DealBook: Buffett in $23 Billion Deal for Heinz, as Big Mergers Revive

10:12 a.m. | Updated

Warren E. Buffett has found another American icon worth buying: H. J. Heinz.

Berkshire Hathaway, the giant conglomerate that Mr. Buffett runs, said on Thursday that it would buy the food giant for about $23 billion, adding Heinz ketchup to its stable of prominent brands.

The proposed acquisition, coming fast on the heels of a planned $24 billion buyout of the computer maker Dell and a number of smaller deals, heralds a possible reemergence in merger activity.  The number of deals and the prices being paid for companies are still a far cry from the lofty heights of the boom before the financial crisis.  But an improving stock market, growing confidence among business executives and mounting piles of cash held by corporations and private equity funds all favor a return to deal-making. 

Mr. Buffett is teaming up with 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in a company whose business is complementary to Heinz’s: Burger King.

Under the terms of the deal, Berkshire and 3G will pay $72.50 a share, about 20 percent above Heinz’s closing price on Wednesday. Including debt, the transaction is valued at $28 billion.

“This is my kind of deal and my kind of partner,” Mr. Buffett told CNBC on Thursday. “Heinz is our kind of company with fantastic brands.”

In many ways, Heinz fits Mr. Buffett’s deal criteria almost to a T. It has broad brand recognition – besides ketchup, it owns Ore-Ida and Lea & Perrins Worcestershire sauce – and has performed well. Over the last 12 months, its stock has risen nearly 17 percent.

Mr. Buffett told CNBC that he had a file on Heinz dating back to 1980. But the genesis of Thursday’s deal actually lies with 3G, an investment firm backed by several wealthy Brazilian families, according to a person with direct knowledge of the matter.

One of the firm’s principal backers, Jorge Paulo Lemann, brought the idea of buying Heinz to Berkshire about two months ago, this person said. Mr. Buffett agreed, and the two sides approached Heinz’s chief executive, William R. Johnson, about buying the company.

“We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz,” Mr. Johnson said in a statement.

Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo.

Mr. Buffett told CNBC that 3G would be the primary supervisor of Heinz’s operations, saying, “Heinz will be 3G’s baby.”

The food company’s headquarters will remain in Pittsburgh, Heinz’s home for over 120 years.

Heinz’s stock was up nearly 20 percent in morning trading, at $72.51, closely mirroring the offered price. Berkshire’s class A stock was also up slightly, rising 0.64 percent to $148,691 a share.

Heinz was advised by Centerview Partners, Bank of America Merrill Lynch and the law firm Davis Polk & Wardwell. A transaction committee of the company’s board was advised by Moelis & Company and Wachtell, Lipton, Rosen & Katz.

Berkshire’s and 3G’s lead adviser was Lazard, with JPMorgan and Wells Fargo providing additional advice. Kirkland & Ellis provided legal advice to 3G, while Berkshire relied on its usual law firm, Munger, Tolles & Olson.

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'Melrose' actress gets 3 years for deadly NJ crash


SOMERVILLE, N.J. (AP) — A former "Melrose Place" actress who was drunk when her SUV plowed into a car and killed a woman was sentenced Thursday to three years in prison, infuriating the victim's relatives, who had hoped for the 10-year maximum.


"What a travesty!" the victim's husband, Fred Seeman, yelled after the sentence was read.


"This is not justice," the victim's 26-year-old son, Ford Seeman, told the judge before he stormed out of the courtroom.


A jury in November convicted Amy Locane-Bovenizer of vehicular homicide in the 2010 death of 60-year-old Helene Seeman in Montgomery Township.


Locane-Bovenizer will be eligible for parole after 2 1/2 years and will be credited the 81 days she has already served. She also had her license suspended for five years and will be on probation for three years after her release. She must pay several thousand dollars in fines.


Locane-Bovenizer, who didn't testify at the trial, appeared in 13 episodes of TV's "Melrose Place" and in movies including "Cry-Baby," ''School Ties" and "Secretary."


