans to display the damaged cars from April through July.

More cars will be added when recovered. Chevrolet is in charge of restoring the cars.

Fatfat reaffirms Future-LF alliance

BEIRUT: The alliance between the Lebanese Forces and the Future Movement still holds, despite differing opinions over the new Cabinet, MP Ahmad Fatfat said Friday.

“We are allies with the Lebanese Forces," Fatfat reaffirmed following a two-hour meeting with LF leader Samir Geagea in the latter’s Maarab residence. "It was necessary to reconsider the current political stage after the formation of the new government, which we had hoped the Lebanese Forces would have been a part of."

Fatfat added that his Future Movement respects the LF's decision to stand firm against taking part in the new government with Hezbollah.

After initially refusing, the Future Movement joined the new Cabinet with Hezbollah, while the LF announced it would not join an all-embracing government unless Hezbollah withdraws from Syria.

Fatfat went on to say that the policy statement should be based on the Baabda Declaration, affirming Lebanon’s neutrality toward regional conflicts, especially the war in Syria. The policy statement should also align with the priorities laid out by the National Charter unveiled by the Maronite Church earlier this month, which calls for holding the presidential elections on time and urges political rivals to place national interests above personal ones.

Fatfat ruled out the tripartite formula of “the Army, the people, and the resistance” included in previous policy statements and insisted on by Hezbollah. Several figures from the Future bloc would support the withdrawal of the coalition’s ministers from the Cabinet if the policy statement were to adopt this formula, he said.

“ Hezbollah has realized that the party's intervention in Syria is imposing great threats on it and its popular base,” said Fatfat. “We are at the doorstep of a historical stage that compels us to act responsibly and take straightforward stances.”

“If there is no real intention to safeguard Lebanon from its crises then the national unity cabinet doesn't exist,” he warned.

California farmers brace for little or no water

FRESNO, Calif. -- Federal officials plan to announce Friday how much water they can release this year through a vast system of rivers, canals and reservoirs, but Central Valley farmers on the front lines of California's historic drought expect to get little, if anything.

This time of year the U.S. Bureau of Reclamation carefully measures the mountain snow pack, rainfall and reservoir levels all over California to determine the water available for farmers, fish migrations and communities.

Gayle Holman of the Fresno-based Westlands Water District, the nation's largest supplier of water for agricultural use, said the district has been preparing farmers for grim news that they'll receive no water this year from the federal government.

"They're all on pins and needles trying to figure out how they're going to get through this," Holman said, adding that Westland's 700 farmers will choose to leave fields unplanted, draw water from wells or pay top dollar for water that's on the market.

Last year, Westland farmers received just 20 percent of what is considered normal from the federal government's Central Valley Project, while federal water releases for endangered fish remained at 100 percent, causing frustration among farmers.

Gov. Jerry Brown last month declared California's drought emergency, and both state and federal officials have pledged millions of dollars to help with water conservation and food banks for those put out of work by the drought.

California officials who manage the State Water Project, the state's other vast water system, have already said they won't be releasing any water for farmers, marking a first in its 54-year history.

Steve Chedester, executive director of the San Joaquin River Exchange Contractors Water Authority in Los Banos, said he anticipates receiving 40 percent of the full water allotment from the federal government to irrigate 240,000 acres of farmland. That's because the Water Authority dates back to the 1870s and has senior water rights over many other contractors and districts.

In a longstanding agreement, the Water Authority is supposed to receive at least 75 percent, and if it doesn't, Chedester said the federal government has to find authority water from alternatives sources.

Farmers he serves understand the reality of California's drought means it's going to be tough to find enough water for them, Chedester said. "They're taking a very practical approach," he said. "If it's not there, it's just not there."

Mountain Valley Spring Water touts expansion

HOT SPRINGS, Ark. -- Hot Springs-based Mountain Valley Spring Water has been adding employees and increasing its revenue.

Mountain Valley Chairman and CEO Breck Speed says the company added 40 workers in the last year and has seen revenue grow by 38 percent in that span.

Speed says the company has a number of ways to reach customers, including co-packaging for companies around the country that want their own logos on glass or plastic bottles.

The Sentinel-Record reports (http://is.gd/A0wZKR ) that the company is adding new product lines. Speed says the new products are in line with what the company produced earlier in its history.

Mountain Valley sold ginger ale and other beverages about 100 years ago. Speed says sparkling water is also an important growth area for the company.

Angry farmers call off protest at Bangkok airport

BANGKOK -- Angry farmers driving hundreds of tractors have called off a threatened protest at Thailand's main airport after the embattled government agreed to make long-delayed payments on last year's rice crops by next week.

