Russian officer convicted in Moscow as US spy

MOSCOW — A military court on Friday convicted a Russian officer of passing missile secrets to the CIA and sentenced him to 13 years in prison, officials said.

Lt.-Col. Vladimir Nesterets also was stripped of his military rank after he pleaded guilty to passing classified information about Russian missile tests to the CIA for money, said the Federal Security Service, the main agency that replaced the KGB.

The agency said Nesterets committed treason as he worked as a senior engineer at the Plesetsk launch pad in northwestern Russia, a facility the military uses to launch satellites and test missiles.

The security service’s terse statement did not say when Nesterets had been arrested or give any further details about his case.

The conviction comes amid growing tension in U.S.-Russian relations, despite President Barack Obama’s efforts to “reset” them from strains that had developed during the previous U.S. administration.

Relations between Moscow and Washington have worsened over a new U.S.-led missile defense system being developed by NATO around Europe, and Russia teaming with China to block a U.N. Security Council resolution that would have urged Syrian President Bashar Assad to step down.

Russian Prime Minister Vladimir Putin also has been increasingly eager to challenge the U.S. as he campaigns to reclaim his nation’s presidency in next month’s election. He has accused Washington of fueling the massive protests that have recently taken place against his rule in order to weaken the nation.

Earlier this week, Putin’s protege, President Dmitry Medvedev, praised the Federal Security Service for exposing 41 foreign intelligent officers and 158 of their agents last year.

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At a closed-door retreat in a Long Island mansion late last October, United Nations Secretary General Ban Ki-moon and his topmost aides brainstormed about how the global organization could benefit from a “unique opportunity” to reshape the world, starting with the Rio + 20 Summit on Sustainable Development, which takes place in Brazil in June.

A copy of the confidential minutes of the meeting was obtained by Fox News. According to that document, the 29-member group, known as the United Nations System Chief Executives Board for Coordination (CEB), discussed bold ambitions that stretch for years beyond the Rio conclave to consolidate a radical new global green economy, promote a spectrum of sweeping new social policies and build an even more important role for U.N. institutions “ to manage the process of globalization better.”

At the same time, the gathering acknowledged that their ambitions were on extremely shaky ground, starting with the fact that, as Ban’s chief organizer for the Rio gathering put it, “there was still no agreement on the definition of the green economy, the main theme of the [Rio] conference.”

But according to the minutes, that did not seem to restrain the group’s ambitions.

Its members see Rio as the springboard for consolidation of an expanding U.N. agenda for years ahead, driven by still more U.N.-sponsored global summits that would, as one participant put it, “ensure that the U.N. connected with the roots of the current level of global discontent.”

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While criticism surrounding Operation Fast and Furious has so far focused on the Bureau of Alcohol, Tobacco and Firearms, three other federal agencies knew about the operation and some of their agents tried to stop it, according to the former chief of the U.S. Drug Enforcement Administration in Tucson.

Tony Coulson, the DEA’s agent in charge of Southern Arizona during Fast and Furious, says many federal field agents knew the ATF was walking guns to Mexico, but supervisors told them to back off when they objected.

“Clearly, we went too far,” Coulson said. “The question we had among rank and file law enforcement was, ‘When is someone going to call ATF on this, when is someone going to tell them to stop?’”

Coulson’s remarks jibe with what is already known about the operation. The DEA, the FBI and ICE, also known as Immigration Customs and Enforcement, all played roles in the investigation.

WASHINGTON (AP) — Ben Bernanke says declines in home prices have forced many Americans to cut back sharply on spending and warns that the trend could continue to weigh on the economy for years.

The Federal Reserve chairman drew the connection between home values and consumer spending, which fuels 70 percent of economic activity, on Friday during a speech to the National Association of Home Builders in Orlando.

Bernanke says the broader economy won’t fully recover until the depressed housing market turns around. People are spending less because they are stuck in “underwater” homes, which are worth less than what is owed on the mortgage. And home values are falling because of foreclosures and tight credit — even in areas with lower unemployment.

“Recent declines in housing wealth may be reducing consumer spending between $200 billion and $375 billion per year. That reduction corresponds to lower living standards for many Americans,” Bernanke said.

The Fed chairman said there’s no “silver bullet” to rescue the housing market. Renting out foreclosed homes and reducing or modifying mortgages are among steps that could help.

