TOKYO – Japan’s central bank is escalating the fight against deflation by offering more cheap loans to banks.

In a split decision, the Bank of Japan’s policy board decided Wednesday to double the amount available under its short-term lending program to 20 trillion yen ($221 billion) from 10 trillion yen.

Introduced in December, the three-month loans at a fixed rate of 0.1 percent are intended to nourish credit flows and reduce longer-term interest rates.

The seven-member board voted unanimously to keep its key interest rate at a super lean 0.1 percent. In a statement, it pledged to maintain an “extremely accommodative financial environment” for the time being. The central bank has not changed the overnight call rate target since December 2008, when the policy board lowered it from 0.3 percent.

The central bank’s expected move came amid growing political pressure to take stronger action to combat falling prices, which threaten to undermine Japan’s patchy economic recovery.

“The Bank recognizes that it is a critical challenge for Japan’s economy to overcome deflation and return to a sustainable growth path with price stability,” the central bank said. “To this end, the Bank will continue to consistently make contributions as a central bank.”

The world’s second biggest economy grew at an annualized pace of 3.8 percent in the fourth quarter thanks to robust exports, but that has done little to bolster demand or wages at home. Japan’s key consumer price index, which fell for the 11th straight month in January, is expected to keep declining for the next two years.

The troubling outlook separates Japan from growing economies elsewhere in Asia, where central banks are winding down stimulus measures and tightening monetary policy low interest personal loan. Interests rates are rising in Australia and Malaysia, while central banks in China and India are reducing liquidity to control inflation.

Meanwhile, Japan struggles with a familiar foe. The country has battled periods of deflation since the “Lost Decade” in the 1990s. Lower prices may seem like a good thing, but it hamstrings economic growth by shrinking company profits, sparking wage cuts and causing consumers to postpone purchases. It also magnifies debt burdens.

The government’s ability to counter deflation with increased spending is constrained because of Japan’s ballooning debt, the highest among industrialized countries and rising. Prime Minister Yukio Hatoyama has proposed a record $1 trillion budget for the next fiscal year starting April, which will require the government to issue some 44.3 trillion yen ($492 billion) in bonds.

With limited room to maneuver on the fiscal policy front, Finance Minister Naoto Kan has repeatedly called on the central bank to do more. He wants deflation gone by the end of the year and has suggested establishing an inflation target.

The latest move may appease the government for now. But it falls short of a meaningful fight against deflation, economists say.

Richard Jerram, chief economist at Macquarie Securities in Japan, described a temporary increase in liquidity or even a modest interest rate cut as “irrelevant.” Japan needs aggressive, government-led changes to shock prices higher, he writes in a recent report.

“Japan is in such a deep deflationary hole that marginal policy changes are likely to be ineffective,” he said.

Bank of Japan expands lending to fight deflation

NEW YORK (MarketWatch) — Bank stocks led the financial sector lower Monday morning, ahead of details contained in a Democratic bank-reform bill to put before a key Senate panel.

The Keefe Bruyette & Woods Bank ETF shed 0.4%, which helped drive the broader exchange-traded fund Financial Select Sector SPDR down more than 0.5%. Shares of KeyCorp and Citigroup led all decliners.

On the upside, American International Group Inc. and Legg Mason topped the gainers column payday advance loans.

After months of efforts to craft bipartisan legislation, Senate Banking Committee Chairman Chris Dodd, D-Conn., plans to introduce a revised version of sweeping bank reform legislation on Monday, most likely without the support of the panel’s Republican members.

Financial Stocks: U.S. financial stocks slip in early trading

It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.

The report, compiled by an examiner for the bank, now bankrupt, hit Wall Street with a thud late Thursday. The 158-year-old company, it concluded, died from multiple causes. Among them were bad mortgage holdings and, less directly, demands by rivals like JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.

But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as “materially misleading” accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.

Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

“Unbeknownst to the investing public, rating agencies, government regulators, and Lehman’s board of directors, Lehman reverse engineered the firm’s net leverage ratio for public consumption,” Mr. Valukas wrote.

Mr. Fuld was “at least grossly negligent,” the report states, adding that Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

Lehman executives engaged in what the report characterized as “actionable balance sheet manipulation,” and “nonculpable errors of business judgment.”

The report draws no conclusions as to whether Lehman executives violated securities laws. But it does suggest that enough evidence exists for potential civil claims. Lehman executives are already defendants in civil suits, but have not been charged with any criminal wrongdoing.

