Nation roundup for March 15

Cleanup, rescue goes on at site of NYC blast

NEW YORK (AP) — The bodies of all eight people reported missing after a deadly gas explosion destroyed two buildings have been recovered, the fire commissioner said Friday, but workers are treating the scene as a rescue operation in case there are unknown survivors in the rubble.

Salvatore Cassano said no one else is known to be unaccounted for but workers will continue to scour the debris from the flattened apartment buildings for victims. More than 60 people were injured by Wednesday morning’s explosion, and more than 100 others were displaced.

Cassano said about 70 percent of the debris had been cleared at the upper Manhattan blast site. But he said the pace was expected to quicken after firefighters removed a hazardous rear wall. He predicted detectives and fire marshals would gain access to the East Harlem buildings’ basements by midday Saturday to begin the investigation into what caused the explosion.

The rescue effort continued as federal investigators announced that gas was detected in underground tests of the site in the hours after the explosion, lending support to the hypothesis a gas leak may have been the cause.

National Transportation Safety Board team member Robert Sumwalt said utility Consolidated Edison dug dozens of holes about 18 to 24 inches deep around the blast site and measured gas levels in them soon after the explosion. Gas concentration was up to 20 percent in at least five spots, and normal levels in the city’s soil should be zero, he said.

FDIC files suit, accuses 16 big banks of fraud

WASHINGTON (AP) — The Federal Deposit Insurance Corp. has sued 16 big banks that set a key global interest rate, accusing them of fraud and conspiring to keep the rate low to enrich themselves.

The banks, which include Bank of America, Citigroup and JPMorgan Chase in the U.S., are among the world’s largest.

The FDIC says it is seeking to recover losses suffered from the rate manipulation by 10 U.S. banks that failed during the financial crisis and were taken over by the agency. The civil lawsuit was filed Friday in federal court in Manhattan.

The banks rigged the London interbank offered rate, or LIBOR, from August 2007 to at least mid-2011, the FDIC alleged. The LIBOR affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans. A British banking trade group sets the LIBOR every morning after the 16 international banks submit estimates of what it costs them to borrow. The FDIC also sued that trade group, the British Bankers’ Association.

Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the suit. Spokesmen for Bank of America and JPMorgan didn’t immediately return requests for comment.

Four of the banks — Britain’s Barclays and Royal Bank of Scotland, Switzerland’s biggest bank UBS and Rabobank of the Netherlands — have previously paid a total of about $2.6 billion to settle U.S. and European regulators’ charges of rigging the LIBOR. The banks signed agreements with the U.S. Justice Department that allow them to avoid criminal prosecution if they meet certain conditions.

The process of setting the LIBOR came under scrutiny after Barclays admitted in June 2012 that it had submitted false information to keep the rate low.

A number of U.S. cities and municipal agencies also have filed suits against banks that set the LIBOR rate. They are seeking damages for losses suffered as a result of an artificially low rate. Local governments hold bonds and other investments whose value is pegged to LIBOR.

Under a change announced last July, the London-based company that owns the New York Stock Exchange, NYSE Euronext, will take over supervising the setting of LIBOR from the British Bankers’ Association. The changeover is scheduled to be completed by early next year.

Target says it ignored early signs of breach

NEW YORK (AP) — Target Corp. said in its annual report that a massive security breach has hurt its image and business, while spawning dozens of legal actions, and it noted it can’t estimate how big the financial tab will end up being.

The disclosure Friday with the Securities and Exchange Commission came as the nation’s second-largest discounter said separately that security software picked up on suspicious activity after a cyberattack was launched, but it decided not to take immediate action.

The acknowledgement comes after Bloomberg Newsweek reported Thursday that Target’s security team in Bangalore received security alerts on Nov. 30 that indicated malicious software had appeared in its network. It then flagged the security team at its home office in Minneapolis.

“Like any large company, each week at Target there are a vast number of technical events that take place and are logged,” said Target spokeswoman Molly Snyder in a statement. “Through our investigation, we learned after these criminals entered our network, a small amount of their activity was logged and surfaced to our team. That activity was evaluated and acted upon. Based on their interpretation and evaluation of that activity, the team determined that it did not warrant immediate follow up. “

She added, “With the benefit of hindsight, we are investigating whether, if different judgments had been made, the outcome may have been different.”

