U.S. wants boss ex-mortgage to get life in prison (Reuters)

WASHINGTON (Reuters)-U.S. prosecutors have urged a court to send the former President of bankrupt Taylor, Bean & Whitaker Mortgage Corp. in prison for the rest of his life for masterminding the fraud of 2.9 billion that took the company.

Lee Farkas, 58, was sentenced in April to 14 allegations of conspiracy, bank fraud, wire and securities under the scheme, in which he used some of the proceeds to live a lavish lifestyle with a jet and a collection of vintage cars.

Prosecutors said in a court filing Thursday that the Mayor Massimo was 385 years and urged district judge Leonie Brinkema to sentence him to at least 50 years to ensure that Farkas spends the rest of his life in prison.

"The nature, duration and scope of criminal activities by Farkas guarantees maximum punishment for maximum deterrence," they said. Sentencing is scheduled for Thursday.

The fraud began in 2002 and ran until Taylor, Bean filed for bankruptcy in August 2009. The collapse of the mortgage company was a major factor that has contributed to the collapse of one of the largest U.S. regional banks, Colonial Bank.

Farkas was accused of running a regime of large led to cover large losses to Taylor, Bean moving funds between bank accounts and even selling mortgages that did not exist, were useless or had already been sold.

He also attempted to obtain a loan from 553 million dollars Bank Bailout program Federal Colonial Bank of Colonial BancGroup Inc., but money was never disbursed. The Bank was closed by regulators and most of its assets were sold to BB & T Corp.

Prosecutors have also asked Farkas be required to lose more than 42 million dollars.

Defense team of Farkas urged the judge to sentence former Executive mortgage to 15 years in prison, noting that it was almost double that of the longest sentence already handed out in the case and to ignore any good, since he is essentially broken.

"The Government has constantly gone out of his way to paint Mr. Farkas as a greedy and manipulative man out for little more than personal gain," his lawyers said in its filing.

"Even a cursory review of large numbers of letters presented to this Court show that Mr. Farkas is anything but the monster afflicted by greed that the Government tries to paint him as," they said.

Lawyers argued 15 years would serve as a sufficient deterrent. Farkas has lost nearly all its assets, is subject to forfeiture of any remaining properties and faces a potentially large order of restitution, not so well should be imposed, they said.

Several other employees Taylor, bean and Colonial Bank who pleaded guilty for their role in the fraud were sentenced earlier this month. The longest sentence handed down so far was eight years of Catherine Kissick, that was the point of contact at colonial Bank of Farkas.

The case is U.S. v. Farkas, no. 10-cr-200, in u.s. District Court for the Eastern District of Virginia.

(Report by Jeremy Pelofsky, Matthew Lewis and editing by Gerald e. McCormick)

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Brent falls as euro zone woes, pressure dollar (Reuters)

NEW YORK (Reuters)-the price of Brent crude fell 2 percent on Friday as Europe's debt problems and a bounce in the dollar index extended the decline of oil, a day after consuming Nations announced that they were touching on strategic reserves.

7 percent drop for the week, premium to Brent crude fell under U.S. $ 14 a barrel, down $ 19 intraday on Wednesday, the day before the International Energy Agency made a surprise announcement to release oil from strategic reserves. The prize has contracted from his record $ 23.34 reached 15 June.

U.S. crude oil ended slightly higher Friday, after seesawing and briefly dipping below $ 90 a barrel, finding support on trade lower on Thursday.

The euro fell on the dollar as investors worried that the Parliament of Greece cannot pass austerity measures necessary for the country secure more funding.

"The strengthening of the dollar index is helping the oil pressure and we are seeing an unwinding of Brent-WTI spread due to the release of strategic reserves," said Phil Flynn, an analyst at PFGBest research in Chicago.

"The spread of WTI-Brent arrive indicates that the issue was warranted," he added.

ICE Brent crude for August fell $ 2.14 to settle at $ 105.12 per barrel, after swinging between $ 103.62 and $ 108.70 after slide almost 6 percent of the previous session. He was a second straight losing week for the contract.

Brent trading volumes were heavy, eclipsing U.S. crude for a second straight day, after hitting a record a lot of over 1.2 million Thursday.

Nations reserves that require release Brent sent in contango, with front-month Brent, ending with a discount of 19 cents for the contract in September, after closing Thursday at a premium 21 cents for the second month.

Raw cut 14 August U.S. cents to settle at $ 91.16 a barrel, but the front-month crude posted a third straight losing week, a decrease of 2 percent.

Money managers reduced their U.S. crude futures network and long positions of options in both New York and London the week to June 21, the Commodity Futures Trading Commission said on Friday.

Relative strength index for crude oil Brent both U.S. approached the mark of 30 points, a signal that a contract has been oversold following the announcement of the IEA, sell off although WTI cut slightly up after the rally to end-of-day price.

U.S. gasoline Futures settled lower, losing 2.1%, with the benchmark oil, distilled, 1.1 percent less heating.

U.S. refined product prices were reacting to more costly futures Brent crude over the past few months.

IEA RESERVE RELEASE IMPACT

The International Energy Agency (IEA) announced Thursday a statement of 60 million barrels of government stocks for the next 30 days.

Main commodities banks JP Morgan and Goldman Sachs cut their oil price forecasts, after the announcement of the IEA, but the Bank of America Merrill Lynch maintained its forecast for the second half unchanged at $ 102 per barrel.

Saudi Arabia, the leading exporter of crude oil in the world, has yet to make any comment on the release.

The IEA's move came after the Organization of petroleum exporting countries last month, could not reach an agreement on a Boost to production targets. But Saudi Arabia had promised to increase production to meet demand.

"Saudi Arabia will be crucial-will stick to its promise to increase its output to 10 million barrels per day or not?" said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

"If not, then deciding to AIE will have failed. Maybe they will scale back production in July after this release stock. "

The United States Treasury Secretary Timothy Geithner said on Friday that the IEA decision was "reasonable politics".

"Will provide some modest help and relief" for the u.s. economy, Geithner told reporters after meeting with local business owners in Manchester, New Hampshire. "It was a prudent use of existing reserves."

Durable goods data of United States better than expected given support to U.S. crude futures in the early going Friday.

New orders for Us manufactured goods in may increased 1.9 percent after dropping the 2.7 per cent in April, the Commerce Department said.

But concerns over the eurozone debt concerns continued to weigh on the markets. U.S. stocks headed for three days of losses as concern about the Italian added the uncertainty over the passage of a Greek austerity plan in the banking sector. (.N)

(Additional reporting by Gene Ramos in New York, Claire Milhench and Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Lisa Shumaker and David Gregory)

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Drivers catch a break as gasoline prices fall (AP)

NEW YORK – A summer road trip may not be such a bad idea after all.

Gasoline prices are falling fast. In the past 7 weeks, the average U.S. retail prices has dropped 38 cents to $3.60 per gallon. Another 25-cent drop is expected by mid-July.

When prices approached $4 in early May, drivers were worried that $5 gasoline was a possibility this summer. But since then, oil prices have collapsed, the result of slowing economic growth in developed countries, weaker demand for oil and gas and this week's decision by the U.S. and other countries to release 60 million barrels of oil from strategic reserves. Economists say falling prices will benefit consumers by leaving money in their wallets, and making them feel freer to spend on travel, shopping and dining.

Ron Meyers, 51, a handyman from Little Rock, Ark., was doubtful that he could afford the drive to visit family in Pennsylvania. Now, thanks to cheaper gas, the trip is on. And he plans on seeing a few more summer movies, too.

"You can go out and have a good time, and have a little money left in your pocket," he said.

Economists say that while, for instance, a 25-cent-per-gallon drop only saves the typical driver $12.50 per month, it has a huge effect both on the economy as a whole and on the psychology of consumers.

Naveen Agarwal, who helps small businesses and car companies manage fuel costs as CEO of Pricelock, in Redwood City, Calif, said he expects drivers will travel farther distances this summer than originally planned. And they'll spend as they go.

