Mass. signs new casino deal with tribe

BOSTON — Gov. Deval Patrick is calling for swift ratification by the Legislature of a revised casino compact with the Mashpee Wampanoag tribe that would provide the state with 17 percent of gambling revenues from a proposed tribal casino in Taunton.

Patrick and tribal chairman Cedric Cromwell announced the signing of the compact on Wednesday. It replaces an earlier agreement calling for the tribe to hand over 21.5 percent of gambling proceeds to Massachusetts. The federal Bureau of Indian Affairs rejected the earlier deal, saying the revenue sharing figure was too high and would violate the spirit of an Indian gaming law that says casino profits should primarily benefit a tribe's members.

The new compact also stipulates that the state would receive no revenue at all from the Mashpee if another casino operated by a commercial developer were to open in southeastern Massachusetts.

The state's gaming commission has scheduled a hearing for Thursday as it considers whether to open the region to commercial bidders. The state's 2011 expanded gambling law gave preference in the region to a federally-recognized Indian tribe, but also authorized the commission to open the process to commercial developers if it concluded that a tribe was unlikely to get the necessary approvals to go forward with a casino.

"We are pleased to see this next step in expanded gaming take place and I urge the Legislature to ratify the agreement quickly," Patrick said. "A gaming facility will bring needed jobs and economic opportunity to the region."

The Bureau of Indian Affairs must also sign off on the new compact within 45 days. Patrick has said that he "vetted" key details with federal officials, an indication that he believes the revised compact will pass muster with the agency.

The deal includes other changes from the earlier compact. For example, it drops a provision that would have offered the tribe assistance in securing new hunting and fishing rights, which the bureau had said fell outside the scope of gaming issues.

The revised compact would also run for a term of 20 years, as opposed to the 15-year term of the earlier agreement.

Mashpee tribal chairman Cedric Cromwell said he believed the new compact, which was approved Tuesday night by the tribal council, would get the backing of the federal government.

"We look forward to breaking ground in the next year on a development that will bring thousands of jobs and significant economic benefits to our tribe, the people of Taunton and the entire Southeastern Massachusetts region," Cromwell said.

Under the agreement, Massachusetts would receive 17 percent of the tribe's gaming revenues if the casino winds up being the only gambling facility in the southeast region.

If a slots parlor were to open in the region, the revenue sharing agreement would drop to 15 percent. Two of the four bidders for the sole slots parlor license allowed under the state law are also in the southeastern part of the state.

But if the gaming commission were to approve a commercial license in the region — and the Mashpee were still able to build a casino outside of the state-approved process — the tribe would not be required to hand over any of its gambling profits to Massachusetts.

In the unlikely possibility that no other resort casinos are built in Massachusetts, the revenue-sharing figure would rise to 21 percent. The state law allows for up to three regional casinos.

The tribe still faces other legal and regulatory hurdles before it can begin construction, including a requirement that the federal government take the Taunton land into trust.

Some lawmakers from southeastern Massachusetts have been pushing the gaming commission to allow commercial developers to bid for the regional license. They say the region could fall behind other parts of the state in casino development and lose out on jobs and economic development if the tribe encounters further delays.

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JPMorgan clamps down on fees from payday lenders

NEW YORK — JPMorgan Chase said Wednesday that it will take steps to protect its customers from fees and other charges that payday lenders may slap on them.

The bank said it will limit the fees that customers are charged when they overdraft their accounts to make payments to payday lenders.

It will also "enhance communication and require additional training" for employees, to make it easier for customers to stop payments. The bank will also make it easier for customers to close their accounts even when there are pending charges, including payday lender payments.

Payday lenders are a controversial sliver of the financial system. They offer short-term loans, usually targeting the cash-strapped poor. They have high interest rates, making it hard for customers to repay the loans, and the spiral worsens when the payday lenders charge extra fees.

JPMorgan and other mainstream banks do not make so-called payday loans. But they do allow the payday lenders access to their customers. The New York Times reported last month that JPMorgan, Bank of America and Wells Fargo allow payday lenders to automatically withdraw money from customers' accounts, even in states where payday lending is banned. In some cases, the Times reported, the banks allow lenders to tap checking accounts even after the customers have begged for a reprieve.

