2011/11/29

Barney Frank, author of Wall Street reform, to retire (Reuters)

WASHINGTON (Reuters) – Representative Barney Frank, a Democrat who helped to craft the landmark overhaul of financial regulations that bears his name, will not seek re-election in 2012, his office said on Monday.

Frank, 71, one of the most outspoken liberals in Congress, will hold a 1 p.m. EST/1800 GMT news conference to discuss the decision, according to his office.

He has represented his Massachusetts district since 1981, and is known for his detailed knowledge of banking and housing regulations, as well as his acerbic wit.

"Trying to have a conversation with you would be like trying to argue with a dining room table. I have no interest in it," he told a detractor in 2009.

He was one of the first openly gay politicians to serve at a national level.

Democrats expect to retain control of Frank's seat as they try to win back control of the House of Representatives in the November 2012 elections.

Frank has said to several aides that he did not want to die in Congress. He has indicated that he would be interested in heading up the Department of Housing and Urban Development, according to media reports.

With then-Senator Christopher Dodd, Frank led a comprehensive overhaul of Wall Street regulations following the 2007-2009 financial crisis. The Dodd-Frank Act, passed in 2010 with little Republican support, was one of the most ambitious legislative efforts of Obama's first term in office.

Frank's departure will deprive Democrats of the law's chief defender at a time when Wall Street and Republican lawmakers are trying to dilute its impact.

Republican presidential candidates argue that it is placing new burdens on the economy while the unemployment rate is stuck at 9 percent, and have vowed to repeal the law even as regulators are still putting it into effect.

Frank has fended off efforts to weaken the law's consumer protections, but has shown an openness to some of the banking industry's complaints. Earlier this year, for example, he said a new crackdown on debit-card fees was too harsh.

FEW FRIENDS ON WALL STREET

Still, he will not be missed on Wall Street.

"I think they will cheer that he has taken himself out of the running. I don't think he had many fans on the Street," said Ken Polcari, managing director of ICAP Equities.

An advocate of affordable housing, Frank would have had a hand in efforts to reshape the government-owned mortgage buyers Fannie Mae and Freddie Mac.

House Republicans have been trying to unwind the enterprises, but the administration and other policymakers have warned against removing support too quickly given the weak state of the housing market.

Representative Maxine Waters, an even more vocal critic of Wall Street, is next in line to succeed Frank as the top Democrat on the Financial Services Committee, which oversees the economy, housing finance, and the Federal Reserve and other major financial regulators.

Waters faces an ethics investigation following allegations that she broke House rules by trying in 2008 to help a bank in which her husband served on the board of directors.

Frank survived an ethics scandal in 1989 after he admitted hiring a prostitute as a personal aide. Frank apologized and said he had never used official funds.

Democrats say they expect to hold on to Frank's seat. President Barack Obama in 2008 won 61 percent of the vote in the district, which stretches from upscale Boston suburbs to Fall River, a blue-collar fishing town.

But the district has become more conservative after it was redrawn this year, and one Republican said Frank's retirement gives his party a better chance of victory in a state where all House seats are currently held by Democrats. The Massachusetts delegation will fall to nine from ten in the 2012 election.

"There is no obvious heir to the throne on the Democratic side. And on the Republican side Sean Bielat who challenged him in 2010 could make a very strong contender," Republican strategist Todd Domke said.

Frank won 54 percent of the vote in 2010 against Bielat, a political unknown.

James Segel, a former aide, said Frank felt that he had accomplished what he wanted to accomplish in Congress and enjoyed it less now that Democrats do not control the House.

Frank, who publicly acknowledged his homosexuality in 1987, told Reuters in March that he would like to write a history of the gay-rights movement.

(Additional reporting by Dave Clarke, Rachelle Younglai and Richard Cowan in Washington, Svea Herbst-Bayliss in Boston and Charles Mikolajczak in New York; Editing by Bill Trott and Vicki Allen)

Newt Gingrich: Union Leader endorsement a big boost in New Hampshire (The Christian Science Monitor)

Newt Gingrich’s presidential campaign just got a big boost in New Hampshire – the state holding the first Republican primary election.

The Union Leader, the state’s most prominent publication and a leading voice in conservatism, says it’s backing Gingrich over Mitt Romney.