"They'll be a little bit more liberal about their consumption instead of just having a barbeque in their back yard," Agarwal said.

Instead of thinking of ways to cut back, the Dykstra family of Orange City, Iowa, will now be able to spend a little more on meals and souvenirs when it visits Chicago.

"We actually budgeted for $5 a gallon," Mark Dykstra, 46, a supermarket assistant manager who will be travelling with his three teenage children, said earlier this week.

For the first five months of the year, gasoline prices went in one direction: up. Growing economies, especially in Asia, burned more gasoline, diesel and jet fuel. Turmoil in the Middle East and North Africa prevented oil from reaching the market and scared oil traders into bidding prices higher.

Oil peaked at $114 per barrel in April. It's now at $91 per barrel after a 2 percent drop this week.

Energy economists and Wall Street investment bankers caution that oil is likely to rise above $100 again next year, particularly if oil producers struggle to meet rising global demand. Hurricanes in the Gulf of Mexico or further unrest in the Middle East could also boost prices.

Agarwal expects gasoline prices will return to a range of $3.50 to $3.75 per gallon by the end of the year. Goldman Sachs and other investment banks predict oil will rebound next year to levels that would push gasoline above $4 for the first time since 2008.

"If you're asking whether gasoline could be $3.50 or higher forever, the answer is yes," said oil analyst Andrew Lipow. "People will have to make some adjustments."

Adzi Vokhiwa, 22, of Acworth, Ga., is relieved by the price drop, but skeptical. "It almost doesn't matter because I know (prices) are going to go back up again," she said.

She commutes 60 miles a day from her home in Acworth, Ga. to her job in downtown Atlanta. Twice a week she puts $40 worth of gasoline into her Kia Soul, and has asked her boss to change her schedule so she can carpool a couple of days a week.

High gasoline prices have made it tougher for Vokhiwa to save for graduate school. But for now, at least, she says she'll have a little more money to put towards that goal.

Randy Herring, 46, of Montpelier, Vt. had been borrowing his wife's Subaru Legacy instead of driving his Chevy Tahoe SUV and he had even contemplated pulling out his bicycle. Now he's employing a strategy to capitalize on the falling prices. He's started to give the Tahoe the equivalent of a sip of gasoline every so often so he doesn't miss out on the coming savings.

"Whatever I need for the week, and that's it," Herring said.

___

Associated Press Writers Michael Rubinkam in Allentown, Penn. and Barbara Rodriguez in Chicago contributed to this story.

___

Chris Kahn can be reached at twitter.com/ChrisKahnAP. Jonathan Fahey can be reached at twitter.com/JonathanFahey

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Data points to underlying factory strength (Reuters)

WASHINGTON (Reuters) – New orders for U.S. manufactured goods and a gauge of business spending plans rose in May, easing fears of a sharp slowdown in factory activity.

Durable goods orders increased 1.9 percent after dropping 2.7 percent in April, the Commerce Department said on Friday, with a proxy of business spending also rebounding strongly.

An improvement across the board in May and revisions to April's figures that showed smaller declines than previously reported, pointed to underlying strength in a sector that has powered the economic recovery.

Economists had expected durable goods orders, a leading indicator of manufacturing health, to rise 1.5 percent in May. Durable goods are items ranging from toasters to aircraft that are meant to last three years or more.

The report came as a relief to investors after recent regional factory data had shown some signs of fatigue.

Supply chain disruptions after the March earthquake and tsunami in Japan have been constraining production and Friday's data suggested the impact of the disasters might be waning.

The durable goods report also suggested the economy was likely to regain momentum later in the year.

"This supports our view that the economic 'soft patch' will not endure meaningfully into the second half," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.

"It also leads us to wonder whether the recent, sharp declines in various production gauges, such as the New York Empire and Philly Fed surveys, were a reaction to negative news earlier in the quarter."

The better-than-expected report helped to curb losses on Wall Street, where stocks fell on concerns about the Italian banking sector and uncertainty about passage of a Greek austerity plan.

Prices for U.S. government debt were mostly up, while the dollar rose against a basket of major currencies.

GROWTH REVISED A TOUCH HIGHER

Despite its leading role, manufacturing only accounts for about 11.7 percent of U.S. gross domestic product and roughly 9 percent of total employment.

Both the Obama Administration and business leaders would like manufacturing to once again become the mainstay of the U.S. economy, after losing out to emerging markets where production costs are relatively low.

President Barack Obama on Friday launched an initiative to boost manufacturing jobs by teaming government up with companies and universities to invest more than $500 million in advanced technologies.

The economy grew at an annual rate of 1.9 percent in the first quarter, the department said in another report, up from a previously estimated 1.8 percent. That marks a sharp slowdown from the 3.1 percent rate in the fourth quarter.

The slowdown at the start of the year has lingered into the second quarter. The Federal Reserve on Wednesday cut its forecasts for U.S. economy growth for both this year and next, while stating hope some temporary restraints would soon lift.

Further clues on the health of the manufacturing sector will come next week in a series of regional surveys capped by data on Friday on national manufacturing from the Institute for Supply Management.

The weak surveys from the New York and Philadelphia Federal Reserve banks have raised the risk the ISM's index of national factory activity could contract in June after 22 months of expansion. Economists, however, are looking for a slowing in activity, not a decline.

TRANSPORTATION ORDERS UP

Durable goods orders in May were a buoyed by 5.8 percent bounce back in transportation equipment, with motor vehicle orders rising 0.6 percent after plunging 5.3 percent the previous month.

That suggested some improvement in auto production, which has been hit by a shortage of parts from Japan.

Excluding transportation, durable goods orders increased 0.6 percent after a 0.4 percent fall in April.

Outside of transportation, orders for machinery, primary metals, capital goods, electrical equipment and appliances, and computers and electronic products all rose.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded to increase 1.6 percent last month after a 0.8 percent fall in April. Economists had expected a 1.0 percent increase.

"Business continues to spend on new equipment, the only mystery is why they are not adding to staff to run the machines they are buying," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ in New York.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of GDP product, increased 1.4 percent after falling 1.5 percent in April.

(Editing by Neil Stempleman)

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Americans may hit gas again after reserve release (Reuters)

MIAMI/SAN FRANCISCO (Reuters) – Going lightly on the gas pedal, getting a few dollars of gas rather than filling up, cutting out the cruising, and swapping the BMW for a Dodge Caliber -- those are ways Americans are coping with gasoline prices well above $3 a gallon.

But people pumping gas on Friday from Miami to San Francisco saw prospects for lower prices thanks to President Barack Obama's decision on Thursday to tap the country's emergency petroleum stockpile as part of a global effort to bolster tight oil supplies.

The release of 30 million barrels from the U.S. Strategic Petroleum Reserve may not make people reschedule long summer road trips but could spell welcome relief for household budgets crimped by an anemic economic recovery.

While it might be a political move by Obama to help his re-election bid for 2012, as some speculate, most drivers seemed happy to get a break, even a small one.

Jonathan Sifuentes, a 26-year-old power company employee, called the decision "the right thing to do" as he fueled up a Toyota Camry sedan on Miami's outskirts.

"Everyone is hurting, with the economy, and unfortunately we do need gas to maintain our lifestyle, to go to work, to get groceries, to pick up our kids," he said.

Gasoline prices have fallen about 30 cents since the beginning of May to an average of $3.65 a gallon, but the U.S. Department of Energy said it expected gasoline to average $3.75 a gallon this summer, up 99 cents from last year.

While U.S. gas prices may look like a steal to a European, Americans rely more on the stuff. The American lifestyle built around the car and cheap gas prices, for all the work on mass transit and renewable energy, is not going away.

Some drivers hoped the reserve release would help bring down gas prices as much as 50 to 75 cents per gallon. But Dales Feild, a 55-year-old retired General Motors Co assembly worker in Detroit who likes to go shopping and cruising around town for the fun of it, said she did not expect to see a gallon below $3 again, ever.