A large portion of the nine-volume report centers on the accounting maneuvers, known inside Lehman as “Repo 105.”

First used in 2001, long before the crisis struck, Repo 105 involved transactions that secretly moved billions of dollars off Lehman’s books at a time when the bank was under heavy scrutiny.

According to Mr. Valukas, Mr. Fuld ordered Lehman executives to reduce the bank’s debt levels, and senior officials sought repeatedly to apply Repo 105 to dress up the firm’s results. Other executives named in the examiner’s report in connection with the use of the accounting tool include three former Lehman chief financial officers: Christopher O’Meara, Erin Callan and Ian Lowitt.

Patricia Hynes, a lawyer for Mr. Fuld, said in an e-mailed statement that Mr. Fuld “did not know what those transactions were — he didn’t structure or negotiate them, nor was he aware of their accounting treatment.”

Charles Perkins, a spokesman for Ernst & Young, said in an e-mailed statement: “Our last audit of the company was for the fiscal year ending Nov. 30, 2007. Our opinion indicated that Lehman’s financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles (GAAP), and we remain of that view payday loans for self employed.”

Bryan Marsal, Lehman’s current chief executive, who is unwinding the firm, said in a statement that he was evaluating the report to assess how it might help in efforts to advance creditor interests.

Repos, short for repurchase agreements, are a standard practice on Wall Street, representing short-term loans that provide sometimes crucial financing. In them, firms essentially lend assets to other firms in exchange for money for short periods of time, sometimes overnight.

But Lehman used aggressive accounting in its Repo 105 transactions: it appears to have structured transactions such that they sold securities at the end of the quarter, but planned to buy them back again days later. These assets were mostly illiquid real estate holdings, meaning that they were hard to sell in normal transactions.

The effect of the accounting was to artificially and temporarily lower the firm’s debt levels to hit certain targets, making the firm look healthier than it really was.

In a series of e-mail messages cited by the examiner, one Lehman executive writes of Repo 105: “It’s basically window-dressing.” Another responds: “I see … so it’s legally do-able but doesn’t look good when we actually do it? Does the rest of the street do it? Also is that why we have so much BS [balance sheet] to Rates Europe?” The first executive replies: “Yes, No and yes. :)”

Mr. Valukas was appointed by the United States Trustee in the case in January 2009 to investigate the causes of the Lehman bankruptcy, as well as to find out if any fraud or misconduct took place.

Mr. Valukas writes in the report that “colorable claims” could be made against some former Lehman executives and Ernst & Young, meaning that enough evidence existed that could lead to the awarding of damages in a trial. He added that Lehman’s directors were not aware of the accounting engineering.

By his reckoning, Lehman managed to “shed” about $39 billion from its balance sheet at the end of the fourth quarter of 2007, $49 billion in the first quarter of 2008 and $50 billion in the second quarter. At that time, Lehman sought to reassure the public that its finances were fine — despite pressure from short-sellers like the hedge fund manager David Einhorn.

Executives, including Herbert McDade, who was known internally as the firm’s “balance sheet czar,” seemed aware that repeatedly using Repo 105 was disguising the true health of the investment bank. “I am very aware … it is another drug we r on,” he wrote in an April 2008 e-mail cited by the examiner’s report. At other times, he is described as calling for a limit to the number of Repo 105 transactions.

By May and June of 2008, a Lehman senior vice president, Matthew Lee, wrote to senior management and the firm’s auditors at Ernst & Young flagging “accounting improprieties.” Neither Lehman executives nor Ernst & Young alerted the firm’s board about Mr. Lee’s allegations, according to the report.

Mr. Fuld is described in the examiner’s report as denying having knowledge of the Repo 105 transactions, and there is no evidence that he directed subordinates to make use of that aggressive accounting. (He did recall issuing several directives to reduce the firm’s debt levels.) But Mr. McDade is reported as telling Mr. Fuld about using Repo 105 to achieve that goal.

Lehman Brothers Hid Borrowing, Examiner Says

Warner Chilcott PLC said Monday that its fourth-quarter loss narrowed as its acquisition of Procter & Gamble’s global branded prescription drug unit added to revenue.

The Irish company, which makes women’s health and dermatology products, recorded a loss of $9.5 million, or 4 cents per share, in the three months that ended Dec. 31. That compares with a loss of $115.7 million, or 46 cents per share, in the same quarter of 2008.