Ryan McInerney, the bank's head of consumer banking, said in a statement that the bank intended to protect customers from "unfair and aggressive collections practices."

"Some customers agree to allow payday lenders or other billers to draw funds directly from their accounts, but they may not know some of the aggressive practices that can follow," he said.

After the Times story last month, CEO Jamie Dimon described his reaction while speaking at the annual investor conference: "This is terrible, we're going to fix it."

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UK official delivers another austere budget

LONDON — Britain's Treasury chief unveiled another tough budget Wednesday despite weakness in the economy that raised fears of a third recession in a little more than four years.

Though he offered beer drinkers and car drivers a tax break — no doubt a popular move among some — and provided incentives for home-buyers and investments in infrastructure projects, George Osborne showed the Conservative-led government remains convinced that debt-reduction measures are the best way forward for Europe's third-largest economy.

"We are slowly but surely fixing our country's economic wrongs," he said.

That's not a view shared by all. After three years of austerity, the country is borrowing more than Osborne initially thought and growing far slower than anticipated.

Ed Miliband, leader of the Labour Party opposition, said the budget was "more of the same" from a government that has failed to revive the economy following its deepest recession since World War II and presided over the loss of the country's triple A credit rating from Moody's Investors Service.

"Today, the chancellor joined Twitter," Miliband said. "He could have got it all in 140 characters: Growth down. Borrowing up. Families hit. And millionaires laughing all the way to the bank. Hashtag: downgraded chancellor."

While insisting that his approach was the only way to tackle the economy's problems head on, Osborne conceded that the forecasts from the independent Office for Budget Responsibility were more downbeat than the last set less than four months ago.

The growth forecast for this year, for example, was halved to just 0.6 percent, providing Osborne with even less room to maneuver as a flat-lining economy keeps a lid on revenues and maintains the upward pressure on welfare spending. And though growth in 2014 is expected to triple to 1.8 percent, down from the previous 2 percent prediction, it's still below the country's long-run average and a fairly uncomfortable backdrop to the expected election the following year.

The economy shrank by 0.3 percent in the last three months of 2012, and many analysts have predicted another contraction in the first quarter of 2013. That would put the U.K. back into a recession — technically defined as two consecutive quarters of economic contraction.

Osborne admitted that the recovery was taking "longer than anyone hoped," and that problems in Europe were holding Britain back. The 17 European Union countries that use the euro account for around 40 percent of British exports and many of them are in recession, some of them severe. The current crisis in Cyprus is hardly going to help inspire confidence in the eurozone.

"We are still very exposed to what happens on the continent," said Osborne, who confirmed that British military and government personnel on the island would not lose out if a raid on deposits goes ahead.

Because growth has disappointed over the past few years, the government has struggled to get its public finances into shape. The budget office now estimates public debt will continue rising until 2016-17, peaking at 85.6 percent of Britain's annual gross domestic product. In its last forecast in December, it estimated debt would peak at 79.9 percent in 2015-16.

Osborne did tinker a bit with the remit of the Bank of England — giving it the chance to employ forward-looking guidance for interest rate expectations, similar to the approach now taken at the U.S. Federal Reserve.

"But this is not as bold a change as many were probably hoping for," said Vicky Redwood, chief U.K. economist at Capital Economics.

The central bank will have a new governor in the summer when current Bank of Canada chief Mark Carney takes the helm. Many expect further changes to the Bank of England's remit then.

Osborne said that some government departments will be ordered to free up money and that 3 billion pounds would be diverted to infrastructure projects. The Conservatives' coalition partners, the Liberal Democrats, have been pushing for more projects funded by borrowing in the hope of supporting economic growth.

Just hours before the key speech, figures showed unemployment increasing by 7,000 between November and January to 2.52 million. The increase was caused by more 18-24 year olds becoming unemployed. Despite the rise, the rate remained at 7.8 percent, compared with 8.3 percent a year ago.