"I was surprised when it did it once, I don't think it'll happen again," Feild said as she filled the tank of her navy blue GMC Sonoma pickup truck.

'NOT AN EMERGENCY'

Chicagoan Jackson Donnie, a 29-year-old landlord, had stopped filling his gas tank, putting in $20 each time, and was often perilously close to empty. He was walking more or riding his scooter. Obama, he said, felt America's pain at the pumps.

"I think what he did is just to give the economy a break because we were so uptight," said Donnie. "He feels for us. He's a human being just like we are."

Diana Crane, 59, was buying $15 worth of gas at a Houston Valero station for her Ford Focus. She said Obama's motives might have been political, but she did not really care.

"He's trying to make people feel good." said Crane. "If they feel good, maybe they'll vote for him. That's what politicians do. Isn't the government supposed to be for the people?"

Not everyone was willing to give Obama credit for doing the right thing, like Los Angeles nurse Igor Piligramm, 45.

"That's a bad idea because emergency supplies exist for emergencies," he said as he filled up his sedan in Hollywood. "This is not an emergency."

While there might not be many options for short-term relief, the high gas prices and the release of vast reserves, only the third in history, inevitably led drivers to talk about the need for long-term solutions, from America pumping more of its own gas to investing in renewable energy.

The latter is particularly popular in a green energy hotbed like San Francisco, where Praneal Narayan, a software company employee, was pumping gas in his Lexus.

"It feels like there is always some excuse for the price of fuel going up," he said. "Alternative energy is what we should really be focused on instead of what is the price of fuel today."

Until the long-term fixes come through, drivers just need to find the way to make it through the month, like 48-year-old San Francisco yacht captain Yohy Bitton.

Bitton was filling up for a drive down the California coast for the weekend, but he was not taking his own gas- guzzling BMW. He rented a compact Dodge Caliber.

"I'm driving to LA. I'd rather drive this," he said. "The mileage is better, it seems. Much better."

(Additional reporting by Bruce Nichols in Houston, Euanju Lie in Chicago, Deepa Seetharaman in Detroit and Mary Slosson in Los Angeles; Writing by Mary Milliken; Editing by Peter Cooney)

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Obama steps into high-stakes debt-limit talks (AP)

WASHINGTON – Struggling to break a perilous deadlock, President Barack Obama took direct control Friday of national debt-limit negotiations with both Republicans and Democrats. With the White House warning the nation's economic stability is at stake, it's one of the most severe tests yet of Obama's presidency.

The key disagreement is over taxes. Democrats, including Obama, say a major deficit-reduction agreement must include tax increases or the elimination of tax breaks for big companies and wealthy individuals. Republicans are demanding huge cuts in government spending and insisting there be no tax increases.

Absent an agreement that cuts long-term deficits, Republicans say they will not vote to increase the nation's borrowing, which will exceed its $14.3 trillion limit on Aug. 2. The administration has warned that if Congress does not raise the debt ceiling, it could mean the first U.S. financial default in history and send economic shockwaves around the world.

Discussions led by Vice President Joe Biden that were designed to trim about $2 trillion from long-term deficits abruptly stalled this week, leading Obama to step in Friday and summon the top Senate leaders to the White House.

On Monday morning, Obama and Biden plan to meet with Senate Majority Leader Harry Reid, D-Nev., and in the early evening he will sit down with Senate Republican leader Mitch McConnell of Kentucky. McConnell and House Speaker John Boehner have repeatedly said that no deal can include tax hikes.

Amid an economic slowdown, persistently high unemployment and a looming deadline for action, the negotiations will challenge Obama's ability to forge a compromise that gives all sides a reason to claim victory.

Obama restated his position to Boehner in person and to McConnell by phone on Wednesday, officials said. On Thursday, the two Republicans who had been negotiating with Biden — House Majority Leader Eric Cantor, R-Va., and Sen. Jon Kyl, R-Ariz. — abandoned those talks.

Ultimately, there was only so much that those discussions would yield, and it was clear that Obama and the top leaders in Congress at some point would have to step in.

Both sides repeated their negotiating positions on Friday.

"The president is willing to make tough choices, but he cannot ask the middle class and seniors to bear all the burden for deficit reduction and to sacrifice while millionaires and billionaires and special interests get off the hook," White House spokesman Jay Carney said.

Democrats and the White House seemed ready to portray Republicans as beholden to the rich and the energy industry. The White House has proposed raising about $600 billion in new tax revenue, including by ending subsidies to oil and gas companies, an idea that failed in the Senate.

The administration also would tax private equity or hedge fund managers at higher income tax rates instead of lower capital gains rates, change the depreciation formula on corporate jets and limit itemized deductions for wealthy taxpayers. It also has called for repealing a tax benefit for an inventory accounting practice used by many manufacturers.

One proposal advanced by Democratic negotiators would reduce the value of deductions for people earning more than $500,000. In addition, the White House is insisting that Bush era tax cuts end after 2012 for families earning more than $250,000.

"What we've seen on the Republican side overall is all take and no give," said Rep. Chris Van Hollen, one of the Democratic negotiators in the Biden talks. "Any serious approach requires compromise."

In a statement following the White House invitation to Monday's talks, McConnell said Obama needs to decide between tax hikes or a bipartisan agreement. "He can't have both," McConnell said.

"Sadly, the Democrats' response has been a mystifying call for more stimulus spending and huge tax hikes on American job creators. That's not serious, and it is my hope that the president will take those off the table on Monday so that we can have a serious discussion about our country's economic future," McConnell said.

Boehner warned the president that including any tax increase would doom a vote on raising the debt ceiling.

But Obama, Boehner and McConnell have been through this before.

The three negotiated a deal in December that extended Bush-era tax breaks for two years. And Obama and Boehner worked out an agreement in April that cut short-term spending and avoided a government shutdown.

The risks this time are higher.

Many economists and government analysts say the government needs to get control of its long-term debt by taming its deficits. The non-partisan Congressional Budget Office this week called the nation's budget outlook "daunting" and said that without major changes in policies, an aging population and rising health care costs would result in a surging federal debt.

An increase in the debt ceiling of $2 trillion to $2.5 trillion would be needed to allow the government to operate until early 2013, getting policymakers past the November 2012 elections. Treasury Secretary Timothy Geithner has said a debt default would be as devastating as the financial crisis that hit in 2008.

Public and private polls show that increasing the debt ceiling is highly unpopular with voters, particularly among Republicans. Many GOP lawmakers fear that a vote to increase the debt ceiling will make them vulnerable to primary election challenges from other Republicans.

On Friday, a pro-Republican advocacy group announced a $20 million, two-month advertising campaign in key battleground states to increase spending cuts and to reduce the national debt without tax increases. In its first ad, the group, Crossroads GPS, criticizes Obama's 2009 stimulus package as ineffective.

Still, Geithner, speaking to business leaders in New Hampshire Friday, said he was confident the impasse would be resolved.

And even Cantor said the private Biden-led talks had "established a blueprint" for agreement on significant cuts in spending.

____

Associated Press writer Andrew Taylor contributed to this report.

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Mob boss brought back to Boston; will he sing? (AP)

BOSTON – James "Whitey" Bulger's capture could cause a world of trouble inside the FBI.

The ruthless Boston crime boss who spent 16 years on the lam is said to have boasted that he corrupted six FBI agents and more than 20 police officers. If he decides to talk, some of them could rue the day he was caught.

"They are holding their breath, wondering what he could say," said Robert Fitzpatrick, the former second-in-command of the Boston FBI office.

The 81-year-old gangster was captured Wednesday in Santa Monica, Calif., where he apparently had been living for most of the time he was a fugitive. He appeared Friday afternoon inside a heavily guarded federal courthouse in Boston to answer for his role in 19 murders.

Bulger, wearing jeans and a white shirt, looked tan and fit and walked with a slight hunch at back-to-back hearings on two indictments. He asked that a public defender be appointed to represent him, but the government objected, citing the $800,000 seized from his Southern California apartment and his "family resources."