Romney, who holds a commanding lead in New Hampshire polling, is still the man to beat there. But the Union Leader’s rejection of his candidacy is a blow nonetheless – particularly since Gingrich has vaulted past his GOP rivals to claim neck-and-neck status with Romney in national Republican polls as well as likely-voter surveys in other states.

RECOMMENDED: Election 101 - Ten questions about Newt Gingrich as a presidential candidate

The newspaper’s endorsement – spread across the top of the front page in the Sunday edition and signed by publisher Joseph W. McQuaid – carries a granite-like tone typical of a publication prominent in Republican politics. Four years ago, its endorsement of John McCain helped propel McCain passed Romney to a win in New Hampshire and to his party’s nomination.

"We are in critical need of the innovative, forward-looking strategy and positive leadership that Gingrich has shown he is capable of providing," the newspaper wrote in its editorial.

"We don't back candidates based on popularity polls or big-shot backers,” the paper declared in obvious reference to Romney. “We look for conservatives of courage and conviction who are independent-minded, grounded in their core beliefs about this nation and its people, and best equipped for the job.”

"We don't have to agree with them on every issue," the newspaper wrote about Gingrich, some of whose positions (on immigration, for example) have rankled conservatives. "We would rather back someone with whom we may sometimes disagree than one who tells us what he thinks we want to hear."

Writes Maggie Haberman at Politico.com: “It's the most significant and impactful endorsement in the GOP race so far, and solidifies Gingrich's standing as the alternative to Romney as the race heads into the final pre-Iowa caucuses stretch.”

While the Union Leader’s endorsement shakes things up, Romney remains the clear front-runner in New Hampshire, a state where he owns a home and where he’s well-known because of his time as governor of neighboring Massachusetts.

The WMUR-University of New Hampshire Granite State poll last week showed Romney with 42 percent support among likely Republican primary voters in New Hampshire. Gingrich came in second with 15 percent, followed by Rep. Ron Paul of Texas with 12 percent, and former Utah Gov. John Huntsman with 8 percent support.

Gingrich’s campaign nearly crashed and burned earlier this year when most of his staff quit in protest of what they saw as his lack of on-the-ground campaigning. And the former House Speaker’s effort has been dinged by reports of lucrative consulting work for mortgage giant Freddie Mac and the health care industry, his and his wife’s $500,000 line of credit at Tiffany’s, and continuing mention of his three marriages and acknowledged adultery.

But his campaign has regained strength and momentum – particularly in the critical state of New Hampshire.

Associated Press political writer Philip Elliott reports that Gingrich hired tea party leader Andrew Hemingway to lead his efforts, and his team has been contacting almost 1,000 voters a day.

“Hemingway's team of eight paid staffers in New Hampshire has been adding more than 100 volunteers each day, campaign officials said,” Elliott writes. “Gingrich's team already has lined up leaders in the major cities and has started identifying representatives in each ward in the state. Gingrich also has opened three offices in New Hampshire – in Manchester, the state's biggest city; in Dover in the eastern part of the state; and in the North Country's Littleton – and plans two more.”

The Union Leader’s endorsement by no means ensures success.

In 1999, the statewide newspaper endorsed Steve Forbes over George W. Bush (who publisher McQuaid referred to as “an empty suit”). Still, the newspaper’s backing carries significant weight, and not just in its formal endorsement.

"The Union Leader's style is we don't just endorse once," McQuaid told The Washington Post in 1999. "We endorse every damn day. We started endorsing Reagan in 1975 and never stopped."

RECOMMENDED: Election 101 - Ten questions about Newt Gingrich as a presidential candidate

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Europe scrambles to save euro (AP)

by GREG KELLER and PAN PYLAS, AP Business Writer Greg Keller And Pan Pylas, Ap Business Writer – 7?mins?ago

PARIS – European leaders raced Monday to save the euro from impending breakup, as momentum gained for a radical proposal in which countries that use the common currency would cede control of a big chunk of their budgets to a central authority.

In the run-up to the next European summit on Dec. 9, hopes were rising that, with their backs to the wall, leaders will finally come up with a solution that will once and for all bring an end to a crisis that has threatened to wreck the global economy.

A raft of hitherto taboo ideas gained sudden prominence Monday.

