Finance and Economic

Engineers pinned their hopes on chemicals, sawdust and shredded newspaper to stop highly radioactive water pouring into the ocean from Japan’s tsunami-ravaged nuclear plant Sunday as officials said it will take several months to bring the crisis under control, the first time they have provided a timetable.

Concrete already failed to stop the tainted water spewing from a crack in a maintenance pit, and the new mixture did not appear to be working either, but engineers said they were not abandoning it.

The Fukushima Da-ichi plant has been leaking radioactivity since the March 11 tsunami carved a path of destruction along Japan’s northeastern coast, killing as many as 25,000 people and knocking out key cooling systems that kept it from overheating. People living within 12 miles (20 kilometers) of the plant have been forced to abandon their homes.

The government said Sunday it will be several months before the radiation stops and permanent cooling systems are restored. Even after that happens, there will be years of work ahead to clean up the area around the complex and figure out what to do with it.

“It would take a few months until we finally get things under control and have a better idea about the future,” said Nuclear and Industrial Safety Agency spokesman Hidehiko Nishiyama. “We’ll face a crucial turning point within the next few months, but that is not the end.”

His agency said the timetable is based on the first step, pumping radioactive water into tanks, being completed quickly and the second, restoring cooling systems, being done within a matter of weeks or months.

Every day brings some new problem at the plant, where workers have often been forced to retreat from repair efforts because of high radiation levels. On Sunday, plant operator Tokyo Electric Power Co. announced it had found the bodies of two workers missing since the tsunami.

Radiation, debris and explosions kept workers from finding them until Wednesday, and then the announcement was delayed several days out of respect for their families.

TEPCO officials said they believed the workers ran down to a basement to check equipment after the magnitude-9.0 earthquake that preceded the tsunami. They were there when the massive wave swept over the plant.

“It pains us to have lost these two young workers who were trying to protect the power plant amid the earthquake and tsunami,” TEPCO Chairman Tsunehisa Katsumata said in a statement freecreditscore.

On Saturday, workers discovered an 8-inch (20-centimeter) crack in a maintenance pit at the plant and said they believe water from it may be the source of some of the high levels of radioactive iodine that have been found in the ocean for more than a week.

This is the first time they have found radioactive water leaking directly into the sea. A picture released by TEPCO shows water shooting some distance away from a wall and splashing into the ocean, though the amount is not clear. No other cracks have been found.

The radioactive water dissipates quickly in the ocean but could be dangerous to workers at the plant.

Engineers tried to seal the crack with concrete Saturday, but that effort failed.

So on Sunday they went farther up the system and injected sawdust, three garbage bags of shredded newspaper and a polymer _ similar to one used to absorb liquid in diapers _ that can expand to 50 times its normal size when combined with water.

The polymer mix in the passageway leading to the pit had not stopped the leak by Sunday night, but it also had not leaked out of the crack along with the water, so engineers were stirring it in an attempt to get it to expand. They expected to know by Monday morning if it would work.

Meanwhile, tens of thousands of people are still living in shelters, 200,000 households do not have water, and 170,000 do not have electricity.

Running water was just restored in the port city of Kesennuma on Saturday, and residents lined up Sunday to see a dentist who had flown in from the country’s far north to offer his services. Many were elderly and complaining of problems with their dentures.

Overhead and throughout the coastal region, helicopters and planes roared by as U.S. and Japanese forces finished their all-out search for bodies.

The effort, which ended Sunday, is probably the final hope for retrieving the dead, though limited operations may continue. It has turned up nearly 50 bodies in the past two days.

In all, more than 12,000 deaths have been confirmed, and another 15,500 people are missing.

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European Union leaders called for worldwide stress testing of nuclear plants on Friday and committed to putting their 143 reactors through the toughest security checks possible.

France, one of the nations most reliant on nuclear energy, with 58 reactors, said it would immediately close any plant if it failed a test.

At the end of a two-day summit, the EU nations agreed to submit their nuclear plants to tough safety tests by year-end and promised to heed the lessons from the accident at Japan’s Fukushima Dai-ichi nuclear complex.

German Chancellor Angela Merkel said the 27 leaders agreed “on uniform euro stress tests and the highest possible safety standards.”

“The experience of Japan has to be reflected in the new stress tests. This is not business as usual,” she said.