"We think he has access to more cash," said prosecutor Brian Kelly.

At the second hearing, Bulger took a swipe at prosecutors after Magistrate Judge Marianne Bowler asked him if he could afford to pay for an attorney.

"Well, I could, if they would give me my money back," he replied in his unmistakable Boston accent, prompting laughter in the courtroom.

Kelly implied that Bulger's cash came from illegal activities.

"He clearly didn't make that on a paper route on Santa Monica Boulevard," he said.

Prosecutors asked that Bulger be held without bail, saying he is danger to the community and may try to threaten witnesses.

"He's also, quite obviously, a risk of flight," Kelly said.

Kelly also said Catherine Greig, Bulger's longtime girlfriend who was arrested with him, told court officials that Bulger's brother may be willing to assist him in posting bail.

Bulger did not ask for a detention hearing, but his lawyer said he may later make an argument that Bulger should be released on bail while awaiting trial.

The amount of money found in Bulger's apartment confirmed a longheld belief by investigators that he kept large stashes of cash for a life on the run.

"We clearly don't think this is his last stash," Kelly said.

When Bulger walked into the courtroom, he saw his brother William, the former powerful leader of the state Senate, seated in the second row. Whitey Bulger smiled at him and mouthed, "Hi." His brother smiled back.

Greig appeared in court a few minutes later on charges of harboring a fugitive. She asked for a hearing to determine whether she can be released on bail, and one was scheduled for next week.

Bulger, the former boss of the Winter Hill Gang, Boston's Irish mob, embroiled the FBI in scandal after he disappeared in 1995. It turned out that Bulger had been an FBI informant for two decades, feeding the bureau information on the rival New England Mafia, and that he fled after a retired Boston FBI agent tipped him off that he was about to be indicted.

The retired agent, John Connolly Jr., was sent to prison for protecting Bulger. The FBI depicted Connolly as a rogue agent, but Bulger associates described more widespread corruption in testimony at Connolly's trial and in lawsuits filed by the families of people allegedly killed by Bulger and his gang.

Kevin Weeks, Bulger's right-hand man, said the crime lord stuffed envelopes with cash for law enforcement officers at holiday time. "He used to say that Christmas was for cops and kids," Weeks testified.

After a series of hearings in the late 1990s, U.S. District Judge Mark Wolf found that more than a dozen FBI agents had broken the law or violated FBI regulations.

Among them was Connolly's former supervisor, John Morris, who admitted he took about $7,000 in bribes and a case of expensive wine from Bulger and henchman Stephen "The Rifleman" Flemmi. Morris testified under a grant of immunity.

In addition, Richard Schneiderhan, a former Massachusetts state police lieutenant, was convicted of obstruction of justice and conspiracy for warning a Bulger associate that the FBI had wiretapped the phones of Bulger's brothers.

Edward J. MacKenzie Jr., a former drug dealer and enforcer for Bulger, predicted that Bulger will disclose new details about FBI corruption and how agents protected him for so long.

"Whitey was no fool. He knew he would get caught. I think he'll have more fun pulling all those skeletons out of the closet," MacKenzie said. "I think he'll start talking and he'll start taking people down."

A spokesman for the Boston FBI did not return calls seeking comment. In the past, the agency has said that a new generation of agents has replaced most or all of the agents who worked in the Boston office while Bulger was an informant.

A law enforcement official who requested anonymity because of the ongoing investigation told The Associated Press on Friday that FBI agents lured Bulger out of his., apartment earlier this week by telling him someone had broken into his on-site storage unit. The official said Bulger walked out of the apartment, was arrested without incident and consented to a search of the premises.

Some law enforcement officials said they doubt Bulger will try to cut a deal with prosecutors by exposing corruption, in part because he will almost certainly be asked to reveal what contact he had with his brothers while he was a fugitive and whether they helped him in any way.

"If Bulger talks, he would have to talk about his brothers, and I can't see that happening, said retired state police Detective Lt. Bob Long, who investigated Bulger in the 1970s and `80s."They are not going to take selective information from him — it's either full and complete cooperation or nothing."

Criminal defense attorney and former Drug Enforcement Administration agent Raymond Mansolillo said Bulger may not have any incentive to talk. "The FBI may say, `You're going to jail or you're going to be killed. We're not offering you anything,'" said Mansolillo, who once represented New England crime figure Luigi "Baby Shacks" Manocchio.

But retired Massachusetts state police Maj. Tom Duffy, one of the lead investigators in the Bulger case, said Bulger may agree to talk if he thinks it could help his girlfriend.

"It's very possible he's concerned about her well-being — she was with him for 16 years and was very loyal to him," Duffy said. "That may be a bargaining chip for the government during negotiations."

The question of whether Bulger will be given a public defender will be decided later. A hearing was scheduled for Tuesday. He did not enter a plea.

Bulger is "looking forward to facing the charges against him," said Peter Krupp, a lawyer assigned to represent Bulger for purposes of Friday's hearing only.

Among the onlookers at the courthouse was Margaret Chaberek, who grew up in Bulger's home turf of South Boston. "I'm here to see him get what he deserves," she said.

Ina Corcoran of suburban Braintree came on her day off to witness a piece of history and sat on a bench outside the fifth-floor courtroom, saying it was like being there to see Al Capone.

"If you could go back in time to be in that courtroom, wouldn't you?" she said.

___

Associated Press writers Johanna Kaiser, Laura Crimaldi in Providence, R.I., Curt Anderson in Miami and Greg Risling in Los Angeles contributed to this report.

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Banks move closer to deal on Greek bailout (Reuters)

ATHENS/FRANKFURT (Reuters) – Banks and policymakers moved closer to a deal on Friday to help Athens secure funds ahead of a parliamentary vote on austerity next week that Greek Prime Minister George Papandreou must win to avert default.

Despite a refusal by the conservative opposition to back the plan agreed with international lenders and signs of revolt in his own socialist party, Papandreou said he was confident the deeply unpopular package of spending cuts, tax hikes and privatizations would pass.

"It is a moment of historic importance. If everybody resists, worse things will come, perhaps even bankruptcy," Papandreou told a news conference at the sidelines of a summit of European Union leaders in Brussels.

The meeting saw euro zone governments discuss a new bailout package for Greece, which could include up to 30 billion euros from the private sector to help cut Greece's huge public debt.

President Nicolas Sarkozy said French banks had agreed to participate in a voluntary rollover of Greek debt, Spain's Jose Luis Rodriguez Zapatero said Spanish banks were willing to take part in a scheme to buy Athens more time while Berlin has asked German banks to state their intentions next week.

"We have had many meetings with the banks and insurance companies. There is no difficulty," French President Nicolas Sarkozy told reporters after the meeting.

However, no new money will flow unless the Greek government enacts deep cuts and markets remain skeptical. The euro fell sharply on doubts the government will win the day after a maverick ruling party member said he would vote against.

"It's very ugly; a complete mess," said a trader in London. "There's a rumor the austerity won't pass."

After a difficult series of meetings this week, new Greek Finance Minister Evangelos Venizelos thrashed out an agreement with inspectors from the EU and the International Monetary Fund on Thursday to release the funds Greece needs immediately.

But if the vote next week is lost, international lenders are unlikely to release a 12 billion euros funding tranche, meaning the government will run out of cash within days.

Greece accepted a package of 110 billion euros of EU/IMF loans in May 2010 but now needs a second bailout of a similar size to meet its financial obligations until the end of 2014, when it hopes to return to capital markets for funding.

International lenders want binding commitments that Athens will push through the painful measures judged necessary to get its shattered public finances back in order.

The government won a vote of confidence this week with 155 out of 300 votes in parliament, showing how tight the June 29 vote on its austerity package could be.

In a sign of the uncertainty around the vote, which will be accompanied by a two-day general strike, one deputy from the ruling PASOK party said he will oppose the mix of higher taxes, spending cuts and state selloffs.

