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The decision keeps Blackwater – since renamed Xe – in Iraq months longer than anyone has suggested publicly, while raising questions about why the U.S. would pay a contractor for work in Iraq if it may not be able to operate there legally.

The State Department has been under pressure from Blackwater critics, including several in Congress, not to renew the company’s contracts in Iraq. Much of the concern stems from a 2007 incident that left 14 Iraqi civilians dead and six former Blackwater guards facing manslaughter charges. One of the guards pleaded guilty, but the company was accused of no wrongdoing in the incident.

In late January, the Iraqi government said it would not renew Blackwater’s operating license and that the company would have to leave as soon as a joint Iraqi-U.S. committee completes its work on guidelines for the operation of private security companies. State Department officials said they would honor the decision.

On Feb. 2, a department spokesman was asked whether officials planned to renew one of Blackwater’s contracts past May. The spokesman, Robert Wood, said the department had told Blackwater “we did not plan to renew the company’s existing task force orders for protective security details in Iraq.”

But records available through a federal procurement database show that on that same day, the State Department approved a $22.2 million contract modification for Blackwater “security personnel” in Iraq, with a job completion date of Sept. 3, 2009.

“Why would you continue to use Blackwater when the Iraqi government has banned the highly controversial company and there are other choices?” asked Melanie Sloan, executive director of the nonpartisan Citizens for Responsibility and Ethics in Washington.

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At issue is whether the government can require federal judges to order mobile phone companies to release historical cell-tower information of a phone number without probable cause — the standard required for a search warrant. While judges have varied on the issue, the resulting evidence can be used in a criminal prosecution.

Mobile phone providers keep such information for up to 18 months. Historical cell-site location information includes the tower connected at the beginning of a call and at the end of the call.

“Because wireless carriers regularly generate and retain the records at issue, and because these records provide only a very general indication of a user’s whereabouts at certain times in the past, the requested cell-site records do not implicate a Fourth Amendment privacy interest,” the Obama administration wrote Feb. 13 to the federal appeals court.

The court filing underscores that the Obama administration is continuing to maintain the Bush administration’s hard-line position when it comes to supporting warrantless surveillance.

The latest surveillance case is believed to be the only one of its kind to reach the federal appellate level, said Jennifer Granick, the civil liberties director for the Electronic Frontier Foundation.

“Almost everybody in the United States carries or will carry a cell phone,” she said. “This tracking ability is a means where the government can find out the location of pretty much everybody without much effort or expense.”

Oil is priced in dollars and when the U.S. currency weakens, it essentially makes crude cheaper.

Benchmark crude for April delivery surged $3.39 to $51.53 a barrel in light trading on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.

With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped $3.24 to $52.14 a barrel.

Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that’s expected to jolt the economy with lower rates on mortgages and other consumer debt.

The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

“You’re seeing wild swings in a lot of commodities today,” said Phil Flynn, analyst at Alaron Trading Corp. “The government is basically printing money to buy back all this paper, and it devalues the dollar.”

The U.S. dollar dropped against other major currencies Thursday morning. The euro traded at $1.3542, up from $1.3424 late Wednesday.

The dollar fell by 3.8% against the euro and by 3.6% against the pound.

The US currency also declined against the yen, the Norwegian krone, the Australian dollar and Brazilian real.

The Fed’s decision to buy debt means it is effectively creating new money, leading to concern from investors about the over-supply of dollars.

Dollar rally ends

The dollar traded at $1.449 against the pound, its lowest since late February.

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed’s measures in the last year.

The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply.

The idea was to encourage more economic activity by lowering interest rates, including those on home loans, and to help the financial system as it struggles under the crushing weight of bad loans and poor investments.

Investors responded with surprise and enthusiasm. The Dow Jones industrial average, which had been down about 50 points just before the announcement, jumped immediately and ended the day up almost 91 points at 7,486.58. Yields on long-term Treasury bonds dropped markedly, and analysts predicted that interest rates on fixed-rate mortgages would soon drop below 5 percent.

But there were also clear indications that the Fed was taking risks that could dilute the value of the dollar and set the stage for future inflation. Gold prices rose $26.60 an ounce, hitting $942, a sign of declining confidence in the dollar. The dollar, which had been losing value in recent weeks to the euro and the yen, dropped sharply again on Wednesday.

In its announcement, the central bank said that the United States remained in a severe recession and listed its continuing woes, from job losses and lost housing wealth to falling exports as a result of the worldwide economic slowdown.

“In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability,” the central bank said.

As expected, policy makers decided to keep the Fed’s benchmark interest rate on overnight loans in a range between zero and 0.25 percent.

Wall Street and Asian stocks climbed after the Fed’s surprise decision on Wednesday to buy up to to $300 billion of longer term U.S. government debt over the next six months and expand an existing scheme to buy mortgage related securities by another $850 billion, to $1.45 trillion this year.

The Fed, which has already brought its benchmark interest rate to near zero, had said it was considering buying long-term Treasuries, but few Fed watchers had expected it to follow Japan and Britain in pumping money directly into the economy so soon.

“This is a pretty dramatic move,” said James Caron, head of global rates research at Morgan Stanley in New York. “They are trying to bring down all consumer rates.”

U.S. home mortgage rates fell toward record lows around 5.00 percent, Treasury bond yields dropped by the biggest one-day margin since the 1987 stock market crash and the S&P 500 benchmark stock index .SPX spiked up by 2.1 percent.

Goldman, which accepted billions of taxpayer dollars last fall and, as learned Sunday, was also a big beneficiary of the rescue of the American International Group, is offering to lend money to more than 1,000 employees who have been squeezed by the financial crisis. The loans, offered via e-mail last week, could range from a few thousand dollars to hundreds of thousands.

Working at Goldman has long been regarded as a sure path to riches. But Goldman’s employees are losing money on their personal investments — particularly in Goldman’s own elite investment funds, which have been considered one of the perks of working at the bank.