Merkel’s comments come two weeks since a magnitude-9 quake triggered a tsunami that knocked out the Fukushima reactor’s cooling system. Japanese Prime Minister Naoto Kan said Friday the fight to stabilize the plant remains “very grave and serious,” as officials said they suspected there was a breach in the core of a reactor that could mean more serious contamination.

The fallout has set off fears of the biggest radioactive contamination since the 1986 disaster at Ukraine’s Chernobyl, which spewed radiation across a wide distance and continues to haunt Europeans.

“European stress tests will be prepared in a coordinated fashion,” Merkel said after the summit. “The aim is the highest possible safety standard,” she said, insisting the EU would press for other European nations to follow suit.

EU officials will follow up the nuclear issue during talks in Ukraine next month. Nuclear energy is key for Ukraine, a country of 46 million. Ukraine today operates 15 reactors at four power plants, which generate nearly half of all its electricity.

“Because the danger does not stop at our borders, we encourage and support neighboring countries to do similar stress-tests,” said EU President Herman Van Rompuy. “A worldwide review of nuclear plants would be best.”

There are currently 442 nuclear power reactors in operation around the globe, with 65 more under construction. Five are in long-term shutdown.

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The first-place party in Ireland’s national election expects to begin talks on forming a new government.

The initiative on Monday rests with Fine Gael, which has so far won 70 seats in the 166-seat lower house of Parliament. Results are not yet complete.

Fine Gael’s possible coalition partner, the Labour Party, has won 36 seats while the long-dominant Fianna Fail party suffered its worst election ever, with only 18 seats so far.

If Fine Gael gets its winning total up into the higher seventies, it could also opt to form a one-party government with backing from some of the 13 independents who have won seats.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

DUBLIN (AP) _ Opposition leader Enda Kenny has already shattered Ireland’s 80-year-old political monopoly. Now he faces an even more challenging assignment _ rebuilding Ireland’s economy, nearly brought to its knees by reckless property speculation and bank lending.

Defying doubters of his ability, Kenny rebuilt his Fine Gael party into a force that handed the ruling Fianna Fail party its worst defeat since 1932 in Friday’s national vote. He faces a decision within days on building a stable government that will respond to Irish voters angry and anxious over the nation’s economic freefall and subsequent bailout by the European Union and the International Monetary Fund.

In victory, Kenny made big promises of a new style of government.

His administration will be “one of responsibility, not privilege; a government of public duty, not personal entitlement; a government looking with confidence and courage to the future, not with guilt and regret at the past,” Ireland’s next prime minister told delirious supporters late Saturday.

Only eight months ago, his Fine Gael colleagues thought so little of his leadership that they tried to oust him.

But the steely nerve and sharp tactics that Kenny displayed in rebuffing that challenge will be sorely tested as he works to assemble a strong government _ either with another party, or with the support of independents.

The latter option offers Kenny more opportunities to reward Fine Gael legislators with ministerial jobs. The temptation grows as Fine Gael wins more places in the 166-seat Dail, the lower house of Parliament; with 78 or more seats, going it alone is a viable option.

“We stand on the brink of fundamental change in how we regard ourselves, in how we regard our economy, and in how we regard our society,” Kenny said saving account pay day loan.

The vote count continued for a second day Sunday, with Fine Gael winning 68 seats and the Labour Party taking 35. Fianna Fail, which had won the most seats in every election since 1932 but was in power when Ireland’s “Celtic Tiger” economy imploded, won just 17. Sinn Fein _ which supported the Irish Republican Army in Northern Ireland _ had 13, and independents and smaller parties had 17 seats.

Irish voters punished Fianna Fail for 13 percent unemployment, tax hikes, wage cuts and a humiliating bailout that will require years of austerity budgets.

Fine Gael has experience in governing in a coalition with Labour, and Labour leader Eamon Gilmore appeared eager to deal. The combination would offer Kenny an overwhelming majority, as well as a partner to share the heat when tough choices stir popular outrage.

Still, the new government, like the last, will be constrained by the terms negotiated for the euro67.5 billion ($92 billion) credit line from the European Central Bank and the IMF. The loan is contingent on Ireland cutting euro15 billion ($20.6 billion) from its deficit spending over the coming four years and imposing the harshest cuts this year.

Kenny has pledged to try to negotiate easier terms for repaying the bailout loan. He has also promised to create 100,000 new jobs in five years and to make senior bond holders in Ireland’s nationalized banks shoulder some of the losses.

