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This responds to the call by the leaders of the Group of 20 (G-20) economies, endorsed by the International Monetary and Financial Committee (IMFC), to increase the financing available to the Fund, through an expanded and more flexible NAB increased by up to US$500 billion. Thirteen new participants, including a number of major emerging market economies, have indicated their willingness to join 26 current participants in the NAB. The decision today follows the agreement reached by current and prospective participants at their meeting in Washington in November 2009 on the key elements of an expanded and more flexible NAB.

“The expansion and enlargement of the NAB borrowing arrangements provides a very strong multilateral foundation for the Fund’s efforts in crisis prevention and resolution, as an essential back-stop to the Fund’s quota resources. This will help ensure that the Fund has access to adequate resources to help members that are vulnerable to financial crises,” IMF Managing Director Dominique Strauss-Kahn said.

A program set up to test beef for chemical residues “is not accomplishing its mission of monitoring the food supply for … dangerous substances, which has resulted in meat with these substances being distributed in commerce,” says the audit by the U.S. Department of Agriculture’s Office of Inspector General.

The health effects on people who eat such meat are a “growing concern,” the audit adds.

The testing program for cattle is run by the USDA’s Food Safety and Inspection Service (FSIS), which also tests meat for such pathogens as salmonella and certain dangerous strains of E. coli. But the residue program relies on assistance from the Environmental Protection Agency, which sets tolerance levels for human exposure to pesticides and other pollutants, and the Food and Drug Administration, which does the same for antibiotics and other medicines.

Limits have not been set by the EPA and FDA “for many potentially harmful substances, which can impair FSIS’ enforcement activities,” the audit found.

The FSIS said in a written statement that the agency has agreed with the inspector general on “corrective actions” and will work with the FDA and EPA “to prevent residues or contaminants from entering into commerce.”

Even when the inspection service does identify a lot of beef with high levels of pesticide or antibiotics, it often is powerless to stop the distribution of that meat because there is no legal limit for those contaminants.

In 2008, for example, Mexican authorities rejected a U.S. beef shipment because its copper levels exceeded Mexican standards, the audit says. But because there is no U.S. limit, the FSIS had no grounds for blocking the beef’s producer from reselling the rejected meat in the United States.

Before Washington Mutual collapsed in the largest bank failure in U.S. history, its executives knowingly created a “mortgage time bomb” by making subprime loans they knew were likely to go bad and then packaging them into risky securities, a congressional investigation has found.

In some cases, the bank took loans in which it had discovered fraudulent activity — such as misstated income by borrowers — and rolled them into mortgage securities sold to investors without disclosing the fraud, according to the report released Monday by the Senate’s Permanent Subcommittee on Investigations.

The actions were driven in part by greed, according to the committee report, which pointed out that WaMu’s pay practices rewarded loan officers and processors based on how many mortgages they could churn out.

The new disclosures could give a boost to efforts by President Obama and congressional Democrats to pass sweeping overhaul of financial regulations, which the Senate is set to consider this spring, said Sen. Carl Levin (D-Mich.), the subcommittee’s chairman.

“Washington Mutual built a conveyor belt that dumped toxic mortgage assets into the financial system like a polluter dumping poison into a river,” Levin said. “Using a toxic mix of high-risk lending, lax controls and destructive compensation policies, Washington Mutual flooded the market with shoddy loans and securities that went bad. . . . It is critical to acknowledge that the financial crisis was not a natural disaster, it was a man-made economic assault.”

WaMu’s failure is also under investigation by the Justice Department. The Seattle-based thrift, which was seized by federal regulators in September 2008 and sold to JPMorgan Chase & Co. for $1.9 billion, had nearly a third of its 2,200 branches in California and was a major player, along with rival Countrywide Financial Corp., in helping fuel the state’s housing boom.

According to the Senate report, WaMu executives were aware in 2006 of problems at its Southern California subprime unit, Long Beach Mortgage Co. Excerpts of internal e-mails and reports offer a stark and unvarnished view of the warning signs that were dismissed as the bank tumbled toward failure.