Prosecutors say she was driving with a blood-alcohol level nearly three times the legal limit when her SUV slammed into a Mercury Milan driven by Fred Seeman as he was turning into his driveway. Fred Seeman's wife, Helene, was killed, and he was seriously injured.


During the trial, the defense argued that Fred Seeman was making a slow turn, which contributed to the crash. They maintained that it was an accident, not a crime.


The defense also shifted blame to a third motorist who they say distracted the actress by honking at her and chasing her after being rear-ended. They said the chase led Locane-Bovenizer to drive 20 miles over the speed limit on a dark two-lane road.


The judge lowered the maximum sentence citing the hardship on Locane-Bovenizer's two young children. One has a serious medical and mental disability. The defense went into detail about how her sick child was deteriorating physically and psychologically since the actress' incarceration and about how a prolonged sentence would make it worse.


"I'm just glad her little girls will have their mother back soon," Locane-Bovenizer's mother, Helen Locane, said as she walked out of the courtroom.


In an emotionally charged statement, Fred Seeman told the court that the defense contention that his vehicle was turning slowly added "salt on the wound," and he said he was appalled that Locane-Bovenizer took no responsibility for killing his wife.


The actress, in turn, apologized to Seeman's family and said she did take full responsibility.


"I am truly sorry for all of the pain I have caused," she said, struggling to get through her statement, as she looked toward the family that packed one side of the courtroom while her friends and family packed the other. "My own suffering will never go away."


Judge Robert Reed said that he had no sympathy for the actress but that the children should not suffer even more because of her actions.


The Seeman family said after the sentencing that the decision was a "mockery" and only added to the suffering they've endured since the accident.


"What's one more punch in the gut?" Ford Seeman said.


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Doctor and Patient: Afraid to Speak Up to Medical Power

The slender, weather-beaten, elderly Polish immigrant had been diagnosed with lung cancer nearly a year earlier and was receiving chemotherapy as part of a clinical trial. I was a surgical consultant, called in to help control the fluid that kept accumulating in his lungs.

During one visit, he motioned for me to come closer. His voice was hoarse from a tumor that spread, and the constant hissing from his humidified oxygen mask meant I had to press my face nearly against his to understand his words.

“This is getting harder, doctor,” he rasped. “I’m not sure I’m up to anymore chemo.”

I was not the only doctor that he confided to. But what I quickly learned was that none of us was eager to broach the topic of stopping treatment with his primary cancer doctor.

That doctor was a rising superstar in the world of oncology, a brilliant physician-researcher who had helped discover treatments for other cancers and who had been recruited to lead our hospital’s then lackluster cancer center. Within a few months of the doctor’s arrival, the once sleepy department began offering a dazzling array of experimental drugs. Calls came in from outside doctors eager to send their patients in for treatment, and every patient who was seen was promptly enrolled in one of more than a dozen well-documented treatment protocols.

But now, no doctors felt comfortable suggesting anything but the most cutting-edge, aggressive treatments.

Even the No. 2 doctor in the cancer center, Robin to the chief’s cancer-battling Batman, was momentarily taken aback when I suggested we reconsider the patient’s chemotherapy plan. “I don’t want to tell him,” he said, eyes widening. He reeled off his chief’s vast accomplishments. “I mean, who am I to tell him what to do?”

We stood for a moment in silence before he pointed his index finger at me. “You tell him,” he said with a smile. “You tell him to consider stopping treatment.”

Memories of this conversation came flooding back last week when I read an essay on the problems posed by hierarchies within the medical profession.

For several decades, medical educators and sociologists have documented the existence of hierarchies and an intense awareness of rank among doctors. The bulk of studies have focused on medical education, a process often likened to military and religious training, with elder patriarchs imposing the hair shirt of shame on acolytes unable to incorporate a profession’s accepted values and behaviors. Aspiring doctors quickly learn whose opinions, experiences and voices count, and it is rarely their own. Ask a group of interns who’ve been on the wards for but a week, and they will quickly raise their hands up to the level of their heads to indicate their teachers’ status and importance, then lower them toward their feet to demonstrate their own.