“Low or negative equity creates additional problems for households,” Bernanke said. “It reduces financial flexibility: Homeowners who are underwater on their mortgages cannot tap home equity to pay for emergency health expenses or their children’s college educations.

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The spread between yields on corporate bonds and Treasury debt widens or shrinks based on investors’ willingness to take on the riskier securities, which has a lot to do with their economic outlook.

You’d think that would have mean last week’s positive employment report would make that gap shrink because investors would be more confident.

But the spread tells a different story, said economists at Moody’s Capital Markets Research Group.

“Investors have responded with caution to favorable news on U.S. economic activity,” John Lonski, chief economist at Moody’s , wrote in a report Friday.

The gap between high-yield bonds and Treasurys did plunge the day the data came out, to 531 basis points from 554 basis points the day before, he said. (A basis point is one-on-hundredth of a percentage point.)

However, since then the spread has widened back out to 550 basis points.

BOSTON (Reuters) – Massachusetts securities regulators said on Friday that they were subpoenaing Bank of America for documents to determine if the lender knowingly overvalued assets in certain investment products.

Local investors lost about $150 million in investment vehicles structured by Banc of America Securities LLC, said William Galvin, the state’s top securities regulator.

Now his office is asking the Charlotte, North Carolina-based bank to supply documents for its activities involving collateralized loan obligations.

The CLOs include LCM VII Ltd and Bryn Mawr CLO II Ltd, which were structured by the bank and sold to investors in 2007.

Galvin, who has been especially aggressive in looking into how big banks hurt small investors during the housing crisis and financial crisis, said he wanted to find out if the issuer “was knowingly overvaluing assets in the portfolio to get them off their books and onto investors.”

The news comes one day after Bank of America and other large lenders agreed to a $25 billion settlement over alleged foreclosure abuses.

There was no immediate comment from Bank of America.

ATHENS, Greece (AP) — Greece’s future in the euro grew increasingly precarious Friday as violence erupted on the streets of Athens during a general strike and five politicians resigned from the government after European leaders demanded deeper spending cuts.

Hours after Greece claimed it had reached an agreement among its squabbling party leaders on new cutbacks, European officials dashed any hopes that the country was close to getting its bailout. Finance ministers said more austerity needs to be agreed and set a deadline for the middle of next week.

If Greece’s government fails to meet Europe’s demands, the debt-ridden country faces a chaotic debt default next month that would send shockwaves around the world economy and could doom a generation of Greeks to even deeper hardship.

If it does deliver those demands, Europe has committed to give it a euro130 billion ($172 billion) lifeline that would at least postpone Greece’s day of reckoning.

“No disbursement without implementation,” Jean-Claude Juncker, the Luxembourg premier who also chairs the eurozone’s finance ministers’ meetings, said Thursday after they declined to fully back the deal Greek leaders had agreed.

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Amid a backlash from many Catholics and proponents of religious liberty, President Barack Obama announced Friday that his administration will not require religious institutions like hospitals and universities to provide free contraception to their employees in their health insurance.

Speaking to reporters at the White House Friday, Obama offered a compromise that would allow women to obtain free contraception but would require them to obtain it directly from their insurance companies if their employers object to birth control because of religious beliefs.

“Whether you’re a teacher or a small businesswoman or a nurse or a janitor, no woman’s ‘s health should depend on who she is, or where she works, or how much money she makes,” Obama said, calling free contraceptive care a “core principle” of his health care law, which requires that all preventive services be provided at no cost to patients.

Obama went out of his way to say that he supports freedom of religion, pointing out that one of his stints as a community organizer in Chicago was funded by a Catholic group.

“As a citizen and as a Christian I cherish this right,” Obama said. “I saw that local churches did more good for a community than a government program ever could.”

Planned Parenthood and the Catholic Health Association each approved of the compromise, which the White House is calling an “accommodation,” in statements on Friday.

(CNN) — If you use Google, and I know you do, you may have noticed a little banner popping up at the top of the page announcing: “We’re changing our privacy policy and terms.” It gives you the choice to “Learn More” or, another option, the one I’m betting most people followed, to “Dismiss.”

Who wants to read about what Google plans to do with all that information it has about us?

I, too, clicked “Dismiss.” That’s because the very idea of considering what Google knows about me can give me heartburn. And if that happens, I may want to Google “heartburn,” and then I’ll wonder if my insurance company will find out that I was searching “heartburn,” or, worse, that one day I will apply for a new insurance company and the side effects of having considered what Google knows will result in a denial of coverage. But I digress.

