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But even while dismantling these discredited programs, President Barack Obama left an equally controversial counterterrorism tool intact.

Under executive orders issued by Obama last week, the CIA still has authority to carry out what are known as renditions, or the secret abductions and transfers of prisoners to countries that cooperate with the U.S.

Current and former U.S. intelligence officials said the rendition program is poised to play an expanded role because it is the main remaining mechanism—aside from Predator missile strikes—for taking suspected terrorists off the street.

The rendition program became a source of embarrassment for the CIA, and a target of international scorn, as details emerged in recent years of botched captures, mistaken identities and allegations that prisoners were turned over to countries where they were tortured.

The European Parliament condemned renditions as an “illegal instrument used by the United States.” Prisoners swept up in the program have sued the CIA as well as a subsidiary of Boeing Corp., which is accused of working with the agency on dozens of rendition flights.

But the Obama administration appears to have determined that the rendition program was one component of the Bush administration’s war on terrorism that it could not afford to discard.

The decision underscores the fact that the battle with Al Qaeda and other terrorist groups is far from over and that even if the U.S. is shutting down the prisons, it is not done taking prisoners.

“Obviously you need to preserve some tools, you still have to go after the bad guys,” said an Obama administration official, speaking on condition of anonymity when discussing legal reasoning behind the decision. “The legal advisers working on this looked at rendition. It is controversial in some circles and kicked up a big storm in Europe. But if done within certain parameters, it is an acceptable practice.”

In a country considered one of the most dangerous for journalists, no Russian newspaper has suffered like Novaya Gazeta. In a country where most media have been cowed into submission, no other newspaper publishes such probing investigative articles and acid commentary about government corruption, police-state politics and Chechnya war abuses.

“Every two or three years, we lose someone,” says Elena Kostyuchenko, a 21-year-old investigative writer for the paper. “But you just have to write, write, write and keep writing. You have to.”

Some 16 journalists have died in contract-style slayings or under suspicious circumstances in Russia since 2000. Many more have been assaulted or threatened.

Under Vladimir Putin, who became president in 2000 and now is prime minister, the TV networks watched by most Russians were taken over by the state, their news operations highly sanitized. Big-selling newspapers are either sympathetic to the Kremlin or owned by Kremlin-allied business groups.

Of the many free-spirited papers that sprang up when the Soviet Union collapsed, Novaya Gazeta — meaning New Newspaper — is a rare survivor.

Ocala National Bank in Florida and Suburban Federal Savings Bank of Crofton, Maryland, were shut by federal regulators, according to statements sent by the Federal Deposit Insurance Corp. MagnetBank of Salt Lake City was seized by the Utah Department of Financial Institutions. The banks had total assets of $876.4 million and deposits of $790 million.

Six banks have failed this month as tumbling home prices and a 16-year high in unemployment boost foreclosures. The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the previous period amid the worst housing crisis since the Great Depression.

Regulators closed 25 U.S. banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. Ocala and Suburban Federal combined will cost the FDIC fund about $225.6 million, the regulator said. No estimate was provided for MagnetBank.

Suburban Federal’s seven offices were scheduled to open today as branches of The Bank of Essex of Tappahannock, Virginia, which acquired the deposits. The Office of Thrift Supervision said it seized the bank because of more than a year of losses stemming from soured residential, construction and land loans.

“The OTS determined that Suburban was critically undercapitalized and in unsound condition,” the regulator said in an e-mailed statement.

Deposits Insured

Ocala was closed by the Officer of the Comptroller of Currency. CenterState Bank of Florida in Winter Haven is assuming the deposits and four branches.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in the Ocala statement.

The FDIC said it was unable to find a buyer for MagnetBank’s deposits, the first time that’s happened since 2004. Insured customers will be mailed checks for their funds next week.

First there was TARP. Get ready for BARF.

They haven’t named it that yet, but calling a federal “bad bank” to soak up toxic assets the Bad Asset Repository Fund would be truth in advertising at least. Despite Washington’s renewed enthusiasm for the idea, there is a strong case to be made against it.

The problem boils down to bank profitability, which is depleted, and the industry’s ability and willingness to lend. Offloading the worst assets into an aggregator fund would still leave banks with loan books under pressure from rising defaults. Banks would still be forced to build reserves at a time when their earnings power is reduced, and that earnings power would only shrink more with a smaller asset base.