"Shops are shutting down every day and we are taking anti-growth measures," party maverick Thomas Robopoulos, a car dealer from Greece's second city, Thessaloniki, and one of the few businessmen in parliament told Reuters. "I will take the floor in parliament and try to convince them to do something."

Daily protests continue in Athens and other cities and an opinion poll on Friday put Greece's conservative opposition 2.1 points ahead of PASOK and showed three quarters of Greeks oppose the raft of tax hikes and spending cuts that will hit them hard.

Greece's partners have expressed growing impatience with what they see as a refusal to face the seriousness of the situation. The attitude of the conservative opposition, which has said it will oppose parts of the package, has particularly enraged European leaders.

"I made it very clear that for the acceptance and for the stability of Greece, it would be highly desirable for the opposition to vote for this package," German Chancellor Angela Merkel said in Brussels.

GETTING BANKS ON BOARD

As well as reform commitments by Greece, private sector involvement in a new rescue is seen by many governments as a vital element to meet objections that European taxpayers were left to foot the bill for saving bank balance sheets.

But it has been complicated by the fact that any scheme must be voluntary, otherwise it risks being classified by credit ratings agencies as a default, or at least a "credit event," which could have serious repercussions for financial markets.

Banking sources told Reuters that European banks and finance officials were discussing a proposal to replace existing Greek debt with a different type of bond to get around ratings agencies' reservations.

The proposal is for a voluntary rollover of debt into securities of a different and not comparable credit composition to avoid agencies moving Greece to default status.

"I don't want to comment on the current state of these talks, I think it's most important for us to have these talks first and then report to you the results," Merkel said. "I don't think it would be wise to give you any numbers. We don't have any hard numbers as of yet.

At the EU summit in Brussels, Papandreou promised to push through radical economic reform after Venizelos clinched agreement with EU and IMF inspectors on extra tax rises and spending cuts to plug a 3.8 billion euro funding gap within an agreed five-year austerity plan worth 28.4 billion euros.

On Thursday, Venizelos announced additional measures including extra spending cuts, lowering the minimum income tax threshold and imposing a special "solidarity levy," measures that will hit ordinary Greeks yet harder.

Employees at Greece's dominant electricity producer PPC, which is slated for privatization next year, were on rolling 48-hour strikes for a fifth day on Friday. The union opposes plans to sell a 17 percent stake in the firm and said the labor action will lead to power cuts.

"Many thought the change of guard at the finance ministry would have helped the weak income groups and those who consistently pay their taxes," said Ethnos, a center-left daily that is normally supportive of the government. "Unfortunately, these hopes were dashed."

(Additional reporting by Emmanuel Jarry, Julien Toyer, Fiona Ortiz, Alex Chambers and Philipp Halstrick, writing by James Mackenziez)

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Peter Falk, TV's rumpled Columbo, has died (AP)

NEW YORK – The best way to celebrate Peter Falk's life is to savor how Columbo, his signature character, fortified our lives.

Thanks to Falk's affectionately genuine portrayal, Lt. Columbo established himself for all time as a champion of any viewer who ever felt less than graceful, elegant or well-spoken.

Falk died Thursday at age 83 in his Beverly Hills, Calif., home, according to a statement released Friday by family friend Larry Larson. But Columbo lives on as the shining ideal of anyone with a smudge on his tie, whose car isn't the sportiest, who often seems clueless, who gets dissed by fancy people.

As a police detective, Columbo's interview technique was famously disjointed, with his inevitable awkward afterthought ("Ahhh, there's just one more thing...") that tried the patience of his suspect as he was halfway out the door.

Columbo was underestimated, patronized or simply overlooked by nearly everyone he met — especially the culprit.

And yet Columbo, drawing on inner pluck for which only he (and an actor as skilled as Falk) could have accounted, always prevailed. Contrary to all evidence (that is, until he nailed the bad guy), Columbo always knew what he was doing.

Even more inspiring for viewers, he was unconcerned with how other people saw him. He seemed to be perfectly happy with himself, his life, his pet basset, Dog, his wheezing Peugeot, and his never-seen wife. A squat man chewing cigars in a rumpled raincoat, he stands tall among TV's most self-assured heroes.

What viewer won't take solace forever from the lessons Columbo taught us by his enduring example?

Columbo — he never had a first name — presented a refreshing contrast to other TV detectives. "He looks like a flood victim," Falk once said. "You feel sorry for him. He appears to be seeing nothing, but he's seeing everything. Underneath his dishevelment, a good mind is at work."

On another occasion, he described Columbo as "an ass-backwards Sherlock Holmes."

"As a person, he was like Columbo. He was exactly the same way: a great sense of humor, constantly forgetting things," said Charles Engel, an NBCUniversal executive who worked with Falk on "Columbo" and was his neighbor and longtime friend.

He remembered Falk as a "brilliant" actor and "an amazingly wonderful, crazy guy," and said a script was in place for a two-hour "Columbo" special, but Falk's illness made the project impossible. In a court document filed in December 2008, Falk's daughter Catherine Falk said her father was suffering from Alzheimer's disease.

Somehow fittingly, Falk — the perfect choice to play Columbo — failed to be the first choice. Instead, the role was offered to easygoing crooner Bing Crosby. Fortunately, he turned it down.

With Falk in place, "Columbo" began its run in 1971 as part of the NBC Sunday Mystery Movie series, appearing every third week. The show became by far the most popular of the three mysteries, the others being "McCloud" and "McMillan and Wife."

Falk was reportedly paid $250,000 a movie and could have made much more if he had accepted an offer to convert "Columbo" into a weekly series. He declined, reasoning that carrying a weekly detective series would be too great a burden.

NBC canceled the three series in 1977. In 1989 ABC offered "Columbo" in a two-hour format usually appearing once or twice a season. The movies continued into the 21st century. "Columbo" appeared in 26 foreign countries and was a particular favorite in France and Iran.

Columbo's trademark: an ancient raincoat Falk had once bought for himself. After 25 years on television, the coat became so tattered it had to be replaced.

Falk was already an experienced Broadway actor and two-time Oscar nominee when he began playing Columbo. And, long before then, he had demonstrated a bit of Columbo-worthy spunk: at 3, he had one eye removed because of cancer.

Then, when he was starting as an actor in New York, an agent told him, "Of course, you won't be able to work in movies or TV because of your eye." And after failing a screen test at Columbia Pictures, he was told by studio boss Harry Cohn that "for the same price I can get an actor with two eyes."

But Falk prevailed, even before "Columbo," picking up back-to-back Oscar nominations as best supporting actor for the 1960 mob drama "Murder, Inc." and Frank Capra's last film, the 1961 comedy-drama "Pocketful of Miracles."

Paying tribute, actor-comedian Michael McKean said, "Peter Falk's assault on conventional stardom went like this: You're not conventionally handsome, you're missing an eye and you have a speech impediment. Should you become a movie star? Peter's correct answer: Absolutely.

"I got to hang with him a few times and later worked a day with him on a forgettable TV movie," McKean went on, calling Falk "a sweet, sharp and funny man with a great soul. Wim Wenders called it correctly in `Wings of Desire': He was an angel if there ever was one on Earth."

"There is literally nobody you could compare him to. He was a completely unique actor," said Rob Reiner, who directed Falk in "The Princess Bride."

"His personality was really what drew people to him. ... He had this great sense of humor and this great natural quality nobody could come close to," Reiner said. Falk's work with Alan Arkin in "The In-Laws" represents "one of the most brilliant comedy pairings we've seen on screen."

Peter Michael Falk was born in 1927, in New York City and grew up in Ossining, N.Y., where his parents ran a clothing store.

After serving as a cook in the merchant marine and receiving a master's degree in public administration from Syracuse University, Falk worked as an efficiency expert for the budget bureau of the state of Connecticut.

He also acted in amateur theater and was encouraged to become a professional by actress-teacher Eva Le Gallienne.