Fine Gael said it would seek to balance public finances mainly through cuts, not tax hikes; it would also reform the health service and abolish 150 public bodies.

Kenny’s path to the top has been long and, in earlier years, slow moving. Kenny, then a teacher, was elected to the Dail in 1975 to take the place of his father, who had died suddenly.

In the 2002 election, in which Fine Gael lost 23 of the 54 seats it held in the Dail, Kenny reportedly had his concession speech ready but scraped by to win a seat. Elected leader that same year, he led a revived party to win 51 seats in 2007.

Chris Curtin, head of the School of Political Science and Sociology at the National University of Ireland, Galway, said Kenny’s popularity was due to his reputation for straight dealing.

“He is seen as an incredibly honorable person, without any thread of anything untoward attached to him,” Curtin said.

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When Robert Weaver and his wife took ownership of their new home last November, they received a nasty shock.

The previous owner had changed the rental water heater three days before the deal closed, choosing an updated model from Direct Energy.

They decided to have it removed because it didn

Western European government bonds are riskier than emerging-market debt for the first time as investors brace for $1.1 trillion of borrowing from euro-region nations this year.

The Markit iTraxx SovX Western Europe Index of credit- default swaps insuring the debt of 15 countries, including Germany, Greece and Portugal, climbed to 7 basis points more than the Markit iTraxx SovX CEEMEA Index linked to Romania, Turkey and Ukraine, according to data provider CMA. The developed nations were 160 basis points more creditworthy than their emerging-market peers as recently as February.

Portugal’s borrowing costs surged at a six-month bill sale this week, the first of Europe’s high-deficit nations to test investor demand in 2011 after the threat of default forced Greece and Ireland to seek bailouts last year. Spain and Italy together need to raise 317 billion euros ($413 billion) this year, according to BNP Paribas SA.

“Concerns about the periphery are dragging down western Europe,” said Harpreet Parhar, a strategist at Credit Agricole SA in London. “Emerging markets have solid growth stories and are not directly weighed down by peripheral issues.”

Europe’s developing nations will grow 3.1 percent this year, according to forecasts by the International Monetary Fund. That’s more than double the 1.5 percent euro-region expansion shown in a Bloomberg survey of economists.

Top Performers

Credit-default swaps on junk-rated Ukraine and Romania are among the world’s best-performing government-linked contracts in the last three months, while Greece, Ireland and Spain are the worst performing, CMA prices show. Investors are shunning the debt of countries including Spain and Portugal as austerity measures fail to reassure bondholders that they can meet their obligations.

Swaps on Ireland, which agreed to an 85 billion-euro rescue package last quarter, rose to a record 640 basis points yesterday, CMA prices show. That’s up from 448 basis points Oct. 7, and means it costs $640,000 annually to insure $10 million of debt for five years.

Swaps on Greece rose 273 basis points to 1,023 in the past three months and Spain increased 120 to 346. Ukraine fell 37.5 to 474.5, while Romania dropped 21.5 to 295.5, CMA prices show.

Ireland will this year post the widest deficit in the EU at 10.3 percent of gross domestic product, following 2010’s 32.3 percent, according to the European Commission. Some Irish banks’ bonds are no longer accepted as loan collateral by the Swiss National Bank after Moody’s Investors Service lowered the country’s credit rating by five levels to Baa1 on Dec. 17.

Unresolved Issues

“People are still wary that issues remain unresolved in the financial sector,” said Christian Weber, an analyst at UniCredit SpA in Munich. “That weighs on national budgets and poses a risk to the solvency of peripheral countries.”

Portugal’s debt rating was cut one level to A+ by Fitch Ratings on Dec payday loan lenders. 23, which said the economy faces a “deteriorating” outlook. The nation’s consumer confidence dropped to a 21-month low in December, the National Statistics Institute said Jan. 5.

Portugal, which intends to sell as much as 20 billion euros in bonds to finance its budget and redemptions this year, sold 500 million euros of bills with a yield of 3.686 percent on Jan. 5, up from 2.045 percent at a sale of similar maturity securities in September. Swaps on Portugal cost 517.5 basis points, near the Nov. 30 record of 543.

‘Unholy Mess’

The credit-rating companies are also reviewing other countries. Moody’s said on Dec. 15 it may cut Spain’s Aa1 credit rating and on Dec. 16 placed Greece’s Ba1 rating on review for a possible downgrade. Greece may yet default on its debt even after a 110 billion-euro loan from the EU and IMF in May, Harvard University Professor Kenneth Rogoff said this week.