Revenue more than doubled to $686.2 million.

Not counting one-time items like a $127 million amortization charge, adjusted earnings were 65 cents per share for the quarter.

The company also recorded a $33.5 million gain in the quarter from the sale of certain inventories to Leo Pharma in connection with a deal it completed in the third quarter of 2009.

Analysts polled by Thomson Reuters expected, on average, earnings of 60 cents per share on $588.1 million in revenue business cards.

In October, Warner Chilcott completed a $3.1 billion buyout of P&G’s global branded prescription drug unit. The company gained a portfolio of products worth about $2.3 billion in annual revenue including blockbuster osteoporosis drug Actonel.

Products from P&G contributed a total of $351.8 million in revenue growth in the fourth quarter. Aside from Actonel, that included the ulcerative colitis treatment Asacol and Enablex, a treatment for overactive bladders.

Warner Chilcott also said selling, general and administrative expenses more than quintupled in the quarter, to $277.5 million, due in part to costs tied to the P&G deal.

The company’s shares fell 67 cents, or 2.5 percent, to close at $26.55.

New products help Warner Chilcott narrow 4Q loss

SEOUL (AFP) – South Korea's top automaker Hyundai Motor said Wednesday it would recall its flagship Sonata sedan in the United States and the domestic market due to a door lock problem.

The firm said in a statement that 1,300 Sonata sedans already sold in the United States and another 46,000 cars in South Korea would be recalled.

Hyundai said the move was in response to reported defective front-door locks on some of its modified Sonatas launched last September high quality business cards. It said it ordered its US dealers on Tuesday to stop selling the model.

The recall was announced on the same day that Toyota's top US executive admitted that global recalls by the Japanese giant had "not totally" fixed dangerous safety flaws.

Hyundai to recall Sonata sedan in US and S.Korea

CAMARILLO, Calif. – The average price of regular gasoline in the United States fell 5.76 cents over a two-week period to $2.67.

That’s according to the national Lundberg Survey of fuel prices released Sunday.

Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.80. Premium was at $2.91.

Cheyenne, Wyo., had the lowest average price among cities surveyed at $2 short term personal loan.38 a gallon for regular. Honolulu was the highest at $3.32.

In California, a gallon of regular cost an average of $2.94.

Fresno had the state’s least expensive gas at $2.86 a gallon. San Francisco remained the steepest at $2.97.

Average gas prices down 5.76 cents nationwide

FACTORY GROWTH AHEAD: Manufacturers’ new orders, a signal of future production, soared to their highest point since 2004. Companies said their customers’ inventories were still too low, so they foresee more production as customers restock.

HIRING UNLIKELY SOON: Rising production won’t necessarily equal a bump in full-time hires. Manufacturers still have excess capacity and access to contract labor. Jobs are scarce, and wages and salaries crept up only 0.1 percent in December. Many economists expect economic growth to slow to about 2 cashadvance.5 percent for the full year as spending remains constrained.

HOUSING ROCKY: Construction spending dropped 1.2 percent in December despite support from the Federal Reserve to hold down mortgage rates and a federal tax credit for homebuyers. Both programs are set to expire this spring.

Summary Box: Manufacturing activity shows strength

NEW YORK – A former senior managing director at New Castle Partners hedge fund has pleaded guilty to securities fraud charges, admitting making $900,000 through insider trading.

The plea was entered in federal court in Manhattan Wednesday by Mark Kurland. Kurland pleaded guilty to conspiracy to commit securities fraud and securities fraud.

In doing so, he admitted a role in what prosecutors have described as the largest hedge fund insider trading case in history.

Kurland is the eighth person to plead guilty in a case that has resulted in charges against 21 people so far fast payday loans. They are accused of making tens of millions of dollars through inside trades.

Among those charged is Raj Rajaratnam (RAHJ rah-juh-RUHT’-nuhm), a portfolio manager and one of America’s richest people.

Plea entered in NY in massive insider trading case

AMSTERDAM – The Dutch financial regulator says it has suspended trading in shares of luxury carmaker Spyker Cars NV Tuesday in expectation of a press release.

The regulator said Tuesday it stopped trading “pending a press statement” by Spyker.

Spyker’s shares leapt 70 percent Monday on speculation investors in the loss-making Spyker will buy Saab Automotive from General Motors Co., a deal which could help Spyker.