Chief among them: a fast-track move to a fiscal union between the 17 countries that share the euro — a proposal some say would be a big leap toward a United States of Europe. Such a move could greatly enhance European stability, but at a cost, critics say, of national sovereignty and democratic accountability.

Another plan being aired in the face of fierce German resistance is for the eurozone's six triple A rated nations to pool their resources through a joint bond to prop up some of the single currency bloc's most indebted members. Germany, the EU's richest member, rejects the idea because it fears it would be tapped for the lion's share of the bailout.

Markets rallied Monday amid optimism for a bold breakthrough.

The Stoxx 50 index of leading European shares closing up 3.6 percent and the euro rising 0.4 percent to $1.3337. Bonds yields which rose alarmingly last week stabilized.

"There appears to be a sense of greater urgency among eurozone leaders after some very worrisome developments last week," said Vassili Serebriakov, an analyst at Wells Fargo Bank.

A critical test comes Tuesday when European finance ministers meet for a summit in Brussels and Italy tries to tap markets for billions more in cash. U.S. President Barack Obama was meeting top EU officials Monday at the White House to discuss the crisis.

Whatever materializes, the euro is in grave danger — with experts saying the currency could fall apart within days without drastic action.

Such a breakup could have catastrophic effects around the global economy. Among the unappetizing prospects are massive bank runs, the seizing-up of the global financial system, and chaotic currency fluctuations for those that go back to their historic money.

Bankruptcies could cascade across the continent with euro-denominated contracts plummeting in value overnight. If Germany broke from the euro, its national currency would skyrocket, severely damaging its export-oriented economy. If struggling Greece or Italy left, their currencies would plummet — making them unable to repay their euro-based debts.

The result for the world economy could be worse than the fallout from the 2008 Lehman Brothers collapse.

"Everyone knows that if the eurozone crashes the consequences would be very dramatic and in the race after that there would no winners, just losers," said Finland's finance minister Jutta Urpilainen.

Evolution Securities economist Gary Jenkins said a series of government bond auctions this week "may determine the future of the EU."

Financial Times columnist Wolfgang Munchau wrote Monday that the common currency "has 10 days at most" to avoid collapse and big decisions need to be taken, including moves to a fiscal union and the creation of a common treasury with wide-ranging powers.

As experts predicted the endgame for the euro, Europe buzzed with talk of a central treasury authority for the eurozone — an idea that just a week ago would have seemed impossible.

Unlike the United States, which has centralized institutions in Washington D.C. for raising taxes and spending, the eurozone has 17 independent treasuries with little oversight from Brussels. That would change under the fiscal union proposal being aired ahead of the EU leaders' summit in less than two weeks.

While not explicitly backing such a move, Germany and France, the eurozone's two biggest economies, have promised to propose new measures that will make the 17 operate under strict and enforceable rules — the hope being that no country, however small, can wreak such damage again.

The idea of fiscal union is controversial not least because it raises fears among some members that economic policy around Europe will be run by the EU's biggest player: Berlin.

But with Europe on the brink, it may be a price that many nations are willing to accept.

Already, the Paris-based OECD is warning that the global economy is in for a hugely rocky road over the coming months ahead. In its half-yearly report Monday, it said the continued failure by EU leaders to stem the debt crisis that has spread from Greece to much-bigger Italy "could massively escalate economic disruption" and end in "highly devastating outcomes."

The latest bout of turmoil to afflict the eurozone came last week after Germany failed to raise all the money it wanted in a bond auction and Italy had to pay through the roof to get investors to part with their cash.

If a busy bond schedule this week meets — Italy is planning to raise euro8 billion ($10.7 billion) on Tuesday — with an equally poor reception, then the euro's countries will be in real danger of being locked out of international markets and facing the devastating prospect of defaulting on their debts.

Germany, as Europe's only powerhouse economy, would then have to decide whether to bail its partners out — or bail out itself.

As governments nervously tap bond markets, Germany appeared to be readying to ask its eurozone partners to back measures for deeper fiscal union.

"The common currency has the problem that the monetary policy is joint, but the fiscal policy is not," Germany's Finance Minister Wolfgang Schaeuble said in a meeting with foreign reporters in Berlin. "Consequently, we are working now to expand the common currency through a common stability policy."