When Google announced its new policy, lovingly explaining its reason as “our desire to create one beautifully simple and intuitive experience across Google,” the authorities in Europe immediately told the Internet leviathan to put off its March 1 start date until European Union officials had a chance to review Google’s new quest for beauty and simplicity.

Europeans, it turns out, are much less trusting of invasions of our electronic privacy than Americans are. Americans have an intense aversion to government intrusion. If the FBI wanted to examine Google searches, the left and the right would come together — the ACLU, Tea Party, liberals and libertarians would raise their fists together to fight for freedom of privacy. The Supreme Court would join in, as it did in the case of GPS surveillance, and conclude the people have a right to privacy, a right against any “unreasonable search,” as the Constitution says.

But in the case of Google’s latest move to consolidate user’s data, however, most Americans paid little attention.

Kiev, Ukraine (CNN) — Suffering in the grip of a brutal winter where temperatures have not risen above freezing in nearly a month, Ukraine has seen a wave of deaths related to the cold, and the country’s ambulance service is inundated with calls for help.

On one recent night, emergency services raced through the streets of the capital, Kiev, in response to a call about a homeless man passed out in the freezing weather.

The man got drunk and either fell asleep or dropped unconscious outside, putting him at risk of frostbite.

Vladimir Poddubniy, a passerby, found him, brought him indoors and called for an ambulance.

Shelters overwhelmed in Poland When paramedics arrived, they found the homeless man, who gave his name simply as Kostya, squatting drunk on the floor. His hand was so swollen, he could barely hold his cigarette.

Poddubniy said the man was freezing to death, so he brought him inside.

“I felt sorry for him. But I also didn’t want to find a body in the morning,” Poddubniy said.

So they are naturally furious with us. How dare we continue to kill our enemies that they are harboring?

PESHAWAR, Pakistan – A US drone strike on a house in northern Pakistan killed at least four suspected militants, and is suspected to have killed Al Qaeda’s Pakistani leader Badar Mansoor, Fox News reports.

The attack is the second in 24 hours. A strike Wednesday in the same area killed at least 10 and several others were injured.

The back-to-back strikes could be an indication the drone program is picking up steam again after a slowdown caused by tensions with Pakistan over accidental American airstrikes that killed 24 Pakistani soldiers last year.

The U.S. held off on carrying out drone strikes for over six weeks after the deadly accident on Nov. 26. There have been a handful of attacks since they resumed in January, but the last two are the first consecutive strikes since the border incident.

WASHINGTON – A new report by Republicans on the House Armed Services Committee slams both the Bush and Obama administrations for taking too many risks when releasing prisoners from Guantanamo Bay prison, Fox News has learned.

The 93-page report, which is expected to be approved Thursday, criticizes the evolution of detainee policies over the past decade and claims both the Bush and Obama adminstrations have adhered to “domestic political pressures” to allow the transfer of some detainees. In turn, those transfers have amped up the national security risk to the United States.

The report comes as the Obama administration officials have acknowledged that they are considering whether to release several Afghan Taliban prisoners from Guantanamo and send them to a third country as an incentive to bring the Taliban to peace talks. The step is certain to create an uproar in Congress, especially among Republicans. The 93-page study is likely to be part of the Republican effort to influence the ongoing debate.

Nearly 14 percent of the former detainees re-engaged in terrorist or insurgent activities upon release, and another 12 percent are suspected of doing so, according to the document.

“The Bush and Obama administrations, reacting to domestic political pressures and a desire to earn goodwill abroad, sought to reduce the Guantanamo population by sending detainees elsewhere,” the report said. “Both administrations faced the persistent challenge of ensuring that the potential threat posed by each detainee had been aptly assessed before transfer or release, and that the countries that received the detainees had the capacity and willingness to handle them in a way that sufficiently recognized the dangers involved.”

WASHINGTON – The Nuclear Regulatory Commission has approved the first new nuclear power project in more than three decades.

The panel on Thursday approved plans from Southern Company for two reactors at a Georgia site. The $14 billion reactors could begin operating as soon as 2016 and 2017.

The NRC last approved construction of a nuclear plant in 1978, a year before a partial meltdown of the Three Mile Island nuclear plant in Pennsylvania raised fears of a radiation release and brought new reactor orders nearly to a halt.

The NRC approved a new reactor design for the Georgia plant in December. Utility companies in Florida and the Carolinas also plan new reactors that use the same design by Westinghouse Electric Co.