The farmers vowed Friday to stage the protest next week if the promise is broken. It's unclear how the debt-ridden government will secure money for the farmers. Nationwide, they're owed about $3 billion as part of a botched rice subsidy scheme.

The farmers' protest is one of many headaches for Prime Minister Yingluck Shinawatra, who appears increasingly powerless against a wider anti-government movement pressing for her resignation.

A protest at Bangkok's Suvarnabhumi Airport has deep resonance in Thailand, with anti-government demonstrators shutting down the facility for over a week in 2008, stranding hundreds of thousands of travelers.

Bhutan, Nissan partner on electric cars

TOKYO -- The Himalayan kingdom of Bhutan and Nissan are partnering on electric cars, with the Japanese automaker's Leaf being chosen for the government fleet and taxis.

Under a deal announced Friday, Nissan will help Bhutan achieve its goal of becoming a zero-emissions nation.

Bhutan, with a population of 720,000, produces and exports hydro-electricity. But it's eager to reduce its dependence on oil imports.

The Leaf is the world's best-selling electric car, selling a cumulative 100,000 since going on sale in late 2010.

Nissan plans to set up Leaf charging machines in Bhutan. Nissan has agreements with more than 100 nations, states and cities globally to promote electric cars. Nissan wants to study how its electric vehicle business fits with emerging markets rich in clean energy like Bhutan.

G-20 finance ministers to focus on global growth

SYDNEY -- The market turmoil sparked by the Federal Reserve's steps toward removing the U.S. economy from life support is expected to be a top agenda item when finance chiefs from the world's biggest economies meet in Sydney this weekend.

The Group of 20 finance ministers and central bankers meeting is a precursor to the main G-20 summit that will be held in the Australian city of Brisbane in November. The meeting's host, Australian Treasurer Joe Hockey, said the Federal Reserve's decision to begin scaling back its stimulus will be a key part of discussions, along with reinvigorating global growth.

In December, the U.S. central bank said it would start reducing its monthly Treasury and mortgage bond purchases, intended to keep interest rates low and support economic recovery in the aftermath of the global recession. Investors responded by pulling out of emerging markets and funneling their money to the U.S. in hopes of higher returns, which contributed to sharp falls in stock markets and the currencies of some developing countries.

The G-20, which represents around 85 percent of the global economy, is made up of both wealthy nations and emerging economies from the United States to Saudi Arabia and China.

In a paper prepared for this weekend's meeting, the International Monetary Fund warned advanced economies to avoid prematurely rolling back their stimulus programs. But Hockey has defended the Fed's decision, saying the U.S. has a responsibility to do what is best for itself.

"There is no doubt that the Fed needs to be aware of these international implications in detail, and be mindful of them," the Australian treasurer said Thursday during an Institute of International Finance conference in Sydney. "But ultimately, the Federal Reserve has to operate in a manner that is consistent with its domestic mandate."

Federal Reserve Board Chair Janet Yellen, who was sworn in Feb. 3 to succeed Ben Bernanke, will travel to Sydney to attend her first G-20 meeting as head of the U.S. central bank. In her first public comments since taking the job, she said the Fed would take "further measured steps" to reduce its bond buying if the U.S. economy continues to improve.

The key focus of the meeting, however, will be exploring ways to restore global growth amid indications that the world's largest economies are once again slowing. Hockey, who says boosting private investment in infrastructure would help stimulate growth, wants G-20 leaders to commit to a global growth target higher than the International Monetary Fund's forecast, which is 3.7 percent this year.

In a letter to G-20 members obtained by The Associated Press, U.S. Treasury Secretary Jacob Lew boosting global growth and creating more jobs will be the G-20's top priority. Lew is attending the meeting and plans to meet with Hockey and finance ministers for Germany, Japan, Brazil and Turkey.

"Despite signs of improvement, global growth remains uneven and well below potential, while unemployment remains stubbornly high in many places," Lew told reporters in Sydney on Friday. "The growth strategies that we will be developing must be ambitious in substance and address both deficiencies in near-term demand as well as longer-term economic challenges."

Another key item will be the failure of the U.S. to pass the 2010 IMF reform package. Last month, Congress rejected a funding request from the Obama administration that would have doubled the IMF's lending capacity to about $733 billion and increased the voting power of emerging economies.

"To secure global economic stability into the future, the United States must support IMF reform now," Hockey said earlier this month in a speech to the Lowy Institute, a Sydney-based foreign policy think tank. "As a longstanding friend of the United States, we can say emphatically that this reform is very much in the interests of the United States as well as that of its friends."

The international lending agency's governing board gave a green-light to the overhaul in 2010, and approval by Congress is the last remaining roadblock for it to take effect. Lew has vowed to get the reform approved, saying last month "we will get it done."