The Trade Union Conference, an umbrella organization for unions with 6.2 million members, said the increase in capital spending that is expected to be presented in the budget isn't enough to kick-start the economy, boosting growth by just 0.06 percent.

Underlining the gravity of the day, Osborne made his first venture into Twitter, choosing to take his message directly to voters. He also posted a picture of himself signing papers beside the scarlet briefcase that symbolizes budget day in Britain.

By early afternoon, he had registered two Tweets — but had some 28,000 followers. Unfortunately for Osborne, he also found himself bombarded by disparaging comments.

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FDA warns of another compounding pharmacy recall

WASHINGTON — The Food and Drug Administration is warning doctors that a compounding pharmacy is recalling dozens of lots of the Roche drug Avastin after receiving reports of eye infections among patients.

The FDA said Wednesday that Clinical Specialties of Martinez, Ga. has received five reports of eye infections from physicians who used the drug to treat macular degeneration, a common vision disorder in seniors.

The compounding pharmacy is recalling 40 lots of Avastin distributed to doctors' offices in Georgia, Louisiana, South Carolina and Indiana since December 18, the FDA said in an online posting.

Avastin is approved as a cancer drug, but it contains the same active ingredient as Lucentis, another Roche drug approved for macular degeneration. For years, compounding pharmacies have repackaged Avastin into small vials for use by eye doctors. Repackaged injections of Avastin cost about $50, compared with $2,000 for Lucentis.

A call placed to Clinical Specialties' lead pharmacist, Austin Gore, was not immediately returned Wednesday.

Swiss drugmaker Roche has tried to discourage doctors from using Avastin for such unapproved uses. The company points out that Lucentis was specifically tested and formulated for use in the eye, and its price reflects the cost of that research and development.

However, groups like the American Academy of Ophthalmologists say there is no detectable difference in outcomes for patients. More than half the injections given for macular generation in the U.S. are Avastin, according to the group.

Age-related macular degeneration is the most common cause of blindness among older Americans, affecting about 2 million people in the U.S. over age 50. The condition causes new blood vessels to grow in the eye and leak blood and fluid, damaging the retina and distorting vision.

In recent weeks the FDA has stepped up inspections of compounding pharmacies across a dozen states after a fungal meningitis outbreak last year tied to compounded drugs.

A tainted steroid distributed by a Massachusetts-based compounding pharmacy killed 50 people and has sickened more than 720 nationwide. Many of the cases involved a rare form of meningitis tied to fungus found in the New England Compounding Center's facilities. The company has been shut down since the outbreak was discovered in September.

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On the Web: http://www.fda.gov/Safety/MedWatch/SafetyInformation/SafetyAlertsforHumanMedicalProducts/ucm344664.htm?source=govdelivery

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Senate set to approve huge 2013 spending bill

WASHINGTON — The Senate pressed ahead Wednesday on a huge, bipartisan spending bill aimed at keeping the government running through September and ruling out the chance of a government shutdown later this month.

Chamber leaders were increasingly confident that a logjam that has stalled the bill since Tuesday would be broken and that the measure would pass by late afternoon and return to the House, where a vote on Thursday would send it to President Barack Obama for his signature.

Sen. Roy Blunt, R-Mo., said he's been promised a vote on an amendment — eagerly sought by the meatpacking and poultry industries — that would offer them relief from food inspector furloughs that threaten to intermittently shutter plants.

The measure would fund the day-to-day operating budgets of every Cabinet agency through Sept. 30, provide another $87 billion to fund overseas military operations in Afghanistan and Iraq, and maintain a pay freeze for federal workers.

The measure gives the Pentagon much-sought relief from a cash crunch in accounts for training and readiness, gives veteran health programs their scheduled increases and sets the detailed, line-by-line budgets for agencies such as Commerce, NASA, Agriculture and Justice.

The measure leaves in place automatic budget cuts of 5 percent to domestic agencies and 8 percent to the Pentagon. The cuts have largely been unnoticed by the public but are making lawmakers uncomfortable, especially as intermittent layoffs known as furloughs begin to take effects next month.