Schaeuble said the proposal, which Chancellor Angela Merkel is to bring up during the Dec. 9 EU summit, would only require passage by the 17 eurozone member states, although the other ten EU countries, such as Poland and Sweden, would be welcome to adopt it if they wanted.

However, analysts said such a move would take a long time to come to fruition.

"We do seem to be moving slowly towards more of a fiscal union but at a pace that may result in all the components being put in place after a complete meltdown of the financial system," Evolution Securities' Jenkins said.

Many think the European Central Bank is the only institution capable of calming frayed market nerves and German Chancellor Angela Merkel's continued dismissal of a greater ECB role has frayed market nerves.

"The ECB has the means to provide a credible measure to avoid further contagion in the sovereign bond markets," the OECD's Chief Economist Carlo Padoan said. "And if you ask me if that is the lender of last resort function, I would say yes."

Potentially, the ECB has unlimited financial firepower through its ability to print money. However, Germany finds the idea of monetizing debts unappealing, warning that it lets the more profligate countries off the hook for their bad practices. In addition, it conjures up bad memories of hyperinflation in Germany in the 1920s.

So far, the ECB has been reluctant in taking on a bigger firefighting role. Current rules only allow it to buy up government bonds in the markets on condition that it sells an equivalent amount of assets.

Though figures Monday showed that it stepped up its purchases in the markets last week to euro8.6 billion ($11.48 billion) from euro8 billion ($10.68 billion) the week before, analysts think that's not enough to keep a lid on countries' borrowing rates. Italy's main ten-year bond yield stands at over 7 percent, the threshold that eventually proved too costly for Greece, Ireland and Portugal and led them to seek financial help.

One proposal that's often been touted as another key pillar of a long-term solution is the issuance of eurobonds, whereby the 17 euro nations pool together to raise money in the markets. Again though, Germany has opposed the principle of eurobonds since it would expose its taxpayers to the bad debt of weaker countries.

A variant of that emerged Monday with a report in Germany's Die Welt newspaper that the six eurozone countries with a triple A rating would issue bonds together. So-called "elite bonds" would be used to support the fiscally-endangered.

Germany's Schaeuble said the report was "completely made up."

____

Pylas reported from London. Melissa Eddy, Juergen Baetz, Kirsten Grieshaber and David Rising in Berlin, and Matti Huuhtanen in Helsinki contributed to this story.

AP IMPACT: More kids skip school shots in 8 states (AP)

ATLANTA – More parents are opting out of school shots for their kids. In eight states now, more than 1 in 20 public school kindergartners aren't getting all the vaccines required for attendance, an Associated Press analysis found.

That growing trend among parents seeking vaccine exemptions has health officials worried about outbreaks of diseases that once were all but stamped out.

The AP analysis found more than half of states have seen at least a slight rise in the rate of exemptions over the past five years. States with the highest exemption rates are in the West and Upper Midwest.

It's "really gotten much worse," said Mary Selecky, secretary of health for Washington state, where 6 percent of public school parents have opted out.

Rules for exemptions vary by state and can include medical, religious or — in some states — philosophical reasons.

Reasons for skipping some school shots vary. Some parents are skeptical that vaccines are essential. Others fear vaccines carry their own risks. Some find it easier to check a box opting out than the effort to get the shots and required paperwork schools demand. Still others are ambivalent, believing in older vaccines but questioning newer shots against, say, chickenpox.

The number of shots is also giving some parents pause. By the time most children are 6, they will have been stuck with a needle about two dozen times — with many of those shots given in infancy. The cumulative effect of all those shots has not been studied enough, some parents say.

"Many of the vaccines are unnecessary and public health officials don't honestly know what the effect of giving so many vaccines to such small children really are," said Jennifer Margulis, a mother of four and parenting book author in Ashland, Ore.

But few serious problems have turned up over years of vaccinations and several studies have shown no link with autism, a theory from the 1990s that has been widely discredited.

To be sure, childhood vaccination rates remain high overall, at 90 percent or better for several vaccines, including those for polio, measles, hepatitis B and even chickenpox. In many states, exemptions are filed for fewer than 1 percent of children entering school for the first time.

Health officials have not identified an exemption threshold that would likely lead to outbreaks. But as they push for 100 percent immunization, they worry when some states have exemption rates climbing over 5 percent. The average state exemption rate has been estimated at less than half that.