The planned reactors are remnants of a once-anticipated building boom that the power industry dubbed the “nuclear renaissance.”

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John Edwards’ failed presidential campaign racked up close to $900,000 in expenses in 2011, according to newly filed finance reports, dropping thousands of dollars on airfare and hotels despite a ruling from federal election officials that he still owes taxpayers more than $2.1 million.

The dozens of pages of filings for the year do not go into detail about where the flights were headed or where the hotels were booked. The purpose of the travel expenses was not clear.

But they appeared to criss-cross the country. In January, August and December, the campaign spent $2,268 for tickets on Alaska Airlines, a transcontinental carrier that does not offer flights between East Coast cities such as Raleigh or Washington.

DAMASCUS, Syria – The U.S. and its allies were considering giving military aid to the Syrian opposition battling the regime of President Bashar al Assad in an 11-month uprising that activists say has killed more than 6,000 people.

The Pentagon had drawn contingency plans that could include supplying the Free Syrian Army (FSA) with weapons and establishing a humanitarian corridor to deliver aid to civilians, The (London) Times reported Thursday, citing a U.S. official.

While U.S. officials said they were “scoping out” military options, any plans at the moment were purely “academic.”

Several nations have already been aiding the rebels, with Saudi Arabia providing financial assistance and Qatar supplying them with 3,000 satellite phones. Qatar was also deliberating giving the FSA night-vision equipment and anti-tank missiles.

The FSA’s logistical coordinator Sheikh Zuheir Abassi told The Times the rebels wanted the West to provide no-fly zones and a haven from which they could safely operate.

“If we were given these two, most of the army would desert and join us,” Abassi said. “We are not asking the West to intervene but to give us weapons. We can do the rest.” Some 40,000 soldiers have deserted the regular army to date, the opposition said.

(CNN) — Beneath Rick Santorum’s stunning three-state sweep on Tuesday stands another stubborn sign of dissatisfaction with the status quo: Republican turnout is down.

I’m talking embarrassingly, disturbingly, hey-don’t-you-know-it’s-an-election-year bad. It is a sign of a serious enthusiasm gap among the rank and file, and a particularly bad omen for Mitt Romney and the GOP in the general election.

Here’s the tale of the tape, state by state, beginning with Tuesday night: Minnesota had just more than 47,000 people turn out for its caucuses this year — four years ago it was nearly 63,000 — and Romney came in first, not a distant third as he did Tuesday night. In Colorado, more than 70,000 people turned out for its caucus in 2008 — but in 2012 it was 65,000. And Missouri — even making a generous discount for the fact that this was an entirely symbolic contest — had 232,000 people turn out, less than half the number who did four years ago.

Even with months of pre-primary hype and attention solely devoted to the Republican field, turnout in this election cycle essentially flat-lined. In Iowa, a little more than 121,000 people voted, compared with nearly 119,000 four years before, when action in the Democratic caucuses absorbed most of the attention.

John AvlonIn New Hampshire, the same dynamic applied — 245,000 voters turned out in 2012, compared with 241,000 four years before, despite Republicans being the only game in town and independents making up 47% of the total turnout in 2012, according to CNN exit polls. Take out the independent voters and you’ve got a deep net decline.

Always proudly rebellious, South Carolina has been the great outlier in this election cycle. With Newt Gingrich making an all-out push for conservatives in a conservative state, turnout was up almost 150,000 over four years before.

But in Florida, the decline became unmistakable. Maybe it decreased because the Romney and Gingrich campaigns, plus super PACS, spent more than $18 million in the Sunshine State on TV ads, of which 93% were negative in the last week alone, according to the Campaign Media Analysis Group. After all, negative ads depress turnout. But after all the mud was thrown, 1.6 million people turned out in the nation’s fourth largest state, which might sound impressive until you compare it with the nearly 2 million who turned out in 2008.

Nevada was even worse, with 32,894 people turning out to vote in a state with more than 465,000 registered Republicans. Four years before, more than 44,300 participated in the caucus. Turnout was down more than 25% despite the GOP caucuses being the only game in town. Party officials were expecting a turnout of more than 70,000.

Santorum trifecta shakes up GOP race All this should be a wake-up call for the GOP. Despite an enormous amount of national media attention devoted to each of the states to date, the response has been a notable yawn among the Republican rank and file.

The turnout numbers are even worse when you compare them with the number of registered Republicans in each state that has voted to date.

