TUESDAY, JULY 13, 2010


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A bipartisan push to the finish line FINANCIAL BILL


paid for without new taxes.” Snowe issued her own state-


NEARS PASSAGE


GOP’s Snowe, Brown pledge crucial votes


by Brady Dennis Two key Republicans said Mon-


day that they plan to support a far-reaching bill to overhaul fi- nancial regulations, all but ensur- ing that the landmark legislation will sail through the Senate in coming days.


GOP Sens. Olympia J. Snowe of


Maine and Scott Brown of Mas- sachusetts, whose unexpected election in January threatened to derail the White House’s top legis- lative priorities, on Monday com- mitted the votes that could give President Obama a high-profile victory in his quest to overhaul the nation’s financial regulations. The landmark legislation now seems likely to land on the presi- dent’s desk within days, giving Democrats an opportunity to pro- claim during the coming election season that they acted to rein in the recklessness of Wall Street. “While it isn’t perfect, I expect to support the bill when it comes up for a vote,” Brown said in a statement. “It includes safeguards to help prevent another financial meltdown, ensures that con- sumers are protected, and it is


ment later in the day. “After thor- oughly reviewing the 2,315-page financial regulatory reform con- ference bill during the July 4 work period, I intend to support pas- sage of the legislation,” she said. “To ensure we avoid another fi- nancial catastrophe . . . it is im- perative that we implement an ag- gressive overhaul of the American financial regulatory system.” Should the bill pass in coming


days as expected, it would be tout- ed as a significant triumph for Democrats. But in the fickle Sen- ate, its success has hinged on a handful of New England Repub- licans — including Snowe, Brown and Maine’s Susan Collins — who flexed political muscle to win con- cessions that altered the bill. Brown in particular remained noncommittal in recent weeks, demanding a series of changes that Democratic leaders quickly, if reluctantly, accepted in their zeal to win his critical vote. Lawmak- ers agreed to an exemption pushed by Brown, for example, that would allow banks to contin- ue to invest at least a small amount of their capital in hedge funds and private equity. The measure would prohibit a bank from placing more than 3 percent of its capital in such investments. Later, after Brown balked at a plan to pay for the financial over- haul with a fee on large banks and hedge funds, Democratic leaders returned to the drawing board. They dropped the fee and instead


decided to end the federal govern- ment’s bank bailout program a few months early and apply some of the projected savings toward the cost of the bill. In addition, they agreed to raise premiums paid by commercial banks to the Federal Deposit In- surance Corp., whose fund serves as a safety net for consumers whose banks fail. Only banks with more than $10 billion in assets would pay the higher premium. By playing hard to get and


eventually bucking his own party, the freshman senator exasperated both Democrats and Republicans, but he got nearly everything he wanted. Any hard feelings — at least from the Democratic side — seemed forgotten Monday. “With the support of Senators Olympia Snowe, Susan Collins and Scott Brown, Wall Street re- form is a step away from heading to the president’s desk,” said Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee. “These colleagues demonstrated how bipartisan- ship is supposed to work.” The question no longer is


whether the bill will pass in the Senate, but when. Part of that de- pends on the legislative math. When the Senate passed an ear- lier version in May, Brown was one of four Republicans to sup- port it, along with Snowe, Collins and Charles E. Grassley of Iowa. Two Democrats, Maria Cant- well of Washington and Russell Feingold of Wisconsin, initially opposed the legislation, saying it


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didn’t go far enough. Since then, Cantwell has stated


that she will vote for the amended bill, saying she is pleased with changes that toughened provi- sions for overseeing the trading of financial derivatives. Grassley has remained noncommittal and has expressed concerns about raising FDIC premiums and about shift- ing funds out of the bank bailout, known as the Troubled Assets Re- lief Program. Collins has said she is inclined to vote for the final bill. If Democrats remain united and win votes from Brown, Cant- well, Collins and Snowe, they will eclipse the filibuster-proof 60 votes needed to send the bill to Obama. If necessary, they could wait until the Democratic gover- nor of West Virginia names a re- placement for Sen. Robert C. Byrd, who died last month. Like Snowe, Brown said that he


reviewed the massive bill over the Fourth of July recess and that he appreciated the efforts to shape it more toward his liking, especially by removing the assessments on banks and hedge funds. True to form, however, he said his vote doesn’t imply total satisfaction. “That doesn’t mean our work is


done,” Brown said. “Further re- forms are still needed to address the government’s role in the fi- nancial crisis, including signifi- cant changes to the way Fannie Mae and Freddie Mac operate.” dennisb@washpost.com


Staff writer Jia Lynn Yang contributed to this report.