It turns out that this keen awareness of ranking is not limited to students and interns. Other research has shown that fully trained physicians are acutely aware of a tacit professional hierarchy based on specialties, like primary care versus neurosurgery, or even on diseases different specialists might treat, like hemorrhoids and constipation versus heart attacks and certain cancers.

But while such professional preoccupation with privilege can make for interesting sociological fodder, the real issue, warns the author of a courageous essay published recently in The New England Journal of Medicine, is that such an overly developed sense of hierarchy comes at an unacceptable price: good patient care.

Dr. Ranjana Srivastava, a medical oncologist at the Monash Medical Centre in Melbourne, Australia, recalls a patient she helped to care for who died after an operation. Before the surgery, Dr. Srivastava had been hesitant to voice her concerns, assuming that the patient’s surgeon must be “unequivocally right, unassailable, or simply not worth antagonizing.” When she confesses her earlier uncertainty to the surgeon after the patient’s death, Dr. Srivastava learns that the surgeon had been just as loath to question her expertise and had assumed that her silence before the surgery meant she agreed with his plan to operate.

“Each of us was trying our best to help a patient, but we were also respecting the boundaries and hierarchy imposed by our professional culture,” Dr. Srivastava said. “The tragedy was that the patient died, when speaking up would have made all the difference.”

Compounding the problem is an increasing sense of self-doubt among many doctors. With rapid advances in treatment, there is often no single correct “answer” for a patient’s problem, and doctors, struggling to stay up-to-date in their own particular specialty niches, are more tentative about making suggestions that cross over to other doctors’ “turf.” Even as some clinicians attempt to compensate by organizing multidisciplinary meetings, inviting doctors from all specialties to discuss a patient’s therapeutic options, “there will inevitably be a hierarchy at those meetings of who is speaking,” Dr. Srivastava noted. “And it won’t always be the ones who know the most about the patient who will be taking the lead.”

It is the potentially disastrous repercussions for patients that make this overly developed awareness of rank and boundaries a critical issue in medicine. Recent efforts to raise safety standards and improve patient care have shown that teams are a critical ingredient for success. But simply organizing multidisciplinary lineups of clinicians isn’t enough. What is required are teams that recognize the importance of all voices and encourage active and open debate.

Since their patient’s death, Dr. Srivastava and the surgeon have worked together to discuss patient cases, articulate questions and describe their own uncertainties to each other and in patients’ notes. “We have tried to remain cognizant of the fact that we are susceptible to thinking about hierarchy,” Dr. Srivastava said. “We have tried to remember that sometimes, despite our best intentions, we do not speak up for our patients because we are fearful of the consequences.”

That was certainly true for my lung cancer patient. Like all the other doctors involved in his care, I hesitated to talk to the chief medical oncologist. I questioned my own credentials, my lack of expertise in this particular area of oncology and even my own clinical judgment. When the patient appeared to fare better, requiring less oxygen and joking and laughing more than I had ever seen in the past, I took his improvement to be yet another sign that my attempt to talk about holding back chemotherapy was surely some surgical folly.

But a couple of days later, the humidified oxygen mask came back on. And not long after that, the patient again asked for me to come close.

This time he said: “I’m tired. I want to stop the chemo.”

Just before he died, a little over a week later, he was off all treatment except for what might make him comfortable. He thanked me and the other doctors for our care, but really, we should have thanked him and apologized. Because he had pushed us out of our comfortable, well-delineated professional zones. He had prodded us to talk to one another. And he showed us how to work as a team in order to do, at last, what we should have done weeks earlier.