Even more troubling are pockets in some states where exemption rates much higher. In some rural counties in northeast Washington, for example, vaccination exemption rates in recent years have been above 20 percent and even as high as 50 percent.

"Vaccine refusers tend to cluster," said Saad Omer, an Emory University epidemiologist who has done extensive research on the issue.

While parents may think it does no harm to others if their kids skip some vaccines, they are in fact putting others at risk, health officials say. No vaccine is completely effective. If an outbreak begins in an unvaccinated group of children, a vaccinated child may still be at some risk of getting sick.

Studies have found communities with higher exemption rates sometimes are places where measles have suddenly re-emerged in outbreaks. Vaccinated kids are sometimes among the cases, or children too young to be vaccinated. Last year, California had more than 2,100 whooping cough cases, and 10 infants died. Only one had received a first dose of vaccine.

"Your child's risk of getting disease depends on what your neighbors do," said Omer.

And while it seems unlikely that diseases like polio and diphtheria could ever make a comeback to the U.S., immunization expert Dr. Lance Rodewald with the federal Centers for Disease Control and Prevention says it could happen.

"Polio can come back. China was polio free for two decades, and just this year, they were infected from Pakistan, and there is a big outbreak of polio China now. The same could happen here," Rodewald said in an email.

He cited outbreaks of Hib, a disease that can lead to meningitis, among the Amish who don't consistently vaccinate their children. Russia had a huge diphtheria outbreak in the early to mid-1990s, he said, because vaccine coverage declined. "Measles is just visible, but it isn't the only concern," Rodewald said.

For its review, the AP asked state health departments for kindergarten exemption rates for 2006-07 and 2010-11. The AP also looked at data states had previously reported to the federal government. (Most states don't have data for the current 2011-12 school year.)

Alaska had the highest exemption rate in 2010-11, at nearly 9 percent. Colorado's rate was 7 percent, Minnesota 6.5 percent, Vermont and Washington 6 percent, and Oregon, Michigan and Illinois were close behind.

Mississippi was lowest, at essentially 0 percent.

The AP found that vaccine exemptions rose in more than half of states, and 10 had increases over the five years of about 1.5 percentage points or more, a range health officials say is troubling.

Those states, too, were in the West and Midwest — Alaska, Kansas, Hawaii, Illinois, Michigan, Montana, Oregon, Vermont, Washington and Wisconsin. Arizona saw an increase that put that state in the same ballpark.

Exemption seekers are often middle-class, college-educated white people, but there are often a mix of views and philosophies. Exemption hot spots like Sedona, Ariz., and rural northeast Washington have concentrations of both alternative medicine-preferring as well as government-fearing libertarians.

Opposition to vaccines "is putting people together that normally would not be together," observed Elizabeth Jacobs, a University of Arizona epidemiologist looking at that state's rising exemption rates.

What many of exemption-seeking parents share, however, is a mental calculation that the dangers to their children of vaccine-preventable diseases are less important than the possible harms from vaccine. Or they just don't believe health officials, putting more stock in alternative sources — often discovered through Internet searches.

"We are being told this by every government official, teacher, doctor that we need vaccines to keep us safe from these diseases. I simply don't believe that to be true. I believe all the diseases in question were up to 90 percent in decline before mass vaccines ever were given. I don't think vaccines are what saved the world from disease. I think effective sewer systems, nutrition, and handwashing (are the reasons)," said Sabrina Paulick, of Ashland, Ore. She's part-time as a caregiver for elderly people in their homes and a mother of a 4-year-old daughter.

Parents say they'd like to reserve the right to decide what vaccinations their children should get, and when. Health officials reply that vaccinations are recommended at an early age to protect children before they encounter a dangerous infection. "If you delay, you're putting a child at risk," said Gerri Yett, a nurse who manages Alaska's immunization program.

Analyzing vaccination exemptions is difficult. States collect data differently; some base their exemption rates on just a small sample of schools — Alaska, for example — while others rely on more comprehensive numbers. So the AP worked with researchers at CDC, which statistically adjusted some states' 2010-11 data for a better comparison.

It's also not clear when an exemption was invoked against all vaccines and when it was used to excuse just one or two shots. CDC officials think the second scenario is more common.