“It is an unholy mess,” said Suki Mann, a credit strategist at Societe Generale SA in London. “The pack will now be unleashed on other sovereigns until a solution is found.”

Countries such as Bulgaria, Lithuania and Kazakhstan are faring better than their advanced neighbors because they have less debt and avoided the plunge in real-estate prices that plagued the West.

Romania, which got a 20 billion-euro bailout from the International Monetary Fund and European Union in 2009, has pledged to cut its budget deficit of 7.2 percent of GDP to 4.4 percent next year. Greece’s deficit was 15.4 percent in 2009, Ireland’s 14.4 percent and Spain’s 11.1 percent, according to EU data.

Weathering the Storm

“Emerging markets as a group weathered the global recession better than advanced economies,” the IMF wrote in a report published on its website last month. “Many have seen growth bounce back during the past year, and they seem poised for high growth in coming years.”

The MSCI Emerging Markets Index of stocks gained 16 percent in 2010, beating the 8.6 percent increase for Europe’s Dow Jones Stoxx 600 Index and the 12.8 percent gain by the Standard & Poor’s 500 Index in the U.S.

Developing European governments were most affected by contagion from the sovereign debt crisis, the IMF said. Countries in the Middle East and Africa, which are also included in Markit Group Ltd.’s CEEMEA index, fared better.

That index has declined 11 basis points to 206 since it started trading on Jan. 20, 2010, CMA prices show. Markit’s Western Europe index rose 129 basis points to 213 in the same period.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

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Confidence among U.S. consumers unexpectedly fell in December, restrained by concern that jobs will remain scarce in 2011.

The Conference Board’s confidence index unexpectedly fell to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the New York-based research group showed today. Another report showed home values dropped more than economists projected.

The loss of confidence is at odds with a report from the University of Michigan that showed sentiment improved to a six- month high in December, and with data showing holiday spending posted the biggest gain in five years. Federal Reserve policy makers this month said “depressed” housing and high unemployment remained constraints on consumer spending, supporting their plans to expand record monetary stimulus.

“We should watch what consumers do and not what they say,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “If you looked at the confidence data you wouldn’t have looked for the pace of spending to accelerate as much as it has. Consumers are still very cautious and very nervous about where the labor market is headed.”

Stocks rose, led by rising shares of commodity producers as energy and metal prices climbed. The Standard & Poor’s 500 Index increased 0.1 percent to 1,258.51 at the 4 p.m. close in New York. Treasury securities fell, pushing the yield in the benchmark 10-year note up to 3.49 percent from 3.33 percent late yesterday.

Rising Sales

Retailers’ 2010 holiday sales jumped 5.5 percent for the best performance since 2005, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include Internet sales and exclude automobile purchases.

The median forecast for confidence, based on a survey of 61 economists, projected confidence would increase to 56.3. The Conference Board revised the November figure to 54.3 from a previous estimate of 54.1. Projections ranged from 53 to 60. The index averaged 96.8 during the last economic expansion that ended in December 2007.

Today’s report stands in contrast to preliminary figures from Thomson Reuters/University of Michigan which showed sentiment climbed this month as the share of Americans citing an improvement in current conditions climbed to the highest level since January 2008.

Drop ‘Surprising’

“The fact confidence moved lower is a bit surprising given the other data we have observed for the month,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “Month-to-month changes in confidence are not well correlated with those in spending. Reports from retailers as well as data on spending have been upbeat. We would give those more weight.”

The S&P/Case-Shiller index of property values fell 0.8 percent in October from the same month in 2009, the biggest year-over-year decline since December of last year, the group said today payday advance. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed.

“Despite the fact that housing will remain at pretty low levels through next year, economic growth in general will be fairly robust,” Maki said on Bloomberg Television’s “Market Pulse” with Pimm Fox. Maki said he expected growth in a range of 3 percent to 3.5 percent next year.

Home Values

The home-price gauge fell 1 percent in October from the prior month after adjusting for seasonal variations, matching September’s drop which was larger than previously estimated.

Eighteen of 20 cities showed a decrease in prices in October, led by a 2.1 percent drop in Atlanta, and decreases of 1.8 percent each in Chicago and Minneapolis. Denver and Washington were the only two that posted gains.