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DealBook: Blackstone Keeps Most of Its Money With SAC

The Blackstone Group, the largest outside investor in the hedge fund SAC Capital Advisors, said it would keep most of its $550 million with the hedge fund for three more months while it monitors developments in the government’s insider trading investigation.

The move by Blackstone comes as SAC’s clients faced a regularly scheduled quarterly deadline on Thursday to decide whether to continue investing with the hedge fund giant run by Steven A. Cohen.

Despite posting one of the best investment track records on Wall Street — returning 30 percent annually over the past two decades — SAC has been fighting to keep investors’ money amid an intensifying investigation into criminal conduct at the fund. In November, since prosecutors brought its most recent case against Mathew Martoma, a former SAC employee, clients have been weighing whether to continue their relationship with the fund. Mr. Martoma has denied the charges.

Large hedge fund investors like Blackstone rarely make public pronouncements about their intentions, but given the heightened interest in SAC, the investment firm issued a statement explaining the rationale for its decision.

The money that Blackstone did withdraw was done in the normal course of business and unrelated to any of SAC’s problems. Blackstone, which runs the world’s largest so-called fund of funds, placing nearly $50 billion with outside managers, is seen as a bellwether in the hedge fund industry.

“While we submitted redemptions for certain accounts as appropriate, BAAM successfully preserved flexibility for our clients by extending our decision time line,” Peter Rose, a Blackstone spokesman, said in a statement, referring to Blackstone Alternative Asset Management, the segment that invests with hedge funds. “We will use this period of time to evaluate all additional information which becomes available.”

It is unclear what the total amount of money that SAC’s clients redeemed on Thursday. The Stamford, Conn.-based hedge fund had warned its employees that it expected it could face at least $1 billion of withdrawals. A Citigroup unit that manages money for wealthy families has already disclosed that it was withdrawing its $187 million investment.

While several other former SAC employees have previously been charged with insider trading crimes, the Martoma prosecution has changed clients’ calculus because the trades at the center of the case involve Mr. Cohen. In addition, the Securities and Exchange Commission warned SAC that it might file a civil fraud lawsuit against the fund related to the trades. Mr. Cohen has not been charged and has said that he has acted appropriately at all times.

Federal prosecutors are also nearing a decision whether to bring criminal charges against Michael Steinberg, a longtime SAC portfolio manager, related to trading in the technology stocks Dell and Nvidia. A lawyer for Mr. Steinberg, Barry Berke, said in a statement that his client did absolutely nothing wrong.

Unlike other hedge funds that can be forced to shut down after a wave of client withdrawals, SAC is in a slightly unusual situation. Only about 40 percent of the $14 billion managed by SAC, or about $6 billion, comes from outside clients. The balance belongs to Mr. Cohen and his well-paid staff.

In addition, SAC has policies in place that limit the amount of money a client can withdraw during any one quarter. Clients can only withdraw 25 percent of their investment every three months. That means if a client put in a so-called redemption request on Thursday, it would receive its money back in quarterly installments beginning March 31, and getting its last dollar out on Dec. 31.

Blackstone negotiated a way to buy itself some time without delaying its ability to withdraw it investment from the fund. SAC agreed to a new redemption policy that it will extend to its other clients, allowing them to keep their money with SAC for another quarter. If after three months, clients then decide to end their relationship with SAC, the fund would return their money in three installments.

Under the new policy, SAC is permitting clients to take a wait-and-see approach, monitoring the investigation for developments that could damage the fund. And if they withdraw, they would still have all of their money returned by year-end.

SAC recent investment results have been solid, though it has lagged behind the Standard & Poor’s 500-stock index. The fund returned about 13 percent last year and 2.5 during the first month of 2013.

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Media Decoder Blog: Time Warner in Talks to Spin Off Majority of Magazines

3:53 p.m. | Updated Time Warner is in early talks to shed much of Time Inc., the country’s largest magazine publisher and the foundation on which the $49 billion media conglomerate was founded, according to people involved in the negotiations.