An appearance in "The Iceman Cometh" off-Broadway led to other parts, among them Josef Stalin in Paddy Chayefsky's 1964 "The Passion of Josef D." In 1971, Falk scored a hit in Neil Simon's "The Prisoner of Second Avenue," Tony-nominated for best play.

Falk made his film debut in 1958 with "Wind Across the Everglades" and established himself as a talented character actor with his performance as the vicious killer Abe Reles in "Murder, Inc."

Among his other movies: "It's a Mad, Mad, Mad, Mad World," "Robin and the Seven Hoods," "The Great Race," "Luv," "Castle Keep," "The Cheap Detective" and "The Brinks Job."

Falk also appeared in a number of art-house favorites, including "Wings of Desire" (in which he played himself as a former angel), and the semi-improvisational films "Husbands" and "A Woman Under the Influence," directed by his friend John Cassavetes.

"Today we lost someone who is very special and dear to my heart. Not only a wonderful actor but a very great friend," said Gena Rowlands, who co-starred with Falk in the latter film, and was married to the late Cassavetes.

Falk became prominent in television movies, beginning with his first Emmy for "The Price of Tomatoes" in 1961. His four other Emmys were for "Columbo."

He was married to pianist Alyce Mayo in 1960; they had two daughters, Jackie and Catherine, and divorced in 1976. The following year he married actress Shera Danese. They filed for divorce twice and reconciled each time.

When not working, Falk spent time in the garage of his Beverly Hills home. He had converted it into a studio where he created charcoal drawings. He took up art in New York when he was in the Simon play and one day happened into the Art Students League.

He recalled: "I opened a door and there she was, a nude model, shoulders back, a light from above, buck-ass naked. The female body is awesome. Believe me, I signed up right away."

Falk is survived by his wife Shera and his two daughters.

___

Associated Press Television Writers Lynn Elber and David Bauder, Entertainment Writer Anthony McCartney and former writer Bob Thomas in Los Angeles contributed to this report.

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Water filling 2,500 homes in Minot as river rises (AP)

BISMARCK, N.D. – The Souris River's full weight hit Minot on Friday, swamping an estimated 2,500 homes as it soared nearly 4 feet in less than a day and overwhelmed the city's levees. City officials said they expected as many as 4,500 homes to be severely damaged by the time the river peaks Saturday.

More than a quarter of the city's 40,000 residents evacuated earlier this week, packing any belongings they hoped to save into cars, trucks and trailers.

"The river's coming up rapidly," Mayor Curt Zimbelman said. "It's dangerous and we need to stay away."

Fed by heavy rains upstream and dam releases that have accelerated in recent days, the Souris surged past a 130-year-old record Friday and kept going. The river was more than 5 feet above major flood stage Friday afternoon and expected to crest as early as Saturday evening some 8 1/2 feet beyond major flood stage.

The predicted crest was lowered a foot based on new modeling by the National Weather Service, but it was little consolation in Minot.

"This has been a very trying time for our community," Zimbelman said. "It's emotionally draining for all of us."

As they had the past two days, emergency officials focused on protecting water and sewer systems to avoid the need for more evacuations. They were confident about the water system, but a little less so about the sewer treatment plant. It had been sandbagged as high as possible.

Zimbelman said water coming up through a storm sewer briefly began to erode one downtown levee before it was controlled.

Also of concern was the Broadway Bridge, a key north-south route. Levees protecting the northern approach were being raised, but Army Corps of Engineers Lt. Col. Kendall Bergmann said it was touch and go. The levee work also protected the campus of nearby Minot State University.

Members of the state's congressional delegation pressed for a federal emergency declaration making people eligible for individual assistance, a step they said was needed for the Federal Emergency Management Agency to set up transitional housing centers.

Sen. John Hoeven said a helicopter flight over the Souris valley showed damage to smaller cities nearby. He estimated more than 5,000 homes in the valley would eventually have water damage, including those in Minot and Burlington, where officials gave up sandbagging Thursday. The Army Corps of Engineers was leading an effort to build emergency levees in Velva, a small town about 20 miles downstream of Minot, before the Souris crests there Tuesday.

In Burlington, deputy auditor Cindy Bader estimated Friday that more than half of the town's 1,000 residents had left to escape the rising Souris River.

Burlington's city hall, school and police and fire departments appeared safe, but some homes in the evacuation zone had water up to their first floors and higher. In one neighborhood, the tops of two traffic signs barely peeked above the brown, brackish water, which reached just beneath the eaves of two nearby houses.

Wayne Walter, a Burlington city councilman and truck driver for a snack food company, said residents were stunned by the river's rapid rise.

"When we went to bed last night, and when we got up this morning, it was a big difference," Walter said Friday. "Down by the dikes, we saw it just trickling over (Thursday night). This morning, everything was gone."

Walter said he lived across the street from the evacuation area, and the Souris was still about 4 feet from his own home.

"Right now, we're staying there, but we've got the camper packed," he said. "They tell us to leave, we're gone."

The National Guard had 870 members activated for the crisis. Minot is best known as home to an Air Force base, which oversees 150 Minutemann III missiles in underground launch silos scattered over 8,500 square miles in northwest North Dakota.

Col. S.L. Davis, commander of the 91st Missile Wing, said there was some "localized flooding" at a handful of missiles sites because of the wet spring and summer. But he said the silos are designed to safety handle some water and protective measures were taken at a few sites similar to what's done in preparation for spring runoff from snowmelt.

In Minot, a car parked near the Broadway Bridge was dry Friday morning but submerged by midday. Nearby, about a half-dozen gophers found themselves stranded in a small and shrinking dry patch. Furniture store workers cheered as one of the gophers swam 20 yards to safety.

The U.S. Fish and Wildlife Service launched four boats to patrol flooded neighborhoods and respond to 911 calls, but no injuries were reported and no rescues were necessary. The evacuation zone was empty except for emergency officials and some geese, who paddled in about 5 feet of water washing down the streets.

George Moe, 63, whose house was about a block from the water's edge, returned briefly Friday to pick up some keys. Moe said the only thing left in his house was the mounted head of an antelope shot by his wife, who died about three years ago.

Moe worried about the home he's lived in for four decades and the shop where he works as a mechanic; it was taking on water and he wasn't sure he'd have a job after the flood.

"I hate to see something go to hell after 40 years," he said. "There ain't much you can do."

___

Associated Press writers Dale Wetzel in Burlington and John Flesher in Minot contributed to this report.

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Kadhafi 'may leave' bombed capital, Obama rebuked (AFP)

TRIPOLI (AFP) – Moamer Kadhafi is reportedly mulling leaving Tripoli after blistering NATO air raids, as the rebels hinted they may let him stay in Libya if he quits and US lawmakers rebuked US President Barack Obama.

The Wall Street Journal quoted a senior US national security official as saying American intelligence shows Kadhafi "doesn't feel safe anymore" in the capital where he has ruled for more than four decades.

However, officials told the paper they did not see the move as imminent and did not believe Kadhafi would leave Libya, a key demand of rebels battling his forces.

Kadhafi is believed to have numerous safe houses and other facilities both within and outside Tripoli where he could go.

In Washington, the House of Representatives on Friday rejected a resolution authorising US military action in Libya, in a symbolic but scathing rebuke to Obama.

Lawmakers voted 123-295 to defeat the measure and moved to take up a companion resolution aimed at sharply reducing the US role in the NATO-led, UN-mandated operations against Kadhafi's forces.

"We are disappointed by that vote. We think that now is not the time to send the kind of mixed message that it sends," White House spokesman Jay Carney told reporters aboard Air Force One.

Rebel spokesman Mahmud Shamam told French daily Le Figaro the insurgents were in indirect contact with the Kadhafi regime and may be prepared to allow him to stay in the country, but that he and his family must agree to leave power.

"Our conditions remain the same. It is totally excluded that Kadhafi or members of his family take part in a future government. We are discussing with them the mechanism for Kadhafi's departure," he said.