Target continues to grapple with the fallout of its massive breach since it revealed in mid-December that hackers stole credit card numbers and personal data of millions of its customers. Target announced last week that its chief information officer, Beth Jacob, had resigned and it was searching for an interim CIO. It also said it was working to overhaul some of its divisions that handle security and technology.

Target’s sales, profit and stock prices have dropped in the wake of the massive breach. The retailer reported late last month that its fourth-quarter profit fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers.

Rule targets for-profit colleges over debt

WASHINGTON (AP) — The for-profit college industry says it will vigorously oppose proposed regulations by the Obama administration designed to protect students at for-profit colleges from amassing huge debt they can’t pay off.

The proposed regulations would penalize career oriented programs that produce graduates without the training needed to find a job with a salary that will allow them to pay off their debt. Schools, for-profit or not, that don’t comply would lose access to the federal student aid programs.

“Career-training programs offer millions of Americans an opportunity they desperately need to further their education and reach the middle class,” Education Secretary Arne Duncan told reporters Thursday. “Today, too many of these programs fail to provide students with the training that they need at taxpayers’ expense and the cost to these students’ futures.”

If finalized, the regulations would take effect in 2016.

In 2012, the for-profit colleges convinced a judge that similar regulations were too arbitrary. Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, said in a statement that the proposed regulations would “deny millions of students the opportunity for higher earnings.” His association argues that the regulations would have a long-term impact on the nation’s ability to address workforce demands and improve the economy, and he called the proposed regulations “discriminatory” and “punitive.”

For-profit programs are popular among non-traditional students, some of who have been laid off during the economic downturn.

“The government should be in the business protecting opportunity not restricting it,” Gunderson said. He said no decision has been made on whether more legal action will be taken.

The administration has long sought to block federal student aid from programs that do not prepare students for “gainful employment” in a recognized occupation. The programs covered under the proposed regulations include nearly all programs at for-profit schools, as well as certificate programs at public and private non-profit institutions, such as community colleges, according to the Education Department.

Duncan said for-profit colleges can receive up to 90 percent of their revenue from federal financial aid programs. If blocked from participating, some could be forced to close, he said.

“Some of these programs — whether public, private or for-profit — empower students to succeed by providing high-quality education and career training. But many of these programs, particularly those at for-profit colleges, are failing to do so,” the Education Department said in a fact sheet.

On Capitol Hill, Sen. Tom Harkin, D-Iowa, the chairman of the Senate Committee on Health, Education, Labor and Pensions, said he was concerned that the proposed regulations don’t go far enough in protecting students.

But Republicans criticized the administration’s actions and said low-income students would be disproportionately affected.

“At a time when demand is great and the stakes are high, government should focus on increasing education opportunities, not unjustly penalizing institutions that are trying to prepare students and workers for a changing economy,” said Rep. John Kline, R-Minn., chairman of the House Education and Workforce Committee.

The latest proposal closely follows those that were struck down in 2012 by U.S. District Judge Rudolph Contreras, but it makes technical changes tailored to the court’s concerns that the benchmarks were arbitrary.

“We tried to base that on expert research and mortgage industry standards for acceptable levels of debt,” Duncan said.

For instance, a typical graduate should not pay more than 20 percent of his or her discretionary income to repaying loans. The previous regulations sought a limit of 30 percent of that income going to repayment.

The proposed regulation also says graduates should not be paying more than 8 percent of their total income to student loans. The department previously sought a 12 percent cap.

The proposed regulations also set a default rate of no more than 30 percent.

In many cases, students who graduate from Education Department-approved programs would keep a greater percentage of their paychecks in their pockets.

Education Department reports show for-profit programs account for about 13 percent of all college students but 46 percent of all loan defaults.

At the same time, 22 percent of for-profit student borrowers defaulted on their loans within three years. At public colleges, that number is 13 percent of borrowers.

And for schools that the Education Department could review, 72 percent of for-profit colleges produce graduates who earn less than high school dropouts.

Duncan said the proposed regulations “target those who are both failing students and taxpayers.”

The public has 60 days to comment on the proposed regulations.