The G-20 members are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea, Russia, Saudi Arabia, South Africa, Turkey, the U.S. and the European Union.

Associated Press Economics Writer Martin Crutsinger in Washington contributed to this report.

Beleaguered Sony counting on new game machine

TOKYO -- PlayStation stands out among the long list of famous Sony brands as one that hasn't faded or succumbed to a nimbler competitor. Months after hitting global markets, the latest version of the video-game console is going on sale at midnight in Tokyo, a big shift from times when Sony was ascendant enough to launch flagship products in Japan first.

The PlayStation 4's much awaited arrival in Sony Corp.'s home market is the first time Japan did not get a major Sony game machine ahead of other markets. With much riding on the PS4's success, the commercial advantages of targeting overseas markets outweighed the sentimental pull of a home town launch.

The PS4, Sony's first video-game console in seven years, went on sale in the U.S. and Europe in November. Still, a big crowd of Japanese game fans are expected at the countdown ceremony in Tokyo's fashionable Ginza district.

Sony officials say more time was needed to prepare game software attractive for Japanese, but analysts say Japan wasn't a priority for Sony's game division.

The PS4 has proved a hit so far, selling 4.2 million units last year, outpacing rival Microsoft Corp.'s Xbox One at 3 million.

But analysts say Sony, headed to a 110 billion yen ($1.08 billion) loss for the fiscal year ending March, needs more than a successful game console to reverse its dimming fortunes.

The company rose from humble beginnings in 1946, with just 20 employees, to become one of the first Japanese companies to go global as the country emerged from the debris of its defeat in World War II to become a manufacturing powerhouse.

But in recent years, out of Sony's long list of well-known brands — Walkman, Vaio, Bravia, Cyber-shot, Handycam, Aibo — only PlayStation has managed to hold its edge. Its share price is today just one third of its 2008 value.

The Walkman portable audio player lost out to the iPod from Apple Inc. over the last decade, as it fell behind in adopting the MP3 format.

Sony's Bravia TV section, despite boasting the company's top notch image technology, has not made money for 10 years straight, despite repeated promises from executives to make it profitable. The Aibo robot dog was scrapped in 2006, under a massive turnaround program, despite an uproar from fans.

Earlier this month, Sony announced it was selling its Vaio personal computer operations in the latest sign of its problems. It is keeping Bravia but making it a subsidiary company.

It's also cutting its global workforce by about 3 percent or 5,000 people by the end of March 2015, as it restructures its PC, television and other businesses. Some 3,500 of the job losses will be overseas and 1,500 in Japan. That comes on top of the 10,000 jobs cuts Sony announced over the previous year.

"I am just not sure anymore if there is anything Sony makes that can be counted on to produce growth," said Motohisa Ohno, a technology expert who heads Tokyo-based NewProject, which consults companies on software, Internet branding and other topics.

"I can only hope it is working on something we all know nothing about. It's so sad to have to say this."

Ohno, underlining a common sentiment, said the trick is to create a product that pioneers a new market, the way the Walkman did when it first came out.

When the Walkman was invented in 1979, listening to music with earphones on-the-go wasn't common practice. It was shown off in the first demonstration by a skateboarder.

Sony has fallen behind competitors from Asian countries to which Japan was once an economic and manufacturing success to emulate. Samsung Electronics Co. of South Korea has emerged dominant in household electronics including TVs and newer product categories such as tablets and smartphones.

In ultra-HD TVs called "4K," the Chinese makers are quickly catching up.

Even the future of the PlayStation 4 is not assured because game players are switching increasingly to mobile devices. The switch to mobile games is especially pronounced in Japan, where Sony has never had to take the threat from Xbox One seriously.

If PS4 sales trail off, that would be a problem. Much of the console's profits come from game software.

Yasunori Tateishi, who has written books on Sony's fall from grace, fears that eventually Sony will be reduced to its entertainment business such as music, movies and perhaps games.

The biggest problem is that Sony President Kazuo Hirai has been selling pieces of the company, instead of investing in the future as did his predecessors, including founder Akio Morita, he said.

Hirai has repeatedly said Sony's smartphones, tablets and imaging technology are still scoring success, and its engineers are working hard to come up with dazzling products. He is promising a turnaround through his reforms.

That hasn't stopped him from being peppered with questions from investors who have heard engineers are quitting in droves, endangering Sony's ability to come up with innovation. Hirai has not directly addressed such questions.

"Mr. Hirai has not scripted out a scenario for the future," Tateishi said, stressing that PlayStation 4 will not be enough to save Sony's electronics. "It's just a game machine."