In the rebel capital Benghazi, however, National Transitional Council deputy chairman Abdel Hafiz Ghoga told AFP: "There is no contact, direct or indirect, with the Kadhafi regime."

Another rebel leader, Colonel Ahmed Omar Bani, on Thursday pleaded for foreign allies to provide the equipment needed to defeat Kadhafi.

Bani said the rebels were up against vastly superior firepower. Much of their arsenal comprises Soviet-era tanks and artillery up to 50 years old.

The mostly volunteer force has, with the help of NATO air strikes, kept Kadhafi's forces at bay on several fronts, but has made limited progress toward Tripoli -- allowing loyalist forces to dig in.

Rights group Amnesty International said on Friday Kadhafi's forces were using rockets packed with ball bearings to bombard civilians in rebel-held Misrata in the west.

At least three civilians -- two women and a 14-year-old boy -- were killed recently when Grad rockets hit a residential neighbourhood of the port city, it said in a statement.

"These rockets are indiscriminate weapons which cannot be directed at a particular target and their use may amount to war crimes," Amnesty said.

A senior US commander, meanwhile, said that NATO and Libya's African allies had not adequately planned for the aftermath of Kadhafi's possible fall.

"We, the international community, could be in post-conflict Libya tomorrow and there isn't a plan, there is not a good plan," the senior US commander in Africa, General Carter Ham, told the Wall Street Journal.

He predicted that Kadhafi could fall quickly, and said there may be a need for substantial ground forces in Libya to preserve order.

Despite the intensive NATO bombing, stalemate on the battlefield and a wave of defections of regime officials and soldiers, Kadhafi remains defiant.

"We will resist and the battle will continue to the beyond, until you're wiped out. But we will not be finished," he said in an audio message on Wednesday.

Around 300 people, including 51 freed detainees, arrived in Benghazi on Friday aboard the Ionis, chartered by the International Committee of the Red Cross, after a 22-hour journey from Tripoli, an AFP correspondent said.

Families who had been separated for weeks were reunited.

The ICRC said the arrival of the group was part of a broader exchange negotiated between Libya's two warring factions.

The 28-member International Energy Agency said on Thursday that 60 million barrels of oil would be taken from reserves over the next month to cover lost Libyan output.

World oil prices sank on Friday, extending Thursday's plunge after the IEA decision.

New York's main contract, West Texas Intermediate for delivery in August, eased ten cents to $90.92 a barrel after plummeting $4.39 or 4.6 percent on Thursday.

In London afternoon trade on Friday, Brent North Sea crude for August fell $1.31 to $105.95, one day after plunging by $6.95, or 6.0 percent in value.

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New York governor signs law approving gay marriage (Reuters)

ALBANY, New York (Reuters) – Governor Andrew Cuomo made same-sex marriages legal in New York on Friday, a key victory for gay rights ahead of the 2012 presidential and congressional elections.

New York will become the sixth and most populous U.S. state to allow gay marriage. State senators voted 33-29 on Friday evening to approve marriage equality legislation and Cuomo, a Democrat who had introduced the measure, signed it into law.

"This vote today will send a message across the country. This is the way to go, the time to do it is now, and it is achievable; it's no longer a dream or an aspiration. I think you're going to see a rapid evolution," Cuomo, who is in his first year of office, told a news conference.

"We reached a new level of social justice," he said.

Same-sex weddings can start taking place in New York in 30 days, though religious institutions and nonprofit groups with religious affiliations will not be compelled to officiate at such ceremonies. The legislation also gives gay couples the right to divorce.

"I have to define doing the right thing as treating all persons with equality and that equality includes within the definition of marriage," Republican Senator Stephen Saland said before the bill was passed. He was one of four Republicans to vote for the legislation.

Cheers erupted in the Senate gallery in the state capital Albany and among a crowd of several hundred people who gathered outside New York City's Stonewall Inn, where a police raid in 1969 sparked the modern gay rights movement.

"It's about time. I want to get married. I want the same rights as anyone else," Caroline Jaeger, 36, a student, who was outside the Stonewall Inn.

But New York's Catholic bishops said they were "deeply disappointed and troubled" by the passage of the bill.

"We always treat our homosexual brothers and sisters with respect, dignity and love. But we just as strongly affirm that marriage is the joining of one man and one woman," the state's Catholic Conference said in a statement.

New York City Mayor Michael Bloomberg, an advocate for gay marriage who lobbied state lawmakers in recent weeks, said the vote was an "historic triumph for equality and freedom."

"Together, we have taken the next big step on our national journey toward a more perfect union," he said in a statement.

ELECTION ISSUE

President Barack Obama, who attended a fund-raiser in New York on Thursday for Gay Pride Week, has a nuanced stance on gay issues. Experts say he could risk alienating large portions of the electorate if he came out strongly in favor of such matters as gay marriage before the 2012 elections.

During the 2008 election, Obama picked up important support from Evangelicals, Catholics, Latinos and African-Americans, some of whom oppose gay marriage, which has become a contentious social issue being fought state-by-state.

In California a judge last year overturned a ban on gay marriage, but no weddings can take place while the decision is being appealed. It could set national policy if the case reaches the U.S. Supreme Court.

Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and the District of Columbia allow same-sex marriage, and Delaware, Hawaii, Illinois and New Jersey approved civil unions. The first legal same-sex marriages in the United States took place in Massachusetts in 2004.

But gay marriage is banned in 39 states.

In New York a recent Siena poll found 58 percent of New Yorkers support gay marriage, while nationally the U.S. public is nearly evenly split, with 45 percent in favor and 46 percent opposed, according to a Pew Research poll released last month.

New York City's marketing and tourism group NYC & Company said it was gearing up to turn the city into "the gay weddings destination." "The new legislation is good news for the City's $31 billion travel and tourism industry," said NYC & Company Chief Executive George Fertitta.

New York's Democrat-dominated Assembly voted 80-63 in favor of gay marriage last week and passed the amended legislation on Friday 82-47.

A key sticking point had been over an exemption that would allow religious officials to refuse to perform services or lend space for same-sex weddings. Most Republicans were concerned the legal protection was not strong enough, so legislative leaders worked with Cuomo to amend his original bill.

"God, not Albany, settled the definition of marriage a long time ago," said Senator Ruben Diaz Sr., a Pentecostal minister and the only Democrat to vote against the measure.

However, fears of a slew of litigation arising from a possible religious exemption to New York's proposed same-sex marriage law are not borne out by experience with similar laws in other states, legal experts say.

(Additional reporting by Phil Wahba, writing by Michelle Nichols, editing by Anthony Boadle and Philip Barbara)

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NYers celebrate historic vote for gay marriage (AP)

NEW YORK – Champagne corks popped, rainbow flags flapped and crowds embraced and danced in the streets of Manhattan's Greenwich Village on Friday night moments after the New York Senate gave final approval to same-sex marriage, igniting wild celebrations at the Stonewall Inn, considered the birthplace of the gay rights movement.

Hundreds gathered inside and outside the landmark bar, where protests over a 1969 police raid helped trigger the movement. Shortly before midnight, Democratic Gov. Andrew Cuomo signed the bill to make gay marriage legal in the country's most populous state.

Scott Redstone and his partner of 29 years, Steven Knittweis, were in the bar when the vote came in. Redstone, 57, said he and his 48-year-old partner hugged after the vote came in. "I said, `Will you marry me?' And he said, `Of course!'" He said they walked home and popped open a bottle of champagne.

Alex Kelston, 26, who works in finance in Manhattan, said he hopped in a cab and rushed to the bar when he heard the news.

"This is the place where the movement started and it's a way to close the loop and celebrate the full equality of gay people in New York," he said.

On June 28, 1969, violent encounters between police and gay activists outside the bar known as the Stonewall riots helped spark the modern-day movement for equal rights for homosexuals.

