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U.S. lawmakers hardened their opposition on Tuesday to releasing $350 billion in financial rescue funds that President-elect Barack Obama wants, setting up a political showdown that regulators warned could have troubling economic consequences.

In the first big test of how he will work with Congress and tackle dissent from within his own Democratic party, Obama tried to rally support at a lunch with Senate Democrats and sent top economic aide Lawrence Summers to a closed-door meeting with members of the powerful Senate Finance Committee.

“It’s very, very important that we be in a strong position on financial recovery,” Summers, who will become director of the National Economic Council, said after his meeting.

Obama — who takes over from President George W. Bush on January 20 — may face the awkward situation of having to quickly wield his veto power to push through an unpopular policy if Congress votes to block the release of the money. A vote could come as early as Thursday.

Many lawmakers are unhappy with how the government has spent the first half of a $700 billion bailout fund, which was hastily approved shortly after the financial crisis intensified following the failure in September of Lehman Brothers.

But top U.S. regulators argued that the still-ailing financial system urgently needed the second $350 billion, and without it the recession, now over a year old, may deepen.

At a Congressional hearing, they suggested that some of the money could be used to buy bad assets that banks are struggling to value or sell — which was the stated intent when the Bush Administration originally proposed the bailout fund fast payday loan.

At Obama’s request, Bush formally asked on Monday for the second half of the bailout fund, starting a 15-day countdown for Congress to reject it or let the money flow.

Democrats and Republicans alike have complained that there was too little transparency into how the government doled out the first half of the cash. They have demanded more details from Obama before the remaining money is released.

Some Republicans are reluctant on political grounds to promote more government intervention in the economy, while many Democrats object to how the first $350 billion has been handled.

ENOUGH VOTES

Illinois Democrat Sen. Dick Durbin said winning Senate approval for releasing the money would be “challenging” and Utah Republican Sen. Orrin Hatch told Reuters that there were probably enough Senate votes to block it.

If that happens, Obama could overturn the decision with a veto after he takes office on January 20. Congress would then need to muster a two-thirds majority to override it.

“It’s a high hurdle to clear,” Tennessee Republican Sen. Lamar Alexander said in an interview, referring to the two-thirds majority.

That would certainly not be an ideal start to Obama’s presidency, and his economic aides were keen to quell the opposition before a vote. 

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Starwood Hotels & Resorts revenue fell 5 percent in the third quarter and the company blamed slowing timeshare sales in Hawaii and Florida.

Revenue for vacation ownership was down 27.4 percent to $183 million, compared to 2007. The company said contract sales of vacation ownership intervals decreased nearly 30 percent mostly due to the sellout of the company’s Westin Kaanapali Ocean Resort North on Maui and an overall decline in demand.

The company said it did not sell any vacation ownership receivables during the quarter, from which it had previously anticipated a gain of $10 million to $15 million.

Starwood said it expects operating income from its timeshare business to drop as much as $115 million this year as demand in Hawaii and Orlando, Fla get a free credit report. slows.

The White Plains, N.Y.-based company (NYSE: HOT) reported profits of $113 million for the quarter, compared to $129 million during the same period last year.

Revenue was 5 percent lower, totaling $575 million, down from $605 million during the third quarter 2007.

The company operates 12 properties in Hawaii.

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Treasury Secretary Henry Paulson said on Saturday that emerging market countries are not immune to the most serious global economic risks in recent memory and must be careful in their policy choices.

In prepared remarks before the International Monetary Fund’s steering committee, Paulson also urged the IMF to stay focused on its core missions, including currency surveillance and helping low-income countries avoid a return to debt distress.

Paulson said the financial turmoil, commodity price shocks and housing price declines were causing a “sharp slowdown in economic growth.”

“The largest advanced economies are feeling this most acutely. Emerging market countries have made impressive strides in strengthening fundamentals, enabling their economic growth to accelerate and their economies to be better cushioned against external shocks,” Paulson said.

“Nevertheless, emerging markets are not immune from the global financial stress, and policy-makers need to be especially attentive to implementing measures to support noninflationary growth, enhance economic resilience, and ensure sound financial systems,” he said.

Paulson reiterated that the United States was taking a number of steps to stem the crisis, including the creation of a $700 billion program that would allow the Treasury to purchase mortgage assets and take equity stakes in financial institutions.

He said the IMF must focus on implementing its recent decision to increase exchange rate surveillance.

“This will require IMF staff to apply its considerable technical expertise to make tough judgments and the (IMF) board to ensure IMF assessments are clearly and candidly conveyed,” he said. 