The company is currently in talks with the Meredith Corporation to put most of its magazines, including People, InStyle and Real Simple into a separate, publicly-traded company that would also include Meredith titles like Better Homes and Gardens and Ladies’ Home Journal.

The deal being discussed is one of several options Time Warner is exploring in order to reduce its troubled publishing unit, said these people who could not discuss private conversations publicly.

As part of the agreement, existing shareholders in Time Warner and Meredith would receive stakes in the new company, which would essentially amount to a women’s magazine company, led by People, the popular celebrity magazine and crown jewel of Time Inc.’s slate of 21 publications.

Time Warner would continue to control news-based magazines, Time, Fortune, Sports Illustrated and Money. Meredith did not express interest in including those titles and Time Warner believed those magazines can fit into its journalistic efforts at CNN and CNNMoney.com, said a person briefed on the discussions.

A Time Warner spokesman declined to comment. News of the talks was first reported by Fortune, a magazine owned by Time Inc.

The talks come weeks after Time Inc. announced it would lay off 6 percent of its global work force of more than 8,000 employees during an industrywide decline in subscription and advertising revenue. Overall revenue at Time Inc. has declined roughly 30 percent in the last five years.

Time Warner’s history is rooted in Time, the weekly news  magazine founded by Henry Luce in 1923 on which the giant media conglomerate got its start. But lately the publishing company’s sluggish performance has stood in sharp contrast to the strong performance at Time Warner’s cable channels like HBO, TBS and TNT.

In the last several years, the company has tried to trim some assets unrelated to the television and movie production business. That included shedding AOL, Time Warner Cable, the Warner Music Group and the Time Warner Book Group.

Jeffrey L. Bewkes, chief executive of Time Warner, has denied reports that he would sell Time Inc. He frequently talks about the division’s strongest brands essentially as cable television channels and has aggressively mandated that Time Inc. make its magazines available on digital devices.

“They’re printing pages right now, but they’re also on electronic screens with moving pictures,” Mr. Bewkes said in a previous interview. He added that “a cable channel like TNT or TBS” is “pretty much the same as what People or Time or InStyle should do.”

The company’s exploration of a deal that would allow it to keep male-oriented titles like Sports Illustrated, Time and Fortune would let it maintain its name and historical roots.

“Time’s name is on the door. I think Jeff feels it would be better to hang onto it and not sell it for what would be a low price,” said a person briefed on Mr. Bewkes’s thinking who could not discuss private conversations on the record.

Jack Griffin, a former chief executive at Meredith, served a brief and stormy reign as chief of Time Inc. before Laura Lang took over in January. Ms. Lang, previously the chief executive of the digital advertising company Digitas, stepped in at a tumultuous time after Mr. Griffin was forced out after less than six months on the job. She hired Bain & Company, a consultancy based in Boston, to assess the business.

Many of  Time Inc.’s magazine titles have been struggling as more readers have been reading material online, and newsstand sales have dropped. Even titles like People, which long helped financially bolster Time Inc.’s less lucrative titles, has suffered. People’s newsstand sales declined 12.2 percent in the second half of 2012 compared to the year before, according to figures released last week by the Alliance for Audited Media. Its advertising pages dropped by 6 percent in 2012 compared to the year before, according to the Publishers Information Bureau.

Last month, Ms. Lang said she was cutting staff 6 percent, or about 480 people. Magazines like Time and People asked employees to take buyouts and said they would lay people off if they did not meet those numbers. Wednesday is the last day for employees to raise their hands for buyouts.

On a conference call with analysts last week, John K. Martin, chief financial and administration officer at Time Warner, said that “very challenging industry conditions weighed” on the company’s results.

The talks come as News Corporation prepares to sever its publishing assets, including newspapers like The Wall Street Journal and The New York Post, from its more lucrative entertainment division, which includes the cable channels FX and Fox News. The separation is expected to be complete this summer.