The companies said Monday they were in talks but have not reached a deal.

Spyker spokesman Mike Stainton has declined comment on why trading was suspended. Shares were up 2.8 percent at euro3.908 ($5.50) before trading was halted Tuesday.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

AMSTERDAM (AP) — The Dutch financial regulator says it has suspended trading in shares of luxury carmaker Spyker Cars NV Tuesday in expectation of a press release payday loans online.

The regulator said Tuesday it stopped trading “pending a press statement” by Spyker.

Spyker’s shares leapt 70 percent Monday on speculation investors in the loss-making Spyker will buy Saab Automotive from General Motors Co., a deal which could help Spyker.

The companies said Monday they were in talks but have not reached a deal.

Spyker spokesman Mike Stainton has declined comment on why trading was suspended. Shares were up 2.8 percent at euro2.908 before trading was halted Tuesday.

Trading in shares of carmaker Spyker suspended

Hot News: China Rebuffs Clinton on Internet Warning

WASHINGTON — Top Republicans on Wednesday were hostile toward President Obama’s plan to create a bipartisan commission on cutting projected deficits, raising doubts about the prospects of a main piece of his budget strategy.

Senator Mitch McConnell of Kentucky, the Republican leader in the Senate, was evasive when pressed by reporters at the Capitol. “I’m not going to decide today what we’re going to do in the future,” he said. But the House Republican leader, Representative John A. Boehner of Ohio, seemed to suggest that Republicans might not take their allotted seats on a commission.

“This sounds like political cover for Washington Democrats who are starting to realize that their out-of-control spending is scaring the hell out of the American people,” Mr. Boehner said of the tentative deal between the White House and Congressional Democratic leaders on Tuesday night.

Under that plan, Mr. Obama would establish by executive order an 18-member bipartisan panel to propose how to balance future tax revenue and entitlement program benefits. The group’s recommendations would be due by Dec. 1 — after the November elections. Then Congressional leaders would put the package to a vote.

Democrats expected that Mr. McConnell and Mr. Boehner would not be supportive given their party’s general opposition to raising taxes and to compromising with Mr. Obama. But Democrats figured that ultimately Republicans would be hard pressed to reject the president’s overture to help reduce the debt, since most of it results from tax and spending policies enacted in recent years, when Republicans controlled the White House and Congress.

The Democrats’ calculations on that and more were upended on Tuesday, when Republicans were emboldened after capturing a Massachusetts Senate seat.

Even two Republicans who have sponsored legislation with Democrats for a bipartisan budget commission — Senator Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee, and Representative Frank R. Wolf of Virginia — were quick to oppose a presidential commission.

Mr. Gregg called the idea “a nothing-burger,” and Mr no fax cash advance. Wolf criticized it as “a back-room deal.” They objected that an executive order, unlike a law, could not mandate that Congress vote on the recommendations quickly and without amendments.

Democratic leaders in the House and Senate have pledged to hold a vote. On Wednesday, however, some moderate Senate Democrats were still awaiting “written assurances” from the speaker of the House, Representative Nancy Pelosi, according to Senator Kent Conrad, a Democrat from North Dakota who is chairman of the Senate Budget Committee and was Mr. Gregg’s co-sponsor of a bill to establish a budget commission.

Under the Democrats’ plan, the Senate would vote first on any recommendations from a commission. The House would vote only if senators approved the package.

Though details were in flux, Mr. Obama’s executive order would designate a panel with 10 Democratic members and eight Republicans. Twelve of them would be chosen by the House and Senate leaders of both parties, with each naming three lawmakers. The president would name six people, four Democrats and two Republicans.

The deal on a commission is intended to clear the way for Congress to vote, perhaps on Thursday in the Senate, to raise the $12.4 trillion debt limit enough to allow the government to continue borrowing to pay for its operations through this year.

Also as part of the agreement, Democratic senators are to drop their opposition to a House-passed bill for a so-called pay-go law, which would require that most new spending and tax cuts would have to be offset by tax increases or spending cuts, to avoid adding to the debt.

“We’ve got to get back to fiscal responsibility,” said Representative Steny H. Hoyer of Maryland, the House Democratic leader.

“Of course,” he added, “the key is going to be whether or not Republicans — both in terms of their appointment of people to the commission and cooperation with the statutory pay-go effort — will cooperate.”

Republicans Oppose Obama Deficit Panel