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Japan and Australia's central banks added more than $20 billion to money markets as agreement on a $700 billion plan to revive the U.S. financial system failed to bring down interbank lending rates.

Singapore's benchmark rate for three-month U.S. dollar loans rose one basis point to 3.79 percent, the most in eight months. Australian funding costs held near a six-month high as banks kept a record amount of cash at the central bank. Short- term rates for loans between banks jumped in Hong Kong and Japan as Belgium and the U.K. rescued their biggest lenders.

“When you have a global credit crisis, there's definitely counterparty risk involved in funding activities,'' said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore. “If the bailout package is approved, it could help the situation somewhat as banks may become less scared of lending to each other.''

Money-market rates are signaling banks' reluctance to lend to each other as U.S. lawmakers may vote on an emergency bill by Oct. 1 to give the Treasury as much as $700 billion to buy tainted mortgage debt from banks to unfreeze credit markets.

Global banks chalked up $555.9 billion of writedowns tied to the collapse of U.S. subprime mortgage market, sending Lehman Brothers Holdings Inc. into the biggest bankruptcy and making Washington Mutual Inc. the largest bank failure in U.S. history. Fortis received a $16.3 billion bailout from the governments of Belgium, Netherlands and Luxembourg and the U.K. government may nationalize mortgage lender Bradford & Bingley Plc.

Singapore's three-month interbank offered rate for U.S. dollars, or Sibor, rose 1 basis point, or 0.01 percentage point 3.79 percent, the highest since Jan. 22, according to the Association of Banks in Singapore. In Hong Kong, the three-monthHibor jumped 9 basis points to 3.49 percent, the Association of Banks in Hong Kong said. The cost reached 3.8 percent on Sept. 25, the most since December 2007.

“Rates may still stay higher than normal because questions remain,'' said Song Seng Wun, an economist at CIMB-GK Securities Ltd. in Singapore. “It's really now the devil in the details in the bailout package.''

Cash Injection

The Bank of Japan injected 1.9 trillion yen ($17.9 billion) today online cash advance cash advance. It has added about 15 trillion yen to the system the past two weeks, the most in at least six years.

Japan's overnight call loan rate stood at 0.41 percent as of 3:10 p.m. in Tokyo, from 0.525 percent on Sept. 26, according to Tokyo Tanshi Co.

The Reserve Bank of Australia added A$2.72 billion ($2.3 billion) and has pumped in more than A$2 billion a day on average since Sept. 15, more than twice the level for the first half of this year.

In Australia, banks had a record A$10.7 billion sitting in exchange-settlement accounts today at the Reserve Bank of Australia after the cash injection. Those accounts are on-call deposits that earn interest at 0.25 percentage point below the central bank's overnight cash target rate of 7 percent.

“The interbank lending market has pretty much dried up so everyone is holding onto their own money,'' Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney, said in a telephone interview. “Australia's banks are taking a wait-and- see approach toward the U.S. bailout.''

Borrowing Costs

Borrowing costs among Australian lenders were little changed today, holding near the highest since Bear Stearns Cos. collapsed six months ago, according to a gauge that measures the availability of funds in the market.

The difference between the rate Australian banks charge each other for three-month loans and the overnight indexed swap rate stood at 90.50 basis points, or 0.9050 percentage point, at 2:12 p.m. in Sydney, from 91 basis points on Sept. 26, when it climbed as high as 98.5 basis points, Bloomberg data show. The gap has averaged 45 basis points this year.

The Reserve Bank sold A$1.55 billion of term deposits, after offering A$2 billion of them, paying 6.95 percent on A$750 million of seven-day deposits and 7.02 percent on A$800 million of 14-day deposits, according to its Web Site.

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European finance ministers and central bankers said they had no plans to follow the U.S. in stimulating their economy and failed to agree on ways of rescuing any foundering financial institution.

As U.S. officials chose to let Lehman Brothers Holdings Inc. go bankrupt rather than throw it a lifeline, European policy makers concluded talks in Nice, France, without breaking new ground on how they would share the bailout cost if a bank collapse threatened to spread across the region. They also signaled restraining inflation and budget deficits was a better strategy to revive growth than trim taxes and interest rates.

“U.S. policy makers have generally taken a more active role in supporting the economy and stabilizing financial markets while the euro zone has opted for a less-interventionist stance,'' said Natacha Valla, a former economist at the European Central Bank and now at Goldman Sachs Group Inc. in Paris.