Christine Haughney and David Carr contributed reporting.

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Miss America pageant returns to Atlantic City, NJ


TRENTON, N.J. (AP) — There she is, Miss America, headed back to Atlantic City, N.J.


The Miss America pageant was an Atlantic City staple for decades before it was moved to Las Vegas in 2006.


Gov. Chris Christie's spokesman Michael Drewniak confirmed the news of the pageant's return to Atlantic City on Wednesday night. Lt. Gov. Kim Guadagno (gwah-DAHN'-oh) is scheduled make a formal announcement Thursday on Atlantic City's Boardwalk Hall.


The Miss America pageant started as little more than a bathing suit revue. It broke viewership records in its heyday and bills itself as one of the world's largest scholarship programs for women. But like other pageants, it has struggled to stay relevant as national attitudes regarding women's rights have changed.


Pageant officials haven't responded to an after-hours email seeking comment.


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Phys Ed: Getting the Right Dose of Exercise

Phys Ed

Gretchen Reynolds on the science of fitness.

Fitness Tracker

Marathon, half-marathon, 10k and 5K training plans to get you race ready.

A common concern about exercise is that if you don’t do it almost every day, you won’t achieve much health benefit. But a commendable new study suggests otherwise, showing that a fairly leisurely approach to scheduling workouts may actually be more beneficial than working out almost daily.

For the new study, published this month in Exercise & Science in Sports & Medicine, researchers at the University of Alabama at Birmingham gathered 72 older, sedentary women and randomly assigned them to one of three exercise groups.

One group began lifting weights once a week and performing an endurance-style workout, like jogging or bike riding, on another day.

Another group lifted weights twice a week and jogged or rode an exercise bike twice a week.

The final group, as you may have guessed, completed three weight-lifting and three endurance sessions, or six weekly workouts.

The exercise, which was supervised by researchers, was easy at first and meant to elicit changes in both muscles and endurance. Over the course of four months, the intensity and duration gradually increased, until the women were jogging moderately for 40 minutes and lifting weights for about the same amount of time.

The researchers were hoping to find out which number of weekly workouts would be, Goldilocks-like, just right for increasing the women’s fitness and overall weekly energy expenditure.

Some previous studies had suggested that working out only once or twice a week produced few gains in fitness, while exercising vigorously almost every day sometimes led people to become less physically active, over all, than those formally exercising less. Researchers theorized that the more grueling workout schedule caused the central nervous system to respond as if people were overdoing things, sending out physiological signals that, in an unconscious internal reaction, prompted them to feel tired or lethargic and stop moving so much.

To determine if either of these possibilities held true among their volunteers, the researchers in the current study tracked the women’s blood levels of cytokines, a substance related to stress that is thought to be one of the signals the nervous system uses to determine if someone is overdoing things physically. They also measured the women’s changing aerobic capacities, muscle strength, body fat, moods and, using sophisticated calorimetry techniques, energy expenditure over the course of each week.

By the end of the four-month experiment, all of the women had gained endurance and strength and shed body fat, although weight loss was not the point of the study. The scientists had not asked the women to change their eating habits.

There were, remarkably, almost no differences in fitness gains among the groups. The women working out twice a week had become as powerful and aerobically fit as those who had worked out six times a week. There were no discernible differences in cytokine levels among the groups, either.

However, the women exercising four times per week were now expending far more energy, over all, than the women in either of the other two groups. They were burning about 225 additional calories each day, beyond what they expended while exercising, compared to their calorie burning at the start of the experiment.

The twice-a-week exercisers also were using more energy each day than they had been at first, burning almost 100 calories more daily, in addition to the calories used during workouts.

But the women who had been assigned to exercise six times per week were now expending considerably less daily energy than they had been at the experiment’s start, the equivalent of almost 200 fewer calories each day, even though they were exercising so assiduously.