Also, states differ on some of the vaccines required and what's needed to get an exemption: Sometimes only a box on a form needs to be checked, while some states want letters or even signed statements from doctors.

Meanwhile, some parent groups and others have pushed legislators to make exemptions easier or do away with vaccination requirements altogether. The number of states allowing philosophical exemptions grew from 15 to 20 in the last decade.

Some in public health are exasperated by the trend.

"Every time we give them evidence (that vaccines are safe), they come back with a new hypothesis" for why vaccines could be dangerous, said Kacey Ernst, another University of Arizona researcher.

The exemption increases have come during a time when the government has been raising its estimates of how many children have autism and related disorders. Some experts suggest that parents have listened intently to that message, with some believing the growing roster of recommended shots must somehow be related.

"I don't understand how other people don't see that these two things are related," said Stacy Allan, a Summit, N.J., mother who filed religious exemptions and stopped vaccinating her three children.

Several parents said that while they believe many health officials mean well, their distrust of the vaccine-making pharmaceutical industry only continues to grow.

"I wouldn't be one to say I am absolutely certain these things are hurting our children," said Michele Pereira, an Ashland mother of two young girls. She is a registered nurse and married to an anesthesiologist. While her daughters have had some vaccinations, they have not had the full recommended schedule.

"I feel like there are enough questions out there that I don't want to take the chance," she said.

___

Associated Press writer Jeff Barnard in Grants Pass, Ore., contributed to this report.

2011/11/28

NYC judge rejects $285M SEC-Citigroup agreement (AP)

NEW YORK – A federal judge in New York has struck down a $285 million settlement that Citigroup reached with the Securities and Exchange Commission, citing a need for truth about the financial markets.

Judge Jed Rakoff rejected the settlement Monday. The deal would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors on a complex mortgage investment. The SEC has accused the bank of betting against the investment in 2007 and making $160 million, while investors lost millions.

The judge wrote that there is an overriding public interest in knowing the truth about the financial markets. He set a July 16 trial date for the case.

Citi says it is reviewing the decision and declined to comment.

Attorney: there was 'culture of hazing' at FAMU (AP)

LITHONIA, Ga. – Florida A&M University had a "culture of hazing" that led to the recent death of a marching band member, an attorney for the student's family said Monday.

Attorney Christopher Chestnut said the family plans to file a lawsuit in the death of 26-year-old Robert Champion, who was found Nov. 19 on a bus parked outside an Orlando, Fla., hotel after the school's football team lost to rival Bethune-Cookman.

Police say Champion, a clarinet player who recently was named drum major, had been vomiting and complained he couldn't breathe shortly before he collapsed. Police suspect hazing but have not released any more details about what may have led to Champion's death. Chestnut also refused to talk about any specifics of the death.

"We are confident from what we've learned that hazing was a part of his death. We've got to expose this culture and eradicate it," he said. "There's a patterns and practice of covering up this culture."

Champion's parents said their son never told them about any troubles with the band.

"He loved the band, and every band he's been in. He loved performing in the band," said Champion's mother, Pam Champion. "My thing is to make sure this does not happen to anyone else, let people know this is real."

Since Champion's death, the school has shuttered the famed Marching 100 band and the rest of the music department's performances, and the longtime band director, Julian White, was fired. Florida Gov. Rick Scott has said state investigators would join the probe and the college announced an independent review led by a former state attorney general.

The Marching 100 — whose rich history includes performing at several Super Bowls and representing the U.S. in Paris at the 200th anniversary of the French Revolution — was scheduled to perform at the fall commencement on Dec. 16.

IMF denies in Italy aid talks (Reuters)

By James Mackenzie and Francesca Landini James Mackenzie And Francesca Landini – Mon?Nov?28, 3:56?am?ET

ROME (Reuters) – Italy's prime minister faces a testing week as he seeks to shore up the country's strained public finances, with an IMF mission expected in Rome and market pressure building to a point where outside help may be needed to stem a full-scale debt emergency.

However, an IMF spokesperson poured cold water on a report in the Italian daily La Stampa that said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months.

"There are no discussions with the Italian authorities on a program for IMF financing," an IMF spokesperson said.

Adding to international pressure on euro zone leaders to stem the debt crisis, U.S. President Barack Obama will press senior European Union officials in Washington on Monday to reach a solution to the emergency that Moody's said now threatens the credit standing of all European government bond ratings.