"I am spellbound. I'm so exhausted and so proud that the New York State Senate finally stood on the right side of history," said Queens teacher Eugene Lovendusky, 26, who is gay and said he hopes to marry someday.

He then repeated a chant he had screamed during a protest at a fundraiser for President Barack Obama last night: "I am somebody. I deserve full equality."

Mayor Michael Bloomberg was mid-sentence at a press conference on the city budget when City Council Speaker Christine Quinn interrupted him to announce that the marriage bill had passed.

The room erupted in cheers from other lawmakers and staff, as Quinn — the first gay person to hold the job — embraced her colleagues and smiled, tears welling in her eyes.

"It's hard to describe the feeling of having the law of your state changed to say that you ... are a full member of the state and that your family is as good as any other family," she said.

In a way, the decision will change everything for her and her partner, Quinn said.

"Tomorrow, my family will gather for my niece's college graduation party, and that'll be a totally different day because we'll get to talk about when our wedding will be and what it'll look like, and what dress Jordan, our grand-niece, will wear as the flower girl. And that's a moment I really thought would never come," she said.

"I really can't really describe what this feels like, but it is one of the best feelings I have ever had in my life," she said.

Bloomberg called the vote "a historic triumph for equality and freedom."

He said he would support the Republicans who voted for the measure Friday, and said he believed their actions were consistent with GOP ideals of liberty and freedom.

"The Republicans who stood up today for those principles I think will long be remembered for their courage, foresight and wisdom," said the mayor, a Democrat-turned-Republican-turned-independent. "Ten, 20, 30 years from now, I believe they will look back on this vote as one of the finest and most proud moments in their life."

Bloomberg, a billionaire who had lobbied in Albany for the measure along with Quinn, has the personal resources to help the Republicans withstand any backlash from their own party.

Celebrities also responded, with Lady Gaga posting on Twitter that she "can't stop crying." The pop star has been urging her 11 million followers to call New York senators in support of the bill.

"The revolution is ours to fight for love, justice+equality. Rejoice NY, and propose. We did it!!!" she also posted.

Talk show host Wendy Williams posted to her Twitter followers as well, saying: "Yay for Gay Marriage! NY, it's about time... jersey we're next! How you doin?"

___

Associated Press Writers Samantha Gross and Cristian Salazar contributed to this report.

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House rebukes Obama but won't halt funds for Libya (AP)

WASHINGTON – Challenging presidential power, a defiant U.S. House voted overwhelmingly Friday to deny President Barack Obama the authority to wage war against Libya. But Republicans fell short in an effort to actually cut off funds for the operation in a constitutional showdown reflecting both political differences and unease over American involvement.

In a repudiation of their commander in chief, House members rejected a measure to authorize the Libya mission for a year while prohibiting U.S. ground forces in the North African nation, a resolution Obama had said he would welcome.

The vote was 295-123 with 70 Democrats abandoning the president just one day after Secretary of State Hillary Rodham Clinton had made an unusual appeal to rank-and-file members. A Senate committee is to consider the same resolution next Tuesday and is expected to support it, raising the prospect of conflicting messages from Congress.

Friday's votes showed lawmakers' concerns about an open-ended U.S. commitment to a civil war between Moammar Gadhafi and rebel forces looking to oust him — as well as growing weariness among Americans with drawn-out conflicts in Iraq and Afghanistan.

In addition, the resounding number rejecting the authority resolution was a clear sign of anger toward the president for failing to seek congressional consent for the operation within 60 days, as stated in the 1973 War Powers Resolution. Republicans and Democrats argued that an arrogant Obama had run roughshod over the Constitution, ignoring the authority of the legislative branch that the founding fathers had insisted has the power to declare war.

While Republican as well as Democratic presidents have often ignored the War Powers Resolution, a frustrated House voted earlier this month to rebuke Obama for failing to provide a "compelling rationale" for the Libyan mission and for launching U.S. military forces without congressional approval. They requested a report to Congress on the operation.

Obama further incensed lawmakers last week when he said he didn't need authorization because the operation did not rise to full-blown hostilities, a decision he reached by overruling some of his advisers.

It's not about Gadhafi, foes of the authorization said.

"I support the removal of the Libyan regime. I support the president's authority as commander in chief, but when the president chooses to challenge the powers of the Congress I, as speaker of the House, will defend the constitutional authority of the legislature," said Speaker John Boehner, R-Ohio.

Added Rep. Tom Rooney, R-Fla.: "The last thing that we want as Americans is for some president, whether it's this president or some future president, to be able to pick fights around the world without any debate from another branch of government."

The rejected money-cutoff bill, sponsored by Rooney, would have barred drone attacks and airstrikes but allowed the United States to continue actions in support of the NATO-led operation such as intelligence gathering, refueling and reconnaissance. The effort to cut off money was defeated, 238-180. While GOP leaders backed the measure, they didn't pressure Republicans to support it.

Supporting Obama, Democrats opposed to the votes argued that they would empower Gadhafi, aggravate NATO allies desperately needed in the fight in Afghanistan and send a dispiriting message to those who led the Arab spring uprisings in Tunisia, Egypt and elsewhere.

They reminded lawmakers of Gadhafi's role in the 1988 bombing of Pan Am Flight 103 and said he had American blood on his hands.

"The message will go all over the world, the message will go to Moammar Gadhafi, the message will go to our NATO allies, the message will go to every nation of the world that America does not keep faith with its allies," said Rep. Steny Hoyer of Maryland, the No. 2 Democrat in the House.

The authorization vote marked the first time since 1999 that either chamber had voted against backing a military action. The last time was to limit President Bill Clinton's authority to use ground forces in Kosovo. There will be no immediate effect on American involvement in the NATO-led mission in Libya, the same as in 1999.

Since NATO took command of the operation in early April, the U.S. role has largely been limited to support efforts such as intelligence and electronic warfare. However, the U.S. has launched airstrikes and drone attacks, flying more than 3,200 sorties. The effort has included 39 drone attacks and 80 strikes with jet fighters.

The bill to cut off funds failed, in part, because several Republicans feared that even a vote for limited authorization for a NATO support mission amounted to support for the war effort.

"By dictating to President Obama how he can use American military forces in support of the NATO effort in Libya, we would authorize him to continue the same mission he has been carrying out for the past three months without congressional approval," said Rep. Scott Garrett, R-N.J.

The votes Friday were not the last word in the House. Lawmakers plan to target money for Libya when the House considers the defense spending bill the week of July 4.

Reacting to the votes, Clinton said she would have preferred a different outcome on the authorization vote but was "gratified that the House decisively rejected" the bill to cut funds.

"We need to stand together across party lines and across both branches of government with the Libyan people and with our friends and allies and against Gadhafi," Clinton said.

In Benghazi, Libya, rebel spokesman Jalal el-Gallal, said he didn't know why the House voted against the authorization measure.

"America is the beating heart of democracy and should support the birth of a democracy in our time," he said. "I believe the American people will put the pressure on the government to change its mind."

White House spokesman Jay Carney said, "We think now is not the time to send the kind of mixed message that it sends when we're working with our allies to achieve the goals that we believe that are widely shared in Congress: protecting civilians in Libya, enforcing a no-fly zone, enforcing an arms embargo and further putting pressure on Gadhafi."

The authorization resolution mirrors a Senate measure sponsored by Sens. John Kerry, D-Mass., and John McCain, R-Ariz. The Senate Foreign Relations Committee will consider that resolution on Tuesday, and Senate Majority Leader Harry Reid, D-Nev., has indicated it has the panel's support.

___

Associated Press writers Jim Abrams, Lolita C. Baldor and Matthew Lee in Washington and Hadeel al-Shalchi in Libya contributed to this report.

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Nugent-Hopkins heads to Edmonton with top NHL pick (AP)

ST. PAUL, Minn. – Ryan Nugent-Hopkins took center stage when the Edmonton Oilers made him the No. 1 pick in the NHL draft.

It was quite fitting. Center was clearly the coveted position as