“We think that the women in the twice-a-week and four-times-a-week groups felt more energized and physically capable” after several months of training than they had at the start of the study, says Gary Hunter, a U.A.B. professor who led the experiment. Based on conversations with the women, he says he thinks they began opting for stairs over escalators and walking for pleasure.

The women working out six times a week, though, reacted very differently. “They complained to us that working out six times a week took too much time,” Dr. Hunter says. They did not report feeling fatigued or physically droopy. Their bodies were not producing excessive levels of cytokines, sending invisible messages to the body to slow down.

Rather, they felt pressed for time and reacted, it seems, by making choices like driving instead of walking and impatiently avoiding the stairs.

Despite the cautionary note, those who insist on working out six times per week need not feel discouraged. As long as you consciously monitor your activity level, the findings suggest, you won’t necessarily and unconsciously wind up moving less over all.

But the more fundamental finding of this study, Dr. Hunter says, is that “less may be more,” a message that most likely resonates with far more of us. The women exercising four times a week “had the greatest overall increase in energy expenditure,” he says. But those working out only twice a week “weren’t far behind.”

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Hearings Begin on Treasury Nominee


Doug Mills/The New York Times


Republicans have promised to grill Jacob J. Lew, center, President Obama’s nominee for Treasury secretary, over the government’s trillion-dollar deficits.







WASHINGTON — Jacob J. Lew, President Obama’s nominee for Treasury secretary, faced some fierce questioning on Wednesday from the Senate Finance Committee on his tenure at the bailed-out Citigroup and on an investment based in the Cayman Islands. But the even-tempered, bookish Mr. Lew parried the blows and appeared likely to win the committee’s approval and Senate confirmation.




“Frankly, I think you’ve done really well today,” said Senator Orrin G. Hatch of Utah, the ranking Republican on the committee. “My gosh, I have nothing but respect for people like you who give yourself to our government.”


Many questions from Senate Republicans seemed intended to rankle or ruffle Mr. Lew and score some political points. Senator Richard M. Burr of North Carolina asked about the Benghazi attack in Libya. Senator Charles E. Grassley of Iowa, referring to Mr. Lew’s lucrative but short time at Citigroup, commanded him to “explain why it might be morally acceptable to take close to a million dollars out of a company that was functionally insolvent and about to receive a billion dollars of taxpayer support.”


Mr. Lew calmly responded, “I was compensated for my work. I’ll leave for others to judge.”


He emphasized that he had worked in operations at Citigroup, albeit for a time at an investment unit that made proprietary trades on behalf of the bank.


“I was not in the business of making investment decisions,” he said. “I was certainly aware of things that were going on. I was working in a financial institution. I learned a great deal about the financial products. But I wasn’t designing them and I wasn’t opining on them.”


Aside from his time on Wall Street from 2006 to 2008, Mr. Lew has spent most of his career as a Democratic budget official — and the White House chose him in no small part for that experience. Much of his testimony focused on the trillion-dollar budget battle he would face immediately after becoming secretary. On March 1, automatic cuts to military and nonmilitary programs, known as the sequester, will start to take effect. Republicans and Democrats are both struggling to unwind or delay them, with hundreds of thousands of jobs at stake.


Mr. Lew said Congress needed to undo the sequester. He also said political dysfunction in Washington was threatening the real economy.


“The short-term-crisis, deadline-driven practices that we’ve seen over the last couple of years are undermining the economy,” Mr. Lew said. “It’s the first time in my nearly 30 years in public life that I felt that the actions of government were actually working against the goal of getting the economy moving.”


Mr. Lew also described tax reform as a top priority, with an eye to raising more money, lowering rates, reducing loopholes and generally rationalizing the code. He said cutting the tax rate on corporate income to 25 percent from its current 35 percent would be difficult. He also called for a minimum tax on foreign profits. And he said there was “room to work together” on creating a tax system in which income is taxed only in the country where it is earned, a change long sought by large American companies that operate around the world.