The caucuses in particular bring out an unrepresentative sample of a state’s Republican Party. For all the grass-roots romanticism, there has got to be a better way to pick a presidential nominee.

But the news is worst for Romney, long the presumptive front-runner in a party that tends to reward the man next in line.

“Reluctantly Romney” could be a bumper sticker, even for his supporters. The former Massachusetts governor has found it difficult to climb above 35% in national polls, meaning that a majority of Republicans still support someone else in a notably weak field. His vote margins and totals lag behind those of four years before, when he lost the nomination to John McCain in a crowded and comparatively competent field, although Minnesota is the first state he won in ’08 and lost in 2012.

You reap what you sow, and part of the reason turnout is down is directly related to the problem of polarization. The Republican Party is more ideologically polarized than at any time in recent history. Therefore, it put up more purely right-wing candidates than it did four years before, when center-right leaders such as McCain and Rudy Giuliani were also in the race. A bigger tent inspired bigger turnout.

But the other reason is simple dissatisfaction with the candidates.

Republicans seem united in their anger against the president — like the Democrats in 2004 — but they are uninspired by their options. Draft movements for fantasy candidates ranging from Chris Christie to Mitch Daniels to Paul Ryan and even Jeb Bush have started and failed. Some party leaders show more enthusiasm for a hypothetical 2016 crop of candidates, including Marco Rubio and Bobby Jindal, than they do for the flawed choices before them in this election. Divided and dispirited is an odd place for the Republican Party to be so soon after the enthusiasms of the 2010 tea party-driven election.

The bottom line is that voter turnout matters. And what should be most troubling for Republicans is that this enthusiasm gap among the conservative base is accompanied by a lack of candidates who might appeal to independents and centrist swing voters in the general election. It is a double barrel of bad news for the Republican Party. The numbers can be spun and rationalized by professional partisan operatives all day long, but the fact remains — voters just aren’t turning out to cast their votes for this crop of conservative candidates in 2012.

BEIJING — The former top cop of a major Chinese city has dropped from sight amid unconfirmed reports he is seeking U.S. asylum following a quarrel with one of China’s most powerful local politicians.

Wang Lijun, a crusading lawman who made his name busting crime gangs and inspired a drama on state TV, has taken leave to recover from anxiety and overwork, the city government of Chongqing said in a statement Wednesday.

Wang, who also is a vice mayor of Chongqing, was shifted out of his role as police chief last week, prompting speculation of a falling-out with the city’s powerful Communist Party secretary, Bo Xilai, who is widely believed to be seeking national office.

The police chief may have fallen out of favor because his 2008-2010 crackdown on criminal gangs strayed from standard procedures and clashed with the central government’s current campaign to strengthen the rule of law, Beijing-based political analyst Li Fan said.

Days of speculation about his situation spiked Wednesday with online reports that he sought asylum at the American consulate in the nearby southwestern city of Chengdu on Tuesday after quarelling with Bo.

Employees of businesses near the Chengdu consulate reported large numbers of police vehicles in the area on Tuesday night, but said the area was quiet on Wednesday.

Richard Buangan, a spokesman for the U.S. Embassy in Beijing, declined to discuss those reports, but said there had been “no threat to the consulate yesterday, and the U.S. government did not request increased security around the compound.”

Buangan said there would be no comment on the reports of an asylum bid. Chinese Foreign Ministry spokesman Liu Weimin told reporters he had no information on the matter.

A city government spokesman, who like many Chinese bureaucrats would give only his surname, Ye, said he could neither deny or confirm the reports of Wang’s asylum bid.

“We saw that on the Internet, too. I don’t have relevant information now,” Ye said.

In a sign of the sensitivity of the matter, search results for Wang and Bo were blocked on China’s hugely popular Sina Weibo microblogging service and the comments sections attached to online reports about Wang were disabled.

Bo, who sits on the Communist Party’s powerful 25-member Politburo, appointed Wang in 2008 to clean up the force and take on organized crime in a campaign that drew national attention, as well as criticism that it ignored proper legal procedures.

Wang, a 52-year-old martial arts expert, entered law enforcement in 1984 and served more than two decades in northeast Liaoning province, where Bo was once governor. He won a reputation for personal bravery in confronting gangs and was once the subject of a TV drama called “Iron-Blooded Police Spirits.”

His law enforcement success led eventually to high political office and a seat in the national parliament, while his association with Bo gave him countrywide name recognition.