The company’s chief risk officers called Long Beach Mortgage, the subprime subsidiary the firm used to stage its rapid growth in home lending, “a real problem for WaMu.” Stephen Rotella, WaMu’s former chief operating officer, described the unit as “terrible.”

“Short story is this is not good,” David Schneider, WaMu’s former president of home loans, wrote in a December 2006 e-mail. “We are all rapidly losing credibility as a management team.”

Long Beach Mortgage was founded by the late Roland E. Arnall, a West Los Angeles billionaire who later built Ameriquest Mortgage Co. and its sister companies into the nation’s largest subprime operation.

Washington Mutual acquired the bulk of Long Beach Mortgage — the part that offered loans through brokers, not through its own employees — in 1999.

Long Beach Mortgage’s lending reflected the general disintegration of standards across the industry, said Paul Muolo, executive editor of National Mortgage News and co-author of “Chain of Blame,” a 2008 book about the mortgage meltdown. Companies such as Orange-based Ameriquest, Irvine’s New Century Financial Corp. and San Jose’s First Franklin Financial Corp. competed for ever riskier subprime loans that Wall Street banks transformed into mortgage bonds and sold around the world.

“It’s hard to say which lender went berserk first,” Muolo said, as the subprime rivals wound up adopting the philosophy “If he or she breathes, we will make the loan.”

The subcommittee’s investigators, who conducted more than 100 interviews and depositions and collected 50 million documents, found that Washington Mutual jumped headlong into subprime and other risky lending in 2003 to increase profits.

The company and its Long Beach unit “used shoddy lending practices . . . to make tens of thousands of high-risk home loans that too often contained excessive risk, fraudulent information or errors,” according to a subcommittee memo.

Internal company documents highlighted the profit pressures. “In 2007, we must find new ways to grow our revenue. Home Loans Risk Management has an important role to play in that effort,” read a late 2006 message from the unit’s chief risk officer to the risk management team.

Adding to the problems, WaMu and Long Beach Mortgage frequently steered borrowers who qualified for prime loans into subprime loans, the subcommittee found. WaMu then spread the risk of those loans and riskier ones to investors by packaging the subprime loans into $77 billion worth of securities it sold to investors, the panel found.

“At times, WaMu selected and securitized loans that it had identified as likely to go delinquent,” the report said.

A June 2008 review by the bank’s main regulator, the Office of Thrift Supervision, found a “culture focused more heavily on production volume rather than quality.”

Top employees could become members of the company’s President’s Club, which offered lavish, all-expense-paid trips to Hawaii or the Caribbean, the subcommittee found.

Levin said the findings showed the need for a new consumer financial protection agency, which Obama has proposed as part of his regulatory overhaul, to stop lenders from preying on borrowers. “The bottom line is that WaMu had poor policies, poor controls, inadequate oversight of its loans [and] turned out toxic mortgages that sunk the bank, devastated homeowners and polluted the financial system like a poison,” Levin said. “This was a Main Street bank that got taken in by these Wall Street profits.”

JPMorgan, which acquired WaMu, had no comment on the report.

On Tuesday, the Senate subcommittee launches a series of hearings looking at WaMu’s 2008 failure as a case study of the financial crisis. Former WaMu executives are scheduled to testify Tuesday, with testimony Friday from regulators and later this month from credit rating firms and investment banks that also contributed to the bank’s problems.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.

Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.

The Securities and Exchange Commission is examining various creative borrowing tactics used by some 20 financial companies. A Congressional panel investigating the financial crisis also plans to examine such deals at a hearing in May to focus on Lehman and Bear Stearns, according to two people knowledgeable about the panel’s plans.

Most of these deals are legal. But certain Lehman transactions crossed the line, according to the account of the bank’s demise prepared by an examiner of the bank. Hudson Castle was not mentioned in that report, released last month, which concluded that some of Lehman’s bookkeeping was “materially misleading.” The report did not say that Hudson was involved in the misleading accounting.