Over and over, Mr. Lew asserted his longtime budget bona fides and willingness to work with Republicans. “Working across the aisle while serving under President Clinton, I helped negotiate the groundbreaking agreement with Congress to balance the federal budget,” he said in his opening statement. He added that he had been involved in “almost every major bipartisan budget agreement over the last 30 years,” and that “the things that divide Washington right now are not as insurmountable as they might look.”


But as one of Mr. Obama’s main budget negotiators in the last few years, Mr. Lew has at times clashed with Republicans, particularly in the House. Former Treasury Secretary Timothy F. Geithner, not Mr. Lew, acted as a main negotiator during the talks over the automatic tax increases and spending cuts, the so-called fiscal cliff, that Congress cut a deal to avoid last month.


During the hearing, Republicans also targeted a money-losing investment Mr. Lew had made in a fund based in the Cayman Islands. Mr. Grassley noted that Mr. Obama had derided Ugland House, which provides an address for thousands of investment entities — including the fund Mr. Lew bought into — and said he saw some hypocrisy in Mr. Lew’s nomination, given the investment.


But the attacks seemed mostly tactical. “Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment,” said Eric Schultz, a White House spokesman. “There are no new facts that provide a basis for senators to reach a different conclusion about Mr. Lew’s nomination than they reached twice before in this administration.”


Some senators — including Jeff Sessions, Republican of Alabama, and Bernard Sanders, the left-leaning independent from Vermont — have said they do not support Mr. Lew. But it seemed unlikely that he would face a filibuster that might delay his confirmation or end his candidacy.


“Mr. Lew has been confirmed by the Senate three times already,” Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said in a statement released before the hearing, referring to Mr. Lew’s service in both the Obama and Clinton administrations. “I don’t expect there to be any reason why he should not be confirmed this time around as well.”


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Ex-Officer Locked in Mountain Standoff With Police





LOS ANGELES — Law enforcement officials were locked in a standoff after a shootout outside a forest cabin on Tuesday afternoon with Christopher J. Dorner, the former Los Angeles police officer who is the target of the largest manhunt in Los Angeles Police Department history, officials said.







Stan Lim/The Press-Enterprise, via Associated Press

Police officers manned a road block near Big Bear, Calif., on Tuesday as a gunfight took place nearby with Christopher Dorner, a former Los Angeles officer accused of three killings.








The shootings happened in the San Bernardino Mountains after Mr. Dorner apparently burglarized a couple’s home, tied them up and stole their car, officials said.


Mr. Dorner was pinned down in a cabin after the shootout in which two officers were shot. They were airlifted to a nearby hospital. One of the deputies died from his injuries, The Los Angeles Times reported.


The standoff drew scores of police officers and sheriff’s deputies, from surrounding jurisdictions and led by the San Bernardino Sheriff-Coroner Department. The tension heightened as the day passed. Law enforcement agencies ordered news helicopters to keep their distance from the standoff for the protection of the officers involved. The sheriff’s online feed to its radio scanner was shut down for the same reason.


The police believe Mr. Dorner is probably monitoring the news, and Cmdr. Andrew Smith, a spokesman for the Los Angeles Police Department, addressed him directly at a news briefing.


“Enough is enough,” he said. “It’s time to stop the bloodshed and let this incident be over.”


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Alec Baldwin, wife expecting a baby this summer


NEW YORK (AP) — Alec Baldwin and his wife are expecting their first child together.


Publicist Matthew Hiltzik confirmed Tuesday that Hilaria Baldwin is due late this summer.


Alec Baldwin already is the father of a 17-year-old daughter, Ireland, from his previous marriage to actress Kim Basinger (BAY'-sing-ur). Hilaria Baldwin is a special correspondent for the TV show "Extra." The couple wed last June after a three-month engagement.


Alec Baldwin recently won a SAG Award for best actor in a TV series for the NBC comedy "30 Rock," which concluded its seven-year run two weeks ago.


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