Obama holds fast to clean energy


Report focuses on industry’s potential to generate jobs


by Michael D. Shear and Steven Mufson


President Obama is looking again to convince voters that the billions of dollars he has pumped into embryonic clean-energy firms will build a better economy even if they generate only a mod- est number of jobs before the middle of the decade. The White House compares the


effort to the government’s invest- ment in the Internet several dec- ades ago, and Obama will high- light startups that make electric batteries for future fleets of zero- emissions cars and trucks. In a report due Wednesday, the president’s economists say the loan guarantees and grants ex- tended under the Recovery Act — matched by billions of dollars in private investment — have the po- tential to “stand up” new indus- tries that could employ thou- sands of Americans by 2015. They estimate that each dollar in feder- al investment translates to $3.50 of total investment. On Thursday, for the second time in two weeks, Obama will visit a battery-making plant, this time in Michigan, and Cabinet of- ficials will fan out to similar facil- ities across the country. “There’s a view that crisis


sometimes provides opportuni- ties,” said Jared Bernstein, the chief economist for Vice Presi- dent Biden. “One of the things we have to do with Recovery Act funds is plant the seeds for on- going opportunities. We could have had the same conversation about the Internet several dec- ades ago.”


But it is too early to say wheth- er early bets on electric vehicles, solar power and “smart” electric grids will create the booming in- dustries the White House envi- sions. Politically, it is all but cer- tain that the benefits of those ef- forts will not be visible in time to make voters feel better about the economy before the fall elections. Cars and trucks powered solely


by electric batteries remain un- proven in the mass market, and efforts to build a smarter power grid are opposed by 11 Northeast- ern governors, who say they are leery of subsidizing a $160 billion electric transmission line from their states deep into the popula- tion centers of the Midwest.


Job prospects Even Obama’s Democratic al-


lies say the investment in a clean- energy future is unlikely to pro-


FDIC wins broad authority to probe banks


Federal bank regulators have agreed to give the Federal Depos- it Insurance Corp. unlimited au- thority to investigate banks, clar- ifying the agency’s power after questions about it during the fi- nancial crisis. The agreement between the FDIC, the Federal Reserve and the Treasury Department clearly spells out the FDIC’s authority to make special examinations of banks. It updates a 2002 agree- ment, which blocked the FDIC from examining banks that were deemed financially healthy by


EARNINGS Alcoa returns to profit with stronger sales


Alcoa said Monday that it post- ed a second-quarter net income of $136 million, reversing a year- earlier loss of $454 million, as aluminum sales picked up in commercial vehicles, packaging and construction markets. The Pittsburgh manufacturing giant said revenue rose to $5.19 billion from $4.24 billion. The results topped estimates from analysts surveyed by Thom-


MEDIA


Playboy, going private? Playboy founder Hugh


Hefner offered to take his struggling company pri- vate, but the owner of rival magazine Penthouse talked of a competing bid, raising the possibility that Hefner could lose control of the empire he launched in 1953. Playboy Enterprises said


Monday that Hefner has backing from a a private- equity firm to buy the shares of the media com- pany that he doesn’t al- ready own and take the company private in a deal that values the organiza- tion at $185 million. — Associated Press


son Reuters. The U.S. aluminum producer said improved demand helped offset a 1 percent drop in alumi- num prices. Because of its varied customer base, from beverage can makers to airplane builders, Alcoa’s quarterly performances can give insight into developing economic trends.


— Associated Press


their primary regulators, among other restrictions. The FDIC, which takes over banks that fail, has said it lacked access to information needed to evaluate banks’ risk. Since the start of last year, 230 U.S. banks have failed amid mounting losses on loans and the toughest eco- nomic climate since the 1930s. The failures have sapped billions of dollars out of the deposit insur- ance fund, which fell into the red last year. Its deficit stood at $20.7 billion as of March 31. — Associated Press


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KEVORK DJANSEZIAN/ASSOCIATED PRESS


MERGERS & ACQUISITIONS Aon Corp. to buy Hewitt in $4.9 billion deal


Insurance conglomerate Aon Corp. said Monday that it has agreed to buy human-resources firm Hewitt Associates for $4.9 billion in a cash-and-stock deal that would nearly triple the size of its consulting business. The deal, if approved by reg-


JONATHAN NEWTON/THE WASHINGTON POST Ron Heath of Standard Solar prepares to install a solar power module on a home in Marriottsville, Md. The green scene