At several points, Lehman did transactions greater than $1 billion with Hudson vehicles, but it is unclear how much money was involved since 2001.

Still, accounting experts say the shadow financial system needs some sunlight.

“How can anyone — regulators, investors or anyone — understand what’s in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?” said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. “Everybody’s talking about preventing the next crisis, but they can’t prevent the next crisis if they don’t understand all these incestuous relationships.”

The story of Lehman and Hudson Castle begins in 2001, when the housing bubble was just starting to inflate. That year, Lehman spent $7 million to buy into a small financial company, IBEX Capital Markets, which later became Hudson Castle.

From the start, Hudson Castle lived in Lehman’s shadow. According to a 2001 memorandum given to The New York Times, as well as interviews with seven former employees at Lehman and Hudson Castle, Lehman exerted an unusual level of control over the firm. Lehman, the memorandum said, would serve “as the internal and external ‘gatekeeper’ for all business activities conducted by the firm.”

The deal was proposed by Kyle Miller, who worked at Lehman. In the memorandum, Mr. Miller wrote that Lehman’s investment in Hudson Castle would give the bank and its clients access to financing while preventing “headline risk” if any of its deals went south. It would also reduce Lehman’s “moral obligation” to support its off-balance sheet vehicles, he wrote. The arrangement would maximize Lehman’s control over Hudson Castle “without jeopardizing the off-balance sheet accounting treatment.”

Mr. Miller became president of Hudson Castle and brought several Lehman employees with him. Through a Hudson Castle spokesman, Mr. Miller declined a request for an interview.

The spokesman did not dispute the 2001 memorandum but said the relationship with Lehman had evolved. After 2004, “all funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way,” he said, adding that Lehman was only a tenth of Hudson’s revenue.

Still, Lehman never told its shareholders about the arrangement. Nor did Moody’s choose to mention it in its credit ratings reports on Hudson Castle’s vehicles. Former Lehman workers, who spoke on the condition that they not be named because of confidentiality agreements with the bank, offered conflicting accounts of the bank’s relationship with Hudson Castle.

One said Lehman bought into Hudson Castle to compete with the big commercial banks like Citigroup, which had a greater ability to lend to corporate clients. “There were no bad intentions around any of this stuff,” this person said.

But another former employee said he was leery of the arrangement from the start. “Lehman wanted to have a company it controlled, but to the outside world be able to act like it was arm’s length,” this person said.

Typically, companies are required to disclose only material investments or purchases of public companies. Hudson Castle was neither.

Nonetheless, Hudson Castle was central to some Lehman deals up until the bank collapsed.

“This should have been disclosed, given how critical this relationship was,” said Elizabeth Nowicki, a professor at Boston University and a former lawyer at the S.E.C. “Part of the problems with all these bank failures is there were a lot of secondary actors — there were lawyers, accountants, and here you have a secondary company that was helping conceal the true state of Lehman.”

Until 2004, Hudson had an agreement with Lehman that blocked it from working with the investment bank’s competitors, but in 2004, that deal ended, and Lehman reduced its number of board seats to one, from five, according to two people with direct knowledge of the situation and an internal Hudson Castle document. Lehman remained Hudson’s largest shareholder, and its management remained close to important Lehman officials.

Hudson Castle created at least four separate legal entities to borrow money in the markets by issuing short-term i.o.u.’s to investors. It then used that money to make loans to Lehman and other financial companies, often via repurchase agreements, or repos. In repos, banks typically sell assets and promise to buy them back at a set price in the future.

One of the vehicles that Hudson Castle created was called Fenway, which was often used to lend to Lehman, including in the summer of 2008, as the investment bank foundered. Because of that relationship, Hudson Castle is now the second-largest creditor in the Lehman Estate, after JPMorgan Chase. Hudson Castle, which is still in business, doing similar work for other banks, bought out Lehman’s stake last year. The firm’s spokesman said Hudson operated independently in the Fenway deal in the summer of 2008.