Six markets, including Atlanta, Charlotte, Miami, Seattle, Tampa and Portland, Oregon, reached their lowest levels in October since prices started to retreat in 2006.

“The double-dip is almost here,” said David Blitzer, chairman of the index committee at S&P. Sales aren’t “giving any sense of optimism.”

According to the Conference Board, the share of consumers who said jobs are hard to get increased to the highest level since February.

Those expecting more jobs to become available in the next six months reached the lowest level since July, while the proportion who expected their incomes to rise over the next six months also fell.

Jobs Gains

Employers added 951,000 workers to payrolls in the first 11 months of the year, according to figures from the Labor Department. December data are due Jan. 7.

The gains haven’t been large enough to reduce unemployment, which was at 9.8 percent last month after finishing 2009 at 10 percent.

President Barack Obama on Dec. 17 signed into law an $858 billion bill that extends for two years Bush-era tax cuts for all income levels, continues expanded jobless insurance benefits to the long-term unemployed for 13 months and reduces payroll taxes during 2011.

Some Americans are more willing to make big-ticket purchases. Car sales in November rose to a 12.26 million unit pace, the highest since the government’s cash-for-clunkers program in August 2009, industry data showed this month. Demand over the past three months is the strongest in two years.

“We have a high degree of confidence that 2011 is going to be a stronger sales year,” George Pipas, Ford Motor Co.’s sales analyst, said in a Dec. 20 briefing with reporters in Dearborn, Michigan, where the company is based. “We’re a whole lot better off than we were a year ago.”

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NEW YORK, N.Y.

The aggressive push federal prosecutors are making against potential insider trading is sending investigators into a legal gray area that may redefine insider trading itself.

Mutual fund company Janus Capital Group said Tuesday it was cooperating with an inquiry on insider trading. A day earlier, the FBI searched the offices of three hedge funds in New York, Connecticut and Massachusetts as part of what outside experts say could turn out to be one of the largest probes in Wall Street history.

Investigators are thought to be pursuing suspicions of trading by hedge funds and mutual funds that might have profited illegally using inside information not available to ordinary investors.

But the behavior being targeted by investigations appears more elusive and complex than the common understanding of insider trading _ high-powered executives picking up the phone, whispering secret tips about big deals, and trading stock at an unfair advantage. These were the types of cases that ensnared executives such as Ivan Boesky in the 1980s and Enron’s Jeffrey Skilling more recently.

How the alleged scheme may have worked is unclear. Federal prosecutors declined to comment on Tuesday. But what is clear is that the way information is shuttled around the world of finance today is faster, more complex and more shadowy. It involves an increasingly digitized financial world where networks of insiders can share bits of information with blinding speed.

It can also tap into so-called expert networks of industry analysts, experts and consultants who squirrel details between corporate America and Wall Street about what companies are up to _ potentially giving some investors an unfair edge.

Federal authorities have traditionally pursued high-ranking executives and their confidants in insider-trading cases. Now, they’re increasingly going after the rank and file. In September, for instance, the Securities and Exchange Commission accused a railroad supervisor and a trainman of insider trading after they noticed an “unusual number” of tours of people in “business attire” in a railyard.

The two workers and their relatives then bet in the stock market that the company would soon be taken over and made $1 million when that turned out true, according to the SEC suit.

The federal crackdown on insider trading that burst into view this week is being led by Preet Bharara, the top United States prosecutor in Manhattan. Bharara has called insider trading “rampant” and suggested it is growing.

In a strikingly revealing speech last month to the New York City Bar Association, Bharara said the detection of insider trading has “perhaps never been more difficult to attack through traditional investigative means.”

The explosion of financial information, including blogs, tweets and online newsletters, makes it easier for an accused insider trader to argue that he or she was acting on information “based on some report somewhere,” he said.

Bharara also spoke of the need to target insider trading by using a tool more typically deployed in racketeering cases: wiretaps.

“The question of why we use wiretaps to investigate illegal insider trading is, to my ear, like my asking a defense lawyer, why do you cross-examine the government’s witnesses at trial?” he said. “Court-authorized wiretaps, so long as all the legal requirements can be met, will continue to be in our toolbox in insider trading cases.”

Bharara’s office was already pursuing an insider-trading case against the Galleon Group, a once-powerful hedge fund led by Raj Rajaratnam cashadvance. He was charged last year with conspiring to trade insider information. He has pleaded not guilty.