A former commerce minister, Bo is considered a leading “princeling” in the party, a reference to the offspring of communist elders whose connections and degrees from top universities have won them entry into the country’s elite.

Bo garnered huge publicity for his anti-crime campaign and an accompanying drive to revive communist songs and poems from the 1950s and 1960s, spurring talk that he was seeking a promotion. Those campaigns have since fizzled, leading analysts to pull back on speculation that he might be elevated to higher office when the party begins a generational change in leadership later this year.

Chinese political analysts say Bo has been cutting ties with the advisers behind the “red songs” and anti-crime drives in hopes of reviving his political fortunes.

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Is Wall Street over? Done?

In the months since the Great Panic of 2008, investors, regulators, politicians, and the culture at large have given Wall Street banks a series of kicks to the groin. And while the stock market may have recovered some of its lost swagger, the Wall Street investment banks haven’t. That’s the thesis of Gabriel Sherman’s New York cover story, “The Emasculation of Wall Street.”

And he’s right — to a large degree. Surveying a world in which structured products have disappeared, new capital standards have reduced the ability to take on leverage, regulations have prohibited once-profitable practices like proprietary trading, Sherman concludes that Wall Street is “afflicted by a crisis it would not be flip to call existential.” Indeed, the widely documented decline of bonuses — combined with the high cost of living — has many bankers wondering what the point of the whole thing is.

As we discuss in the accompanying video, this delayed reaction has been a long time coming. Any time a sector blows up and inflicts damage on the economy, its financial and cultural footprint shrinks. The dotcom sector quickly went from massive hero to much smaller goat in 2000 and 2001. But Wall Street was spared a good deal of the pain associated with popped bubbles because the taxpayers and the Federal Reserve rushed to their aid. Ironically, investment bankers and traders were among the biggest short-term beneficiaries of the emergency efforts that reflated credit and stock markets in 2009 and 2010.

But time has been less kind to the bankers. And the Occupy Wall Street movement is the least of its problems. Turmoil in Europe and volatility has helped tamp down the pace of trading and dealmaking. The businesses of mortgages and their associated products, which fueled so much growth and easy profits in the past decade, have dwindled and are unlikely to return. “Certain products are gone forever,” J.P. Morgan Chase CEO Jamie Dimon told Sherman. “Fancy derivatives are gone forever. Prop trading is gone. There’s less leverage everywhere.” Dodd-Frank forbids banks from risking depositors’ capital on proprietary trading. The low-yield environment makes it tough to generate returns. And so banks are left with the boring, lower-margin, lower-octane of making commercial lines, advising big companies, and managing assets. All that translates into lower profits, less risk, and, worst of all, smaller bonuses.

It would be premature to write Wall Street off completely. Over the past 30 years, investment banks and financial players have shown an ability to transition, almost seamlessly, from one boom to the next — bond-trading in the 1980s, dotcom and telecom stocks in the 1990s, mortgage-backed securities in the 2000s. The industry has generally viewed regulations as obstacles to skirt through fancy maneuvering, or to tear down through lobbying. There’s always a bull market somewhere, as the saying goes.

Of course, when the next boom does come, Wall Streeters are going to find it more difficult to cash in on it. For while the industry has felt its share of pain from Washington, there’s likely more to come. Low tax rates on capital gains, dividends, and massive bonuses are likely to rise in coming years. Mitt Romney’s presidential run has brought heightened focuses to one of Wall Street’s most absurd advantages — the carried interest rule, which applies long-term capital gain tax rates to money private equity firms earn for managing other people’s money. The Masters of the Universe, who were held aloft by cheap money and favorable regulation, are increasingly floating back to earth. As Sherman writes, “The system is being designed so that Wall Street grows as fast as Main Street.”

That may be a bad thing for young Wall Streeters with visions of private jets — and for the real estate brokers and restaurateurs who cater to them. But it’s not a bad thing for the rest of us, or the economy at large.

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You would think members of Congress would realize, on their own, that trading stocks based on inside political information they may possess is wrong. But it turns out they may indeed need a law to telll them so. Ever since 60 Minutes exposed the ways in which some lawmakers, and their staffers, have profited based on privileged insider knowledge, the public has clamored for action.

President Obama heeded those cries in his State of the Union Address in January.