The transatlantic divide in monetary and fiscal policies may mean the economy of the 15-nation euro region takes longer to rebound after contracting 0.2 percent in the second quarter. The European Commission projects the weakest growth since 2003 this year as Germany and Spain slip into a recession and Italy and France stagnate.

“Europe faces a long-lasting slowdown and only gradual recovery,'' said Dario Perkins, an economist at ABN Amro Holding NV in London.

Cost-Sharing Plan

The lack of a cost-sharing plan means the pain would be even greater should a pan-European financial institution run into troubles similar to those that battered Lehman Brothers in the U.S., said Nicolas Veron, an economist at Bruegel, a Brussels-based research organization.

Ministers have so far agreed only to knit bank supervisors closer together and pledged to cooperate in managing any crisis. Unwilling to commit taxpayer money up front, they resisted calls to devise a plan for splitting the bill should a bailout become necessary to prevent a collapse of the financial system.

“The policy response would be slower and less efficient given the lack of a framework, and that would pose a significant cost to the economy if something happened,'' Veron said.

By contrast, the U.S. has been able to step in swiftly to help ailing institutions. The government this month assumed control of Fannie Mae and Freddie Mac, while in March the Federal Reserve helped finance JPMorgan Chase & Co.'s purchase of Bear Stearns Cos. Still, as Lehman Brothers slid, U.S. Treasury Secretary Henry Paulson indicated that he didn't want to use taxpayer cash to ease a sale of the company.

Biggest Banks

The U.S. has the advantage that the institutions it monitors are largely contained within its borders. Europe's biggest banks held an average of 24 percent of their assets in European countries other than their own in 2006, double the amount of 1997, according to Bruegel.

European policy makers also face more constraints than their U.S. counterparts in responding to weakening growth. One is inflation, which remains above the ECB's 2 percent limit payday loan guaranteed approval cash advance loans. Governments have their hands tied by EU rules that require budget deficits to be below 3 percent of gross domestic product.

Neither restraint exists in the U.S., allowing the Fed to cut its benchmark rate to 2 percent and President George W. Bush to enact $168 billion of stimulus. Europe's strategy amounts to a bet that expansion can be better revived by controlling inflation and budgets than by pump-priming growth with short- term stimulus that generates higher prices and bigger deficits.

Fiscal Easing

Spending taxpayers' funds on fiscal programs to spark growth would be “like burning money,'' German Finance Minister Peer Steinbrueck said. Luxembourg Finance Minister Jean-Claude Juncker questioned the success of the U.S. approach, and said declines in the still “overvalued'' euro and oil price would help Europe.

“This should calm the ECB a bit as it increasingly fears that fiscal easing would oppose the central bank's efforts to bring down inflation over time,'' said Juergen Michels, an economist at Citigroup Inc. in London.

ECB President Jean-Claude Trichet, who has demanded governments control their budgets, said the test would be “implementation in practice.'' Price stability remains the bank's “fundamental concern,'' he said in Nice.

Not Sitting on Hands

Rather than driving up deficits, the European officials said they plan to cushion their economy by allowing automatic stabilizers such as higher welfare payments to kick in. They also pledged to make their economies more flexible, increase financial-market transparency and lend more money to small- and medium-sized industries.

“We're not going to sit on our hands,'' French Finance Minister Christine Lagarde said.

Still, slowing growth alone will be enough to end four years of fiscal consolidation with JPMorgan predicting a budget deficit of 2 percent of GDP in the euro area next year, up from 0.6 percent last year.

Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Plc, predicts an extended period of weak growth may prompt countries such as France and Italy to “exploit'' a revised rule that allows a temporary breach of the limit in times of weak expansion. Italy, France, Ireland, Portugal and Greece are at risk of breaching the deficit ceiling next year, according to Commerzbank AG.

In a report today, Cailloux said the ECB may also cut rates if the Fed does so again and its officials become “convinced that credit markets have seized up or see a vicious downward spiral in equity markets.''

“The escape clause the ECB could use to explain its unexpected policy response would be the obvious rising risk of a feedback loop between the financial crisis and the real economy and the need to shore up confidence in financial markets,'' he said.

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Anheuser-Busch said Wednesday that a lawsuit filed in an attempt to block InBev’s $52 billion takeover of the Budweiser-maker lacks merit.

“We believe that the claims alleged in the lawsuit are without merit and we intend to vigorously defend against them,” said Gary Rutledge, vice president of legal and government affairs, in a statement.