Monday’s raids targeted three hedge funds: Level Global Investors in New York, Diamondback Capital Management in Stamford, Conn., and an address that matched Loch Capital Management in Boston. Federal law enforcement agencies would not comment other than to confirm an investigation.

Investors can use the expert networks to glean details of what’s occurring within certain industries or particular companies. Someone interested in learning more about fast-food dining in China, for example, might connect with local store managers, suppliers or experts on dining in the region.

The expert networks connect the investor and the source, getting a fee from the investor and then paying the source, who could make $400 to $500 an hour, says Sanford Bragg, CEO of the consulting firm Integrity Research Associates, which connects investors with these research firms.

Hedge funds have been paying people to dig for hard-to-find numbers on companies for years.

Tammer Kamel, president of Iluka Consulting Group Ltd. in Toronto, recalls visiting a Hong Kong fund 10 years ago that wanted to better gauge future sales by a company with factories in China. Its solution: Pay Chinese farmers near a company warehouse to count trucks leaving the site.

For a possible investment in a casino, another fund paid people to stand outside the casino and count visitors walking in, Kamel says. Then the fund multiplied that number by average losses per visitor to get a better sense of the casino’s daily take.

“The managers were openly discussing technique,” Kamel said. “They clearly thought it was just smart data gathering.”

This week, retailer Big Lots filed a lawsuit accusing a research firm of having “wrongfully induced” stores managers to disclose “trade secrets” about the chain’s inventory levels, sales and strategy. A report on those figures subsequently sent to clients “caused” Big Lots’ stock to drop 6 percent, the suit alleges.

When Bharara announced arrests in the largest hedge fund insider trading case in history a year ago, targeting the head of the Galleon Group hedge fund, he said law enforcement for the first time had made extensive use of wiretaps, just like in drug cases.

Stephen A. Miller, a longtime federal prosecutor before becoming a criminal defense lawyer at Cozen O’Connor in Philadelphia several months ago, said Bharara seemed to be packaging insider trading cases for “dramatic effect” to send a message of deterrence to the industry.

Miller said Monday’s raids might have been a reaction to the leak of the investigation in published reports over the weekend. He said it would be difficult to pinpoint when arrests might result, though he said he thought hundreds of people could be potentially subject to charges given the size of the net that’s been cast.

Miller added: “I think it’s wrong when you think of these arrests to demonize the entire hedge fund industry. There are a lot of really honorable people working at hedge funds making good smart investment decisions and not doing anything wrong.”

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The ability of credit card holders to pay off debt has shown sustained improvement this year and on Monday the top U.S. credit card issuers said that trend continued in October.

Statistics posted by five of the six biggest card companies mainly showed fewer balances being written off as uncollectible, and fewer card customers falling behind on their payments. Four of the six biggest issuers, included the largest, JPMorgan Chase & Co., reported their lowest levels of bad debt and late payments this year.

Only Bank of America reported an uptick in loans it gave up trying to collect, to 10.15 percent of balances from 9.98 percent in September. That’s still well below the peak charge-off rate of 13.53 percent the Charlotte, N.C., bank reported in December. Bank of America also said late payments dipped to 5.6 percent, from 5.71 percent the month before.

Bank of America is the second-largest issuer by outstanding balances, according to The Nilson Report, an industry newsletter.

The largest drop in charge-offs was reported by Capital One Financial Corp., which said it wrote off 7.26 percent of balances, down from 8.38 percent the prior month. Chase and Discover Financial Services Inc. posted more modest improvements. The charge-off rate at American Express Co. was flat at 4.7 percent, the lowest among the six largest card companies.

Citibank, the third-largest issuer, is due to report its performance for October later Monday.

Both charge-offs and delinquencies have been steadily falling throughout the year, with occasional upticks at certain banks.

Mike Dean, a managing director at Fitch Ratings, said the numbers show the bad debt situation for card companies is stabilizing. That’s partly because card companies have already written off billions of dollars of unpaid debt in the past few years. That leaves the banks with a better portfolio of open accounts, he said. “A lot of poor performing consumers have been written off.”

Industrywide charge-offs peaked at 10.66 percent in the second quarter, according to the Federal Reserve, and while the numbers have gotten better, Dean points out that they have yet to return to a normal range.

The historical average for charge-offs is just over 6 percent.

“We still have a ways to go,” Dean said.

And it may be some time before that point is reached.