Hudson Castle might have walked away earlier if not for Fenway’s ties to Lehman. Lehman itself bought $3 billion of Fenway notes just before its bankruptcy that, in turn, were used to back a loan from Fenway to a Lehman subsidiary. The loan was secured by part of Lehman’s investment in a California property developer, SunCal, which also collapsed. At the time, other lenders were already growing uneasy about dealing with Lehman.

Two submarines and eight vessels were spotted on Saturday about 140 km (90 miles) southwest of Okinawa, the first time Japan has confirmed the presence of Chinese submarines and such a large number of vessels in the area, defence ministry officials said.

“Such a situation has not happened before and we will investigate this, including whether (China has) any intentions against our country,” Japanese Defence Minister Toshimi Kitazawa told reporters.

The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”

The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with “an intellectual foundation upon which we will construct the concept to guide out future force developments.”

The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk.

The Wicks Review on UK energy policy published last summer effectively dismissed fears but Lord Hunt, the British energy minister, met concerned industrialists two weeks ago in a sign that it is rapidly changing its mind on the seriousness of the issue.

The Paris-based International Energy Agency remains confident that there is no short-term risk of oil shortages but privately some senior officials have admitted there is considerable disagreement internally about this upbeat stance.

Future fuel supplies are of acute importance to the US army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.

But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.

Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.

“It’s surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on,” he said.

“The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was “decades away”. In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?”

The last time we heard about cellphones and terrorism, it was an appeal from the NYPD to shut off cell communication during an attack. Now, Homeland Security’s Science and Technology Directorate want to use cellphones to detect the very threats that might be coordinated using wireless chit-chat. Their new program, called Cell-All, would embed inexpensive, chemical-sniffing microchips into cellular telephones. If a dangerous level of air-based toxin is detected, the phone would issue a warning ring (or vibration) to alert the owner and send a message to a centralized military monitoring station.

And, since the vast majority of Americans carry cellphones wherever they go, the program would use aggregated reports of toxin detection within a small area. If hundreds of cellphones in one location start flooding the alert system, the military knows they’ve got a serious threat to contend with. Detection, transmission and analysis would take around 60 seconds, according to a press release from the Directorate.

Given that terrorist attacks are usually launched in highly populated areas — subways, malls, office buildings — the idea of crowdsourcing the detection of toxic terror threats makes a lot of sense, and using a built-in cellphone app would give the military the ability to detect threats in every corner of the country.

Except that, for now, the program’s manager is describing the initiative as “opt-in.”

“Privacy is as important as technology,” Stephen Dennis said. “After all, for Cell-All to succeed, people must be comfortable enough to turn it on in the first place.”

That’s good news for privacy zealots and conspiracy theorists, but bad news for the program’s potential effectiveness, given that crowdsourced intelligence depends on knowing that there’s a crowd to be sourced in the first place.

Gulab Mangal, who is the governor of Helmand, said those held were planning attacks in Lashkar Gah, the province’s main city, “and the number one target was myself”.

He said that the alleged operation, by the three Italians and six Afghans, was funded by the Afghan Taliban based in Pakistan.

Suicide bomb vests, hand grenades, pistols and explosives were found in a hospital storeroom where the three worked, which is run by the Italian charity Emergency.

Police were tipped off about a plot to kill Mangal, a government spokesman, said.

Speaking from Milan, Cecilia Strada, the head of Emergency, told Al Jazeera that this was a completely groundless claim.

“It sounds quite ridiculous that they would be involved in any plot. They have spent the last few years in Afghanistan, helping and treating people for free.

“We ask that you respect their rights, first of all, the right to communicate with us and let us know where they are and what their condition is.”

Raid video

The Associated Press obtained a video of the raid that shows British troops accompanying Afghan police, soldiers and government officials to the hospital.

In a storeroom, boxes are opened containing what appear to be bullets, pistols, hand grenades, and bags of explosives.

A British soldier is heard saying that an explosives-disposal unit was on its way when the explosives were found.