After slumping last week, Asian shares and the euro rose on Monday on hopes that some measures may emerge this week to ease the crisis.

Euro zone finance ministers will meet on Tuesday to consider detailed rules to boost the impact of a 440-billion-euro rescue fund.

Germany and France are also exploring radical ways to secure deeper and more rapid fiscal integration among the bloc's 17 countries to shore up the region's defenses against the debt crisis.

Italian Prime Minister Mario Monti is expected to unveil measures on December 5 that could include a revamped housing tax, a rise in sales tax and accelerated increases in the pension age. But pressure from the markets could force him to act more quickly.

One source with knowledge of the matter said contacts between the International Monetary Fund and Rome had intensified in recent days as concern has grown that German opposition to an expanded role for the European Central Bank could leave Italy without a financial backstop if one were needed.

The IMF inspection team is expected to visit Rome in the coming days but no date has been announced.

EYE OF THE STORM

Italy is in the eye of the euro zone debt storm after its borrowing costs returned to the levels that triggered the collapse of former Prime Minister Silvio Berlusconi's center-right government. Yields on 10-year bonds ended last week at more than 7.3 percent.

Italian yields are now in the territory that forced Greece, Ireland and Portugal to seek international bailouts and an auction on Tuesday of up to 8 billion euros of BTP bonds will be a crucial test.

On Friday, Italy paid a euro lifetime high yield of 6.5 percent to sell new six-month paper, a level that analysts said cannot be maintained for long without pushing a public debt amounting to 120 percent of gross domestic product out of control.

European Central Bank member Christian Noyer said on Monday that Italy's economy was fundamentally sound and Rome should be able to restore market confidence if it shows fiscal discipline.

"Italy should not be considered a weak economy," Noyer told reporters on a visit to Tokyo.

Italy, the euro zone's third biggest economy, would be far too big for existing bailout mechanisms and default on its 1.8 trillion euro debt would cause a banking and financial crisis that would probably destroy the single currency.

It has more than 185 billion euros of bonds falling due between December and the end of April. Obama was due to hold talks on Monday with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, although no breakthroughs were expected.

The president was expected to reiterate he was confident that Europe's leaders could handle the crisis, which is emerging as a major worry for the 2012 U.S. elections, if they show political leadership.

Moody's warned in a report that it may take a series of shocks before the political impetus for a resolution to the debt crisis finally emerges. The crisis had deepened in recent weeks, it said.

"The probability of multiple defaults (in addition to Greece's private sector involvement program) by euro area countries is no longer negligible," it said.

Civil servants from Germany and France were exploring ways for more rapid fiscal integration after the realization that getting an agreement among all 27 countries in the EU will be difficult any time soon.

An agreement among just the euro zone countries is one option.

"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.

Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.

PRESSURE

Monti outlined the broad thrust of his reform plans earlier this month, promising a mix of budget rigor and reforms to stimulate economic growth, and has stuck to Berlusconi's pledge to balance the budget by 2013.

But with growing signs that Italy's chronically sluggish economy could be entering recession, he has come under pressure to provide concrete details quickly.

The measures outlined so far are broadly in line with directions previously given by the ECB, but there have been no detailed discussions with international bodies on the kinds of conditions normally attached to IMF assistance programs.

As well as loosening job protection measures, privatizing local services and opening up professions to more competition, additional budget measures estimated by Italian media at up to 15 billion euros could be announced.

Monti can take some comfort from surveys showing broad popular support for his technocrat government, but austerity measures have yet to bite deeply and surveys also show a mixed picture on individual austerity measures.

On pensions, the government is expected to bring forward an already-planned increase in retirement ages, with a wider reform possible in the coming weeks.

Monti may reintroduce a housing tax that was scrapped by Berlusconi in a last-minute campaign pledge before the 2008 election. The move cost the Treasury an estimated 3.5 billion euros a year.

Other ideas under consideration include raising the value-added tax band in bars and restaurants, which currently stands at 10 percent.

(Additional reporting by Gavin Jones and Steve Scherer and Lesley Wroughton in Washington; Ian Chua in Sydney and Stanley White and Rie Ishiguro in Tokyo; Editing by David Stamp, Alessandra Rizzo and Alex Richardson)