And there is no way a “bad bank” will induce banks to lend. “Lending standards have tightened dramatically and there is an unavoidable restructuring of risk taking place,” says Meredith Whitney, the Oppenheimer & Co. analyst who was among the first to point out the looming bank crisis. “Such causes money to come out of the system and lending to contract, with or without this ‘bad bank’ structure.”

…

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.”

…

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

…

Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

The 2nd U.S. Circuit Court of Appeals overturned rulings by a lower court judge who had tossed out the lawsuits in litigation that began in 2001.

The lawsuits sought unspecified damages on behalf of children and infants who were part of a 1996 study of the oral antibiotic Trovan. The testing occurred during a meningitis epidemic that killed more than 15,000 Africans.
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The lawsuits claimed Pfizer violated international law, federal regulations and medical ethics by rushing to test the experimental antibiotic without their consent or knowledge — an assertion Pfizer denies.

Pfizer said it “remains confident that it will prevail in these cases, and is weighing its options on how to best respond to this decision.”

Peter Safirstein, a plaintiffs’ lawyer who argued the appeal, called the ruling “very, very important.”

The lawsuits were dismissed on grounds they could not be pursued under the Alien Tort Statute, an 18th century law that allows foreigners to sue in U.S. courts over international law violations.

The appeals panel ruled 2-to-1 Friday that the statute can be used.

It cited international law banning the nonconsensual medical experimentation on humans that was established with the war crimes trials at Nuremberg, where 15 doctors were convicted of war crimes and crimes against humanity for conducting medical experiments without consent. Seven of the doctors were sentenced to death and eight were sent to prison.

In 1996, Pfizer sent three American physicians to work with four Nigerian doctors to experiment with Trovan on children who were hospital patients in Kano, Nigeria.

The lawsuits say the two-week experiment on 200 sick children led to 11 deaths and left many others blind, paralyzed or brain-damaged.

“It is theoretically possible,” agency spokesperson Siobhan DeLancey said.

In January, the FDA declared that foods derived from cloned animals and their offspring were safe for human consumption. The U.S. Department of Agriculture, however, asked food companies to voluntarily maintain a ban on products from clones.

The voluntary ban did not extend to the offspring of cloned animals.

Clones are organisms artificially developed directly from the DNA of a single organism, rather than the mixing that is difficult in sexual reproduction. They are made by implanting the nucleus of an adult cell into an egg cell, which is then incubated by a surrogate mother.

According to critics of the technology, very little research has been conducted on the safety of consuming meat or dairy products from clones or their offspring, thus making it premature to bring such products to market.

“It worries me that this technology is out of control in so many ways,” said Charles Margulis of the Center for Environmental Health. He said that the FDA’s announcement that clones’ offspring might already been food supply “is just another element of that.”

A number of major U.S. food producers have announced that they will not use any ingredients derived from cloned animals, due in part to safety concerns. Companies enforcing a ban on clone products include Smithfield Foods, General Mills, Campbell Soup, Nestle, California Pizza Kitchen, Supervalu, Kraft Foods and Tyson Foods, the largest meat company in the United States.

Kraft said that consumer demand influenced its decision.

More than half a million homes and businesses, most of them in Kentucky, remained without electricity from the Ozarks through Appalachia, though temperatures creeping into the 40s helped a swarm of utility workers make headway. Finding fuel — heating oil along with gas for cars and generators — was another struggle for those trying to tough it out at home, with hospitals and other essential services getting priority over members of the public.

The addition of 3,000 soldiers and airmen makes 4,600 Guardsmen pressed into service. It’s the largest call-up in Kentucky history, which Beshear called an appropriate response to a storm that cut power to more than 600,000 people, the state’s largest outage on record. Many people in rural areas cannot get out of their driveways due to debris and have no phone service, the governor said.

“With the length of this disaster and what we’re expecting to be a multi-day process here, we’re concerned about the lives and the safety of our people in their own homes,” Beshear said, “and we need the manpower in some of the rural areas to go door-to-door and do a door-to-door canvass … and make sure they’re OK.”

Staff Sgt. Erick Duncan of Murray said he and his colleagues have been putting in long shifts to open tree-littered roads. Duncan, who manned a chain saw, said he expects the assignment to last quite a while.

“It’s a mess and we’re just in the city limits,” he said. “We’re not even out in the county yet. And there’s plenty of cities and counties to go to.”

Thousands of people were staying in motels and shelters, asked to leave their homes by authorities who said emergency teams in some areas were too strapped to reach everyone in need of food, water and warmth. The outages disabled water systems, and authorities warned it could be days or weeks before power was restored in the most remote spots.