The fear of those furloughs compromising safety at 173 airports slated to lose their air traffic controllers led Sen. Jerry Moran, R-Kan., to seek to restore funding to prevent the layoffs. He was denied an attempt to amend the measure, which led him to drag out debate.

Democrats have generally resisted efforts to fix the automatic cuts on an ad hoc basis, arguing that the so-called sequester needs to be replaced in its entirety as part of a broader budget deal.

The developments in the Senate come as the House resumed debate on the budget for next year and beyond. Republicans are pushing a plan that promises sharp cuts to federal health care programs and domestic agency operating budgets as the price for balancing the budget in a decade. That plan, by Budget Committee chairman and failed GOP vice presidential nominee Paul Ryan of Wisconsin, also contains a hotly contested provision calling for transformation of Medicare for beneficiaries born in 1959 and after into a program that subsidizes health insurance premiums instead of directly paying hospital and doctor bills.

The House was set to consider a set of alternative budgets from the left and right on Wednesday before voting on the GOP plan on Thursday. The Senate was expected to begin debate of the budget Wednesday in hopes of a vote on Friday.

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Investigators search Paris home of IMF chief

PARIS — A lawyer for IMF chief Christine Lagarde says French investigators have searched her Paris home as part of an inquiry into her role in a $400 million arbitration deal in favor of a tycoon.

The lawyer, Yves Repiquet (eev ruh-PEE-kay), says Lagarde has nothing to hide and welcomed Wednesday's search as another step in proving her innocence.

Lagarde was France's finance minister when magnate Bernard Tapie won a 2008 settlement with a state-owned bank over the mishandled sale of Adidas in the 1990s. Critics said the settlement was too generous.

IMF spokesman Gerry Rice said the organization's executive board had discussed the issue prior to Lagarde's appointment in June 2011, "and expressed its confidence that Madame Lagarde would be able to effectively carry out her duties as managing director."

Rice declined further comment, saying it would be inappropriate to say more about a case currently before the French judiciary.

Critics in France have said the Adidas case shouldn't have gone to a private arbitration authority in the first place because it involved a state-owned bank, Credit Lyonnais, and that Lagarde should have questioned the independence of one of the arbitration panel's judges.

Questions about the settlement began before Lagarde was appointed head of the Washington-based International Monetary Fund after her predecessor, Dominique Strauss-Kahn, quit to face charges he tried to rape a New York hotel maid. The charges against Strauss-Kahn were dropped.

During Lagarde's four-year tenure as France's finance minister, she won praise for her role in international negotiations during the global financial crisis and Europe's debt troubles.

Given the legal troubles of her IMF predecessor, Strauss-Kahn, Lagarde's contract says she is "expected to observe the highest standards of ethical conduct" and "shall strive to avoid even the appearance of impropriety in your conduct."

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Markets sanguine over Cyprus uncertainty

LONDON — Markets took the uncertainty over Cyprus' bailout in their stride on Wednesday ahead of the latest policy statement from the Federal Reserve.

Though tensions remain over the financial future of Cyprus after its Parliament rejected a proposal to raid deposits, investors think some deal will be cobbled together soon, probably with Russia, to avoid the country's bankruptcy and possible exit from the euro.

"A deal with Russia is clearly seen as the best option in the markets, where investors are piling back into risk assets," said Craig Erlam, market analyst at Alpari.

In Europe, Germany's DAX closed up 0.7 percent at 8.001.97 while the CAC-40 in France rose 1.4 percent to 3,829.56. The FTSE 100 index of leading British shares ended down 0.1 percent at 6,432.70 after another tough budget statement from the country's finance minister.

In the U.S., the Dow Jones industrial average was up 0.4 percent at 14,515 while the broader S&P 500 index rose 0.6 percent to 1,557.

Trading over the rest of the day will likely continue to be dominated by developments relating to Cyprus as political leaders there try to work out a new way to raise 5.8 billion euros ($7.5 billion) in order to qualify for 10 billion euros worth of bailout funds from its euro partners and the International Monetary Fund. Much of the interest centers on Moscow, where the Cypriot finance minister, Michalis Sarris, is meeting his Russian counterpart.

