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The person, speaking on condition of anonymity, said if institutions were found to need additional capital, financial authorities would provide them with an “extra cushion of support.”

Banks are expected to receive additional information about the tests in the coming week from regulators.

The largest U.S. banks are “well capitalized” for current conditions, the source said, but the Obama administration wants to ensure they can withstand a more severe economic climate and play an important role in helping restart the flow of credit.

Initial plans for the stress tests were announced on Feb. 10 as part of Treasury Secretary Timothy Geithner’s bank stabilization plan, but the source on Saturday for the first time linked the tests to additional government support for large banks. That person did not specify what form any extra capital cushion may take.

Little is known about the form of the stress tests, but the person described them as “consistent, forward looking and conservative.”

The Obama administration tried on Friday to ease market fears the government was poised to nationalize some large banks that are struggling with losses and a lack of confidence, notably Citigroup (C.N) and Bank of America (BAC.N).

Bank shares fell sharply, with Citigroup plunging 22 percent to below the $2 fee of a typical automated teller machine, or ATM, and Bank of America trading around the $4 level.

White House spokesman Robert Gibbs said on Friday, “This administration continues to strongly believe that a privately held banking system is the correct way to go.”

That was quickly echoed by a statement from the U.S. Treasury.

INVESTORS LOSE CONFIDENCE

Citigroup and Bank of America have each received $45 billion in government capital in recent months and guarantees against losses on portfolios of illiquid mortgage assets — aid that now exceeds their market value.

With investors losing confidence in the sector as recessionary losses on real estate and commercial loans mount, analysts say the government may have to do more to prop up the largest banks.

“We are certainly in contact with the SEC and we are aware of their investigation but we are not going to discuss any ongoing matters,” said FBI Special Agent Shauna Dunlap.

Stanford, a once high-flying businessman whose investment firm’s affiliates stretch from Bogota, Colombia, to Quito, Ecuador, has denied having ties to foreign drug barons and never has been charged with a crime related to his banking. In 1999, Stanford willingly turned over the $3 million from his bank after federal agents found it had come from a drug cartel.

In fact, at the time, Stanford’s cooperation won him praise from authorities who said he had not intentionally accepted drug money.

Around the same time, however, Texas securities regulators found evidence of potential money laundering involving Stanford, an official said Friday in Austin. But, because the activity involved offshore banks, it was referred to the FBI and SEC.

Federal Bureau of Investigation agents were waiting yesterday at a residence in the Fredericksburg area when Stanford’s car pulled up, according to a person familiar with what transpired. The FBI then served him court papers. He was described as cooperative and cordial.

Klaus, whose country now holds the rotating EU presidency, set out a scathing attack on the EU project and its institutions, provoking boos from many lawmakers, some of whom walked out, but applause from nationalists and other anti-EU legislators.

Klaus is known for deep skepticism of the EU and has refused to fly the EU flag over his official seat in Prague during the Czech presidency, saying the country is not an EU province.

He said current EU practices smacked of communist times when the Soviet Union controlled much of eastern Europe, including the Czech Republic and when dissent or even discussions were not tolerated.

“Not so long ago, in our part of Europe we lived in a political system that permitted no alternatives and therefore also no parliamentary opposition,” said Klaus. “We learned the bitter lesson that with no opposition, there is no freedom.”

He said the 27-nation bloc should concentrate on offering prosperity to Europeans, rather than closer political union, and scrap a stalled EU reform treaty that Irish voters have already rejected.

Klaus said that questioning deeper integration has become an “uncriticizable assumption that there is only one possible and correct future of the European integration.”

“The enforcement of these notions … is unacceptable,” Klaus said. “Those who dare thinking about a different option are labeled as enemies.” Observers had been expecting Klaus to deliver a critical speech during his first and only visit to the EU chamber at a time when his country holds the EU limelight as chair of the 27-nation bloc.

U.S. Bureau of Reclamation officials said parched reservoirs and patchy rainfall this year were forcing them to completely stop surface water deliveries for at least a two-week period beginning March 1. Authorities said they haven’t had to take such a drastic move for more than 15 years.

The situation could improve slightly if more rain falls over the next few weeks, and officials will know by mid-March if they can release more irrigation supplies to growers.

Farmers in the nation’s No. 1 agriculture state predicted it would cause consumers to pay more for their fruits and vegetables, which would have to be grown using expensive well water.

“Water is our life — it’s our jobs and it’s our food,” said Ryan Jacobsen, executive director of the farm bureau in Fresno County. “Without a reliable water supply, Fresno County’s No. 1 employer — agriculture — is at great risk.”

The drought would cause an estimated $1.15 billion dollar loss in agriculture-related wages and eliminate as many as 40,000 jobs in farm-related industries in the San Joaquin Valley alone, where most of the nation’s produce and nut crops are grown, said Lester Snow, director of the Department of Water Resources.

Gasoline taxes that for nearly half a century have paid for the federal share of highway and bridge construction can no longer be counted on to raise enough money to keep the nation’s transportation system moving, LaHood said in an interview with The Associated Press.

“We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled,” the former Illinois Republican lawmaker said.

Most transportation experts see a vehicle miles traveled tax as a long-term solution, but Congress is being urged to move in that direction now by funding pilot projects.

The idea also is gaining ground in several states. Governors in Idaho and Rhode Island are talking about such programs, and a North Carolina panel suggested in December the state start charging motorists a quarter-cent for every mile as a substitute for the gas tax.

The victim’s fiance told investigators he found the body of 57-year-old Dr. Eugenia Calle in the penthouse apartment at the Aqua Midtown building on 10th Street at West Peachtree Street.

“There did appear to be some signs of a struggle,” Lt. Keith Meadows told WSB-TV Channel 2 reporter Ryan Young.

Meadows said he believed the victim died from “blunt force trauma” to the head. She may have been dead up to 12 hours before her body was found at 11 p.m. Tuesday.

Calle was a physician and a cancer researcher, who has been the director of Analytic Epidemiology for the American Cancer Society since 1994. She was also an adjunct professor in Epidemiology at Emory University.

Calle made great contributions in the medical field, including ground-breaking research that linked cancer with obesity, according to co-workers.

Calle was engaged to be married and she and her fiance were selling her high-rise luxury apartment.

Police said somehow the killer gained entry into her apartment and killed her.

Common in parts of Europe, work-sharing means slashing employees’ pay and hours instead of firing people outright. Two or three people might share what previously was one person’s job.

The idea is that employees are required to share the pain of coping with hard times while everyone gets to keep their jobs — even if they’re paid less.

Work-sharing is the latest buzzword in Japan Inc. Proponents say it’s a good way to avoid American-style layoffs in a society that has long fostered lifetime employment. Toyota Motor Corp., Mazda Motor Corp., Toshiba Corp. and Fujitsu Inc., have all taken up some kind of work-sharing. Nissan Motor Co. and others are considering it.

Although critics say it’s merely a fancy way to disguise wage cuts, the practice is winning powerful supporters here, including Fujio Mitarai, the head of the major business lobby Keidanren.

The government is now considering earmarking public money for companies that take up work-sharing to curb surging joblessness as the world’s second-largest economy slides into what authorities are calling Japan’s worst recession since World War II.