“I’ve talked tonight about the deficit of trust between Main Street and Wall Street. But the divide between this city and the rest of the country is at least as bad — and it seems to get worse every year,” Obama said. “Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow. Let’s limit any elected official from owning stocks in industries they impact. Let’s make sure people who bundle campaign contributions for Congress can’t lobby Congress, and vice versa — an idea that has bipartisan support, at least outside of Washington.”

Earmarks are another prime example of how politicians can wield their influence for personal gain. The Washington Post on Tuesday published the results of a comprehensive investigation into pork-barrel spending on infrastructure projects that conveniently took place close to property that Congressional members own.

“Thirty-three members of Congress have directed more than $300 million in earmarks and other spending provisions to dozens of public projects that are next to or within about two miles of the lawmakers’ own property,” reports the Washington Post.

The STOCK Act

In a rare example of Congress responding with alacrity to a call from the president, the Stop Trading on Congressional Knowledge (STOCK) Act has been moving its way quickly through Congress. The Senate passed the bill in a sweeping 96 to 3 bipartisan vote last Thursday. The House is working to take up the legislation this week but has pledged to strengthen the version passed by the Senate.

“Members of Congress want to keep their jobs, so that is why I think the vote was so lop-sided,” says Peter Schweizer, author of Throw Them All Out who was featured in the CBS 60 Minutes interview. He joined The Daily Ticker’s Daniel Gross to discuss the bill, which “by no means is perfect.”

In its current form the Senate’s version of law does the following:

#1 Makes insider trading illegal: “It says that it is a federal crime to use congressional inside information to trade on stocks to gain an informational advantage,” says Schweizer, a fellow at the Hoover Institution. “There would be penalties for that for congressmen but also for their staff members.”

#2 Changes financial reporting requirement: “Right now they only have to report their finances — that is their assets and their trades — once a year and they only do it on paper,” he says. “The STOCK Act says they now need to report every 90 days, rather than just once a year.”

#3 Regulates political intelligence: “It would regulate the people who collect political intelligence” and then sell it to the financial community, says Schwiezer.

The three regulations above have Washington spinning, but the last point has caused the most uproar from political insiders. The provision introduced by Sen. Chuck Grassley (R-Iowa) would require those who collect political intelligence to register in a similar manner as lobbyists.

But the bill overlooks several items Schweizer believes are necessary. “It does not deal with options trading, it does not deal with members of Congress who get these sweetheart IPO deals and it doesn’t deal with land deals and other forms of enrichment,” says Schweizer. It is hard to know how pervasive this issue is “but [the bill] is a first-step forward and I think there are other steps we need to take to make sure this practice ends completely.”

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In his Twitter photo, Groupon CEO Andrew Mason is on the floor, in pajamas, looking like a giddy five-year-old on Christmas. Yet his accomplishments are anything but juvenile. He has built a 10,000-person organization operating in 45 countries that is expected to have 2011 revenue of roughly $1.6 billion. And he has done it all since October 2008.

For the fourth quarter, to be reported on Wednesday, analysts expect sales of $473 million, up nearly threefold from a year ago. Still, as Mr. Mason leads his first earnings call, the hard work may just be starting for the newly public company. Groupon has to prove its business isn’t just a fad and, as important, that it can make money. Otherwise, its $15 billion market value makes little sense.

Slowing revenue growth is a potential concern. Groupon chopped marketing costs in the third quarter. While that got the company closer to profitability, it may have been a reason sales growth versus the prior quarter slowed to 10%. Analysts expect Groupon maintained that pace in the fourth quarter. A related worry is churn. Groupon doesn’t disclose how frequently users are clicking “unsubscribe” on its emails. As users drop off, it gets harder to replace them with new subscribers, especially given how large Groupon has already become. Groupon has done well to launch new products to existing subscribers. In addition to the core business of spa and restaurant coupons, product and travel deals appear to be growing nicely. But the share of revenue Groupon gets to keep—its “take rate”—is lower than with the core business. Another new product—instant deals delivered to users based on their location—is one Groupon has touted as distinguishing it from smaller rivals. But it isn’t clear instant deals are catching on.

Rival LivingSocial may be pressuring margins. The private company’s 2011 financial results were outed in the annual financial filing of an investor, Amazon.com, showing $245 million in revenue. A person familiar with the matter says LivingSocial did about $750 million in gross billings. That translates to a 33% take-rate, undercutting the 37% Groupon reported last quarter, itself down from 44% at beginning of the year. Add it up, and Mr. Mason still has to convince investors Groupon can handle any growing pains.