Russia could play a role in any alternative rescue package. Russians are believed to account for just under a third of Cyprus' 68 billion euros in bank deposits and the two countries are longtime allies.

"We will be here until some kind of agreement is reached," Sarris said.

Cypriot markets remained closed alongside banks and there is growing speculation they won't reopen until next week. If Cyprus doesn't work out a way to get the money it needs, the banks could fail, fueling financial chaos that could eventually cause the country to leave the euro. That's a scenario European policymakers fought to avoid with other countries for fear that an exit by one may spell the eventual end of the currency.

Investors will also be monitoring the U.S. Federal Reserve, which ends a two-day policy meeting later Wednesday. The Fed is expected to keep borrowing costs at record low levels despite signs of a strengthening economy. The meeting will end with updated economic forecasts and a policy statement, with possible hints on the future of the Fed's stimulus program. Chairman Ben Bernanke will hold a news conference.

"Bernanke's press conference will be monitored for clues as to the Fed's eventual exit policy," said Neil MacKinnon, global macro strategist at VTB Capital.

What emerges could have a big bearing on the dollar, too. If there are hints that the monetary easing the Fed has conducted over the past few years is coming to an end, it may prompt a dollar surge, especially at a time when the euro is facing headwinds.

The euro managed to recover somewhat Wednesday, along with stocks, trading 0.7 percent higher at $1.2948. Earlier this week, the euro fell to its lowest level against the dollar in 2013.

Earlier in Asia, Hong Kong's Hang Seng rose 1 percent to 22,256.44 while South Korea's Kospi fell 1 percent to 1,959.41. Mainland Chinese shares rose on optimism about the economic outlook as concerns over recent property price curbs faded. The Shanghai Composite Index surged 2.8 percent to 2,317.37, the biggest gain in more than two months, while the smaller Shenzhen Composite Index added 2.7 percent to 949.82.

Stock markets in Japan were closed for a public holiday.

Oil prices advanced alongside equities, with the benchmark New York rate up 25 cents at $92.77 a barrel.

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Survey: Low-wage workers gloomy about future

WASHINGTON — While lower-wage American workers have accounted for the lion's share of the jobs created since the 2007-2009 Great Recession, a new survey shows that they are also among the most pessimistic about their future career prospects, their job security and their finances.

The two-part Associated Press-NORC Center for Public Affairs Research survey of both employers and employees found high levels of anxiety among those earning $35,000 annually or less. Many of these workers say they're worse off now than they were before or during the recession.

And there's no question that workers see the world differently than do their bosses.

Seventy-two percent of employers at big companies and 58 percent at smaller ones say there is a "great deal" or "some" opportunity for worker advancement. But, asked the same question, 67 percent of all low-wage workers said they saw "a little" or "no opportunity" at their jobs for advancement.

The survey revealed that many people on the lowest rung in the workplace view their jobs as a dead end. Half were "not too" or "not at all" confident that their jobs would help them achieve long-term career goals. And only 41 percent of workers at the same place for more than a decade reported ever receiving a promotion.

Yet 44 percent of employers surveyed said it's hard to recruit people with appropriate skills or experiences to do lower-wage jobs, particularly in manufacturing (54 percent). And while 88 percent of employers said they were investing in training and education for employee advancement, awareness and use of such programs among the lower-wage workers was only modest.

Although President Barack Obama made it a national goal to "equip our citizens with the skills and training" to compete for good jobs, the survey shows a U.S. workforce that has grown increasingly polarized — between the haves and the have-nots and between employers and their employees.

Through last month, the economy had recovered only about 5.7 million of the 8.7 million jobs shed in the deepest downturn since the Great Depression. Low-wage jobs are usually the first to come back following a recession. While the outlook clearly is improving, economic growth remains anemic and unemployment is a still-high 7.7 percent.