Unemployment is one of the biggest factors in payment rates. The rate for initial filings for unemployment claims has ticked down a bit, and that correlated with the reduction in late payments and charge-offs, Dean said.

But the unemployment rate has remained stubbornly around 10 percent. The norm is between 5.5 percent and 6 percent.

And a recent AP survey of economists found that some do not believe the U.S. will return to that range of unemployment until at least 2018.

Credit card companies can expect higher delinquency rates and write-downs until that rate normalizes.

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South Korea may revive a 14 percent tax on domestic Treasury and central bank bonds held by foreigners as early as January to curb foreign-exchange volatility, a ruling party lawmaker said.

“If we don’t do it right now and the situation worsens, we may have to set up higher barricades,” Kim Song Sik, a member of the Grand National Party and the legislature’s financial committee, said in an interview yesterday in Seoul. He also called on the central bank to raise interest rates to head off asset-price bubbles.

The bonds initiative is part of a series of measures across Asia aimed at defusing the danger of hot money, or inflows of capital that push up currency and asset values in the search for short-term gains. Taiwan yesterday said it will restore curbs on foreign investment in its debt, only allowing offshore funds to have as much as 30 percent of their portfolios invested in all types of government bonds and money-market products.

Kim said that a bill to resurrect South Korea’s levy will be submitted to parliament this weekend or early next week, and predicted passage by the end of the year.

“What I’m proposing is a predictable and reasonable hurdle for capital flows in and out of the nation,” Kim said.

Won’s Gain

The won has advanced more than 9 percent against the dollar since June, the second-best performer in Asia outside Japan, after Thailand’s baht. It was little changed today at 1,113.75 per dollar as of 12:10 p.m. in Seoul, according to data compiled by Bloomberg. An appreciating currency threatens trade gains in the export-led economy.

Thailand is ending foreigners’ 15 percent tax exemption on income from domestic bonds, while Brazil last month tripled a tax on purchases of local fixed-income assets by overseas investors. Nations from China to South Africa have also strived to limit currency gains as near-zero borrowing costs in advanced economies spur demand for higher-yielding emerging-market assets.

Asian economies may need capital controls as U.S. quantitative easing threatens to stoke asset bubbles in their stock, currency and property markets, the World Bank said yesterday.

The risk is that the restrictions diminish the appetite of foreign investors on a more lasting basis, said strategist Christian Carrillo.

Long-Term Risk

“The re-imposing of the withholding tax could weaken the Korean won temporarily but damage to foreign confidence on KTB investments will be long-lasting,” Carrillo, head of Asia- Pacific rates strategy at Societe Generale SA, said in Tokyo yesterday, using the acronym for Korean Treasury Bonds no teletrack payday loan.

Overseas investors currently don’t have to pay the 14 percent tax applied to domestic buyers. South Korea will “seriously consider” whether to withdraw the exemptions, Finance Minister Yoon Jeung Hyun said on Oct. 19.

“I’m pretty confident about the possibility of the bill passing” this year, Kim said. “If approved, the bill will take effect in January.” The tax on interest income and capital gains would apply only to new purchases from that month.

The ruling Grand National Party controls 171 seats in the 299-member legislature. Kim said that opposition Democratic Party lawmakers want even tougher capital control measures such as a transaction tax.

‘Lot of Discussion’

“If the proposal is submitted to parliament I expect a lot of discussion on it,” said Hae Yung Woo, director of the government bond policy division at the Ministry of Strategy and Finance.

South Korean regulators began an audit of banks handling foreign-currency derivatives on Oct. 19 to tackle speculation. Financial Supervisory Service Governor Kim Jong Chang said this week the country may tighten curbs on bank trades of the derivatives and penalize institutions acting improperly.

Overseas investors held 79 trillion won ($71 billion) of South Korean debt in October, data from the Financial Supervisory Service this month showed. Foreigners owned 7.1 percent of the country’s outstanding bonds.

The Grand National Party’s Kim also called on the Bank of Korea to take prompt action on monetary policy to avoid asset bubbles.

“If I were a central bank board member, I would raise interest rates next week,” Kim said. “We need to normalize the rates as we’re getting out of the crisis and secure some policy tools to counter another possible crisis. It is critical to send a clear signal of normalization and regain the market trust.”

The central bank kept the benchmark interest rate unchanged at 2.25 percent after raising it by 25 basis points, the first advance since the global financial crisis. The board meets next week to decide interest rates.

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