Joseph Alioto, a prominent San Francisco antitrust lawyer, filed a lawsuit Wednesday in a federal court in St. Louis on behalf of 10 Missouri beer drinkers, alleging that the takeover hurts consumers with higher prices and smaller selections.

The beer market is “plainly a market ripe for probable if not certain collusion and a galloping tendency toward monopoly,” the lawsuit says instant payday loan faxless cash advance. “If InBev is allowed to purchase Anheuser-Busch, there no longer would be any significant major potential competitor to influence pricing and marketing practices in the United States anywhere near the degree to which InBev, as the largest brewer in the world, is able to do.”

St. Louis-based Anheuser-Busch Cos. Inc. (NYSE: BUD), through its Anheuser-Busch Inc. subsidiary, is the leading domestic brewer, holding a 48.5 percent share of U.S. beer sales. The company accepted a $52 billion takeover offer from Belgian InBev, which will create the world’s largest brewer when the deal closes.

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State-owned Korea Development Bank (KDB) confirmed on Tuesday it was in talks with Lehman Brothers over a possible joint investment in the U.S. bank with other Korean banks, sending local banking shares lower.

Lehman, which has more than $60 billion of mortgage and mortgage security exposure, is under pressure to raise capital ahead of its results announcement this month as Wall Street firms continue to reel from the credit crunch.

“Our CEO said talks are ongoing and cannot disclose the content of them,” said KDB spokesman Sung Joo-young.

Buying a top bank could catapult South Korea’s financial services firms into the top ranks of global investment houses, which have been battered by heavy mortgage writedowns, and which have seen their share prices tumble.

But investors are jittery about a potential Lehman tie-up, which may involve top South Korean banks such as Shinhan Financial Group Woori Finance Holdings and Hana Financial Group on concerns about the extent of problems at the U.S payday loans payday loan. bank.

Shares at Woori, the country’s No.3 financial services firm, tumbled 6.3 percent to their lowest in almost three years. Second-ranked Shinhan trimmed falls to close down 1 percent and No.4 Hana shares shed 2.6 percent, underperforming a 0.5 percent fall on the wider market.

KDB CEO Min Euoo-sung, who headed Lehman’s local operations until earlier this year, also said his bank was in discussions to form a consortium with private banks to jointly buy Lehman, but pricing remained an issue, according to his spokesman.

Lehman declined to comment. 

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Thailand's inflation slowed from the fastest pace in a decade in August as antigovernment protests hurt spending and oil prices fell, making it likely the central bank will refrain from further interest rate increases.

Consumer prices gained 6.4 percent from a year earlier, the Commerce Ministry said today in Bangkok. That compares with the 8.8 percent median estimate of 11 economists in a Bloomberg News survey. The pace was 9.2 percent in July.

Political instability has overtaken inflation as the biggest threat to Thailand's economic growth, which will slow further this year, the central bank said last week. Prime Minister Samak Sundaravej yesterday rejected calling an early election amid protests that threaten to paralyze the government.

“Rates are likely to be left on hold into 2009 and attention will gradually turn to supporting growth,'' Alvin Pontoh, an economist at Capital Economics in London, wrote in an Aug. 27 note to clients. “The Bank of Thailand has probably done enough to keep inflation in check.''

Thailand's central bank raised its benchmark interest rate to 3.75 percent last week in a second increase in as many months to cool price increases fanned by the cost of global oil, which has risen 22 percent this year. The nation's economic growth slowed for the first time in more than a year in the second quarter as domestic spending declined amid higher costs and antigovernment protests, which began May 25.

Slowing Demand

Core inflation, which excludes fresh food and fuel prices, slowed to 2.7 percent in August, the Commerce Ministry said today. The economists surveyed by Bloomberg predicted a 3.9 percent rise.

The central bank and finance ministry agree Thailand's economic growth may ease in the second half of this year as a global slowdown reduces demand for the nation's exports, which account for 70 percent of the economy cash advance flexible payments payday advance lender.

Political instability may also erode consumer spending and investments, the government's economic adviser said Aug. 25. Growth in the $206 billion economy slowed to 5.3 percent in the second quarter from 6.1 percent in the previous three months.

Protesters have occupied Samak's government house compound in Bangkok since Aug. 26, claiming his administration is illegitimate because it serves the interests of former premier Thaksin Shinawatra, ousted in a 2006 coup. Leaders of the People's Alliance for Democracy say they will continue protests until Samak quits by forcing airport closures and encouraging rail, power and airline strikes.