Ronald Moore, 48, of Lebanon, Ind., is among those who have seen their situation improve. He started his own home-inspection company three years ago after he couldn't find enough work as a truck driver. But "nobody was buying homes, so no one needed an inspection," he said. "It was pretty rough in the beginning." Now he operates a custom cabinet business, where business is starting to improve. Slowly.

To gauge the experiences and perspectives of lower-wage workers, the AP-NORC Center conducted two separate surveys. A sample of 1,606 workers earning $35,000 or less annually was surveyed last summer, while a companion poll of 1,487 employers of such workers was conducted from November through January.

Roughly 65 percent of the jobs the U.S. economy added since the recession officially ended in June 2009 have been lower-wage ones.

Despite those numerical gains, "lower-income households have been hit very hard and have not benefited as much from the recovery," said Mark Zandi, chief economist at Moody's Analytics. "Their real wages are going nowhere. And this is a group that has more debt, fewer assets, is less likely to own a home or stocks and with little capacity to absorb higher gasoline prices."

Economists also say low-wage workers were hit particularly hard by an increase in Social Security payroll taxes resulting from "fiscal cliff" negotiations late last year between Obama and Congress.

A degree of economic "self-righting" will happen as more middle-income and higher-income jobs come back and economic growth accelerates, said Robert Trumble, director of the Labor Studies Center at Virginia Commonwealth University. "But the situation we've been facing for the last half-dozen years or so has been tough. And the lower your income, the tougher it is."

"Some things are better. But there are still some things that are still hard," said Sarah Mueller, 33, of Palm Harbor, Fla., who found work as a Montessori teacher two years ago after working as a part-time and substitute teacher. "With student loans, people are still struggling — I'm one of those people — to pay back student loans that are astronomical," she said.

Seventy-four percent of lower-wage workers say it is "difficult" or "very difficult" for them and their families to get ahead financially. Half thought their financial situation was somewhat or much worse than in 2008, when the recession was worsening.

Many worry a lot or some (71 percent) about being unable to pay their bills, unexpected medical expenses (70 percent), losing their job (54 percent) or keeping up with their mortgage or rent (53 percent).

Many reported stagnant (44 percent) or declining (20 percent) wages over the past five years.

Employers and workers tend to agree that employees themselves hold the bulk of the responsibility for helping workers to get ahead in their careers, but employers are more apt to place some of that responsibility on high schools and colleges.

Despite their many frustrations, 74 percent of low-income workers said they were very or somewhat satisfied with their jobs. Yet 90 percent of all workers said they were satisfied with their job, according to an AP-GfK poll conducted in September.

The surge in low-wage jobs seems to have escaped notice by employers, the survey suggests. Just 22 percent of them said their organization's lower-wage workforce grew over the last four years and only 34 percent expect it to increase in the coming four years.

Lower-wage workers are also pessimistic about the overall direction of the country, with 7 in 10 saying "wrong direction," above the 60 percent of all adults who said so in AP-GfK polling conducted at the same time.

"Lower-wage jobs are coming back first," said labor economist Heidi Shierholz of the Economic Policy Institute, a labor-leaning think tank. "But it's all bleak and it's all due to lack of demand for work to be done. We're still not getting more than just what we need to hang on," Shierholz said. "These last few months have looked better, but we cannot yet claim robust recovery by any stretch."

Lena Hughes, 31, of Indianapolis, a certified hospital nursing assistant, would agree.

"Everybody is struggling financially. It's hard to get jobs still," she said. "I don't think it's getting any better."

The surveys were sponsored by the Joyce Foundation, the Hitachi Foundation and NORC at the University of Chicago. The Joyce Foundation works to improve workforce development and education systems to assist job seekers who may lack skills or credentials. The Hitachi Foundation aims to expand business practices that improve economic opportunities for less well-off workers while benefiting business.

The worker survey was conducted online using the GfK KnowledgePanel and by telephone by interviewers from NORC from Aug. 1 through Sept. 6, 2012. The employer survey was conducted online and by phone by NORC from Nov. 12, 2012, through Jan. 31, 2013. The margin of sampling error for the survey of workers was plus or minus 2.9 percentage points; for employers, it was 4.5 points.