Administration officials are visiting firms that have received Recovery Act money and other funds for green energy projects. Wednesday  Housing and Urban Development Secretary Shaun Donovan launches an electric vehicle recharging station project in New York. Thursday  President Obama visits Holland, Mich., for the groundbreaking of a battery manufacturing plant.  Agriculture Secretary Tom Vilsack visits Richmond’s Baker Equipment, which converts gasoline-powered vehicles to propane.  Labor Secretary Hilda L. Solis visits


vide a lot of relief to the unem- ployed. “There are good reasons to cre-


ate green jobs, but they have more to do with green than with jobs,” said Alan Blinder, a Prince- ton University economics profes- sor and former Federal Reserve vice chairman. “There is no rea- son on Earth to think that spend- ing money on green jobs is more effective than spending on other things.” Like many economists, Blinder


says that imposing a carbon tax that would take effect just after the economic downturn would do more to create green jobs. But given the dim prospects of


a carbon tax, administration offi- cials say that providing grants


 Allan Sloan: The fairy tale of “green energy.” A10


Celgard, a Charlotte firm that makes lithium-battery parts.  Ed Montgomery, White House auto industry liaison, visits a General Motors plant in White Marsh. Friday  Nancy Sutley, chair of the White House Council on Environmental Quality, visits the SBE battery component plant in Barre, Vt.  Energy Secretary Steven Chu visits a Delphi facility in Kokomo, Ind., that makes electric-vehicle parts.  Deputy Transportation Secretary John Porcari visits East Penn Manufacturing, a battery maker in Lyon Station, Pa.


and loans is the best way to move forward. Top political aides inside the West Wing are convinced that the early success of the battery in- vestments and other green-en- ergy grants will help Obama sell the Recovery Act to voters. They point out that nine new


electric battery manufacturing plants have been funded from $2.4 billion in Recovery Act mon- ey — but only four of them will be operating before 2011. By the end of Obama’s first term, the United States should have the capacity to produce 20 percent of the world’s advance electric batteries, they estimate, up from just 2 percent in 2009. Officials could not give a figure for current capacity. There is so much demand for the clean-energy tax credits that the program is oversubscribed. The White House is asking Con-


gress for an additional $5 billion. “There’s solar facilities that will mean 1,000 jobs here. Another plant there, that’s another 300 jobs. These ultimately add up,” said senior White House adviser David Axelrod. “And that’s how you rebuild the economy and that’s how you build the future.” Axelrod, who shapes the presi-


dent’s message, said countries such as China and India are bet- ting big on clean-energy technol- ogy, making it imperative that the United States does too. And he said Obama’s efforts contrast sharply with those of Republi- cans, who opposed the Recovery Act. “They voted against these in- vestments in clean-energy tech- nology,” Axelrod said of the GOP. “These may be bets, but they are very, very smart and educated bets.”


Rocky starts But there have already been


rocky starts for some projects. A $535 million federal loan guaran- tee to a California solar panel firm, Solyndra, was supposed to support the construction of a manufacturing plant that would directly and indirectly employ about 1,000 people. The firm has begun construc- tion on new manufacturing lines, employing 3,000 people and hir- ing about 25 people a month. But the company does not expect to turn a profit until 2013, and re- cently had to scramble for enough cash to operate and expand. shearm@washpost.com mufsons@washpost.com


ulators, is the company’s largest ever. Aon said it will pay $50 per Hewitt share, a 41 percent premi- um over Hewitt’s closing price Friday of $35.40. It plans to in- tegrate Hewitt with its existing


consulting and outsourcing op- erations and create a new unit, Aon Hewitt. Russ Fradin, chair- man and chief executive of He- witt, will assume those posts at Aon Hewitt. Hewitt, based in Lincolnshire, Ill., is one of the world’s biggest human resources consulting and outsourcing companies with over $3 billion in annual revenue and 23,000 employees in 32 coun- tries.


— Associated Press Faster Forward ROB PEGORARO Excerpt from washingtonpost.com/fasterforward Consumer Reports declines to recommend iPhone 4


Consumer Reports, one of the most trusted publications in America, has conducted its own research into the reception problems with Apple’s new iPhone 4 and concluded that it cannot recommend the device. The magazine found that the reception problems, which occur when the phone is held with a palm or a finger covering a gap between its external antennas, go beyond the software flaw Apple cited last week. Mike Gikas described the findings in a post on the Web site of Consumer Reports, published by Consumers Union: “We reached this conclusion after testing all three of our iPhone 4s (purchased at three separate retailers in the New York area) in the controlled environment of CU’s radio frequency (RF) isolation chamber. In this room, which is impervious to outside radio signals, our test engineers connected the phones to our base-station emulator, a device that simulates carrier cell towers. We also tested several other AT&T phones the same way, including the iPhone 3G S and the Palm Pre. None of those phones had the signal-loss problems of the iPhone 4.” CR declared that “Apple needs to come up with a permanent — and free — fix for the antenna problem before we can recommend the iPhone 4.” The magazine also challenged Apple’s explanation of the problem — “totally wrong” software that overstates the strength of AT&T’s


wireless signal. “Our findings call into question the recent claim by Apple that the iPhone 4’s signal-strength issues were largely an optical illusion caused by faulty software that ‘mistakenly displays 2 more bars than it should for a given signal strength.’ ” As a temporary fix, CR endorsed a remedy that my colleague Michael


Rosenwald suggested weeks ago: covering the gap with some non-conducting tape. CR also plans to research which iPhone protective cases can prevent this problem.


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