Fuel Tax Cuts

The Finance Ministry last week said inflation peaked in July, when the government cut fuel taxes, gave free electricity and water to low-use households, and waived fares for cheap bus and train seats in a six-month program costing 46 billion baht ($1.3 billion) to ease inflationary pressures.

“The cosmetic improvement in today's inflation numbers, which is likely to last as long as the subsidies remain in place, considerably eases pressure on the Bank of Thailand to hike rates further, especially considering mounting political uncertainties,'' said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong.

The tax cuts contributed to a 13 percent drop last month in the domestic price of diesel, used for transport and manufacturing. Thailand imports almost all of its crude oil, the price of which fell 7 percent in August.

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Who would President Barack Obama or President John McCain choose as the next U.S. Treasury secretary?

With the election still more than four months away, Republican candidate McCain and Obama, his Democratic opponent, are focused on picking vice presidential running mates.

But that has not stopped Wall Street from mulling over possibilities for the top job at Treasury.

“You would have to think that Phil Gramm is on the list for McCain,” said Greg Valliere, chief strategist at Stanford Washington Research Group. Gramm, a vice chairman for UBS Investment Bank and a former Texas senator, is a senior McCain campaign official.

Also high on McCain’s list would be former Hewlett-Packard chief executive Carly Fiorina, Valliere said.

For Obama, some in the financial community are intrigued by the possibility of New York Federal Reserve President Timothy Geithner, a former official in Bill Clinton’s administration.

“He’s very popular on Wall Street payday loans online payday loan. He understands the complexities of the markets and the credit crunch. He’s got just a tremendous Rolodex,” Valliere said.

Both Valliere and Marc Chandler, a currency strategist at Brown Brothers Harriman, said another potential candidate for Treasury secretary in an Obama administration would be Laura Tyson, a former top economic adviser to President Bill Clinton who is now teaching at the University of California, Berkeley. She has recently begun advising Obama. 

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Central bankers from the six Arab Gulf states may agree on the framework for a single regional currency at a meeting tomorrow, increasing chances they will keep their currencies' pegs to the dollar, said economists.

Governors from the six-member Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates, agreed in April to meet in Doha, Qatar, to lay down the principles for monetary union in 2010, according to GCC officials.

Success may ease pressure on Gulf governments to revalue their currencies against the dollar or drop the links completely, which has intensified as inflation accelerates to records in the region. U.S. Treasury Secretary Henry Paulson said last week he'd been assured the Arab states will maintain the pegs, helping to prevent a further weakening of the dollar.

“The plan for currency union does seem to have received a fresh lease of life in recent months,'' said Simon Williams, chief Middle East economist at HSBC Holdings Plc in Dubai. Any sign the plan “is in disarray again would refocus attention on the possibility'' of currency revaluations.

Contracts to buy U.A.E. dirhams and Saudi riyals in 12 months' time have fallen 0.4 percent against the dollar since Paulson said on June 2 that Gulf states are unlikely to drop their links to the dollar following meetings with Saudi Arabian and Qatari government officials.

Holding the Line

“They probably will try to hold the line until 2010, until they've accomplished currency union, and then think about changing,'' said Eckart Woertz, chief economist at the Gulf Research Centre, in a telephone interview from Berlin.

The GCC states, which also include Bahrain, Oman, Qatar and Kuwait, in 2001 agreed to form a European Union-style monetary union with a single currency by 2010 to help boost regional trade cheap payday loans advance america cash advance.

The project was thrown into doubt last year when Oman said it would not join the single currency and Kuwait dropped its peg to the dollar, citing faster inflation.

“The market will be looking for evidence that the renewed enthusiasm for currency union is being translated into concrete agreements on the many technical, economic and political disagreements that have impeded progress so far,'' Williams said.

The Gulf states meet all the five convergence criteria except for inflation, which stipulates that consumer price growth must be within 2 percentage points of the average of the six GCC states.

The other criteria refer to budget deficits, interest rates, foreign reserves and the ratio of public debt to gross domestic product.

Inflation Threat

“From a technical perspective on a number of fronts I don't think they have made headway,'' said Giyas Gokkent, head of research at National Bank of Abu Dhabi, the emirate's largest lender by market value.

Inflation in Saudi Arabia accelerated to a record 10.5 percent in April as the cost of food and housing soared. In February, Kuwaiti inflation quickened to 10.1 percent, while in Oman consumer prices rose an annual 11.1 percent.

Qatar has the highest inflation rate in the GCC, with consumer prices jumping 14.8 percent in the first quarter from a year earlier.

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