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Associated Press News Survey Specialist Dennis Junius and writer Stacey A. Anderson contributed to this report.

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Online: http://www.apnorc.org

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Follow Tom Raum on Twitter: http://www.twitter.com/tomraum

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JPMorgan, MF Global trustee reach agreement

NEW YORK — JPMorgan Chase has agreed to a deal that will return $546 million to former customers of trading firm MF Global Holdings Ltd., which collapsed in 2011 with $1.6 billion missing from its accounts.

MF Global failed in October after a calamitous bet on European debt spooked its investors, partners and clients. The bankruptcy was the eighth-largest in the U.S. and the largest on Wall Street since the 2008 collapse of Lehman Brothers. Much of the missing money belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from fluctuating prices of commodities such as corn and wheat. A House panel has said credit rating agencies and federal regulators contributed to MF Global's collapse. But it pinned most of the blame on risky strategies by ex-CEO Jon Corzine, the former New Jersey governor.

JPMorgan held MF Global funds in several accounts and also processed the firm's securities trades. The trustee tasked with getting customers' money back, James W. Giddens, threatened to sue the New York bank if it didn't return money that was transferred to the bank from MF Global. By June 2012, JPMorgan had returned $608 million to the firm.

Under a settlement agreement filed Tuesday in Manhattan bankruptcy court, JPMorgan Chase has agreed to pay $100 million to reimburse customers and will relinquish claims on $417 million that it previously returned. JPMorgan also will return over $29 million that it is holding as security on an MF Global credit line. The recovered money will eventually be passed along to customers.

The bank doesn't comment on the reserves it sets aside to pay for specific legal cases. But it said the settlement would not have a material impact on its results.

Bank spokeswoman Jennifer Zuccarelli said the bank was pleased to reach the settlement, which would help restore funds to MF Global's customers.

"As we have said before, JPMorgan worked to assist our client in a responsible manner under very challenging circumstances," she added.

The deal must be approved by Bankruptcy Court Judge Martin Glenn and District Court Judge Victor Marrero.

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Freddie accuses big banks of rigging lending rate

WASHINGTON — Freddie Mac has sued 15 big international banks, including JPMorgan Chase, Bank of America and Citigroup, accusing them of rigging a key interest rate and causing huge losses for the government-controlled mortgage giant.

Freddie filed the lawsuit Thursday in federal court in Alexandria, Va. It names the banks that set the London interbank offered rate, known as LIBOR, which provides the basis for trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

In a growing scandal, two big British banks and Switzerland's largest have been fined hundreds of millions of dollars for manipulating LIBOR by U.S. and British regulators.

A U.S. watchdog has found that Freddie and its larger sibling Fannie Mae together may have lost more than $3 billion on their investments from banks' rate-rigging.

The banks schemed together daily to manipulate and hold down the value of LIBOR from August 2007 through at least May 2010, Freddie alleges in its suit. They "acted collectively to suppress ... LIBOR, both to hide their institutions' financial problems and to boost their profits," the suit says.

The staff of the inspector general for the Federal Housing Finance Agency, which oversees Freddie and Fannie, gave the estimate of the losses late last year. The staff's memo said that Freddie and Fannie sustained the losses on $1 trillion in mortgage securities and other investments linked to the LIBOR.

Taxpayers so far have paid about $170 billion to rescue Freddie and Fannie, which suffered huge losses from risky mortgages and were bailed out by the government in September 2008 at the onset of the financial crisis. The two companies together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans.

Fannie Mae spokesman Andrew Wilson said Wednesday the company is weighing a possible suit of its own.

Spokesmen for Bank of America Corp. and Citigroup Inc. declined to comment on Freddie's suit. JPMorgan Chase & Co. spokesmen didn't immediately respond to a request for comment.

The legal action by Freddie adds to a flurry of lawsuits filed by cities and municipal agencies in the U.S. against some of the banks that set the LIBOR. The cities and agencies are seeking damages for losses they say they suffered as a result of an artificially low rate, because they hold bonds and other investments whose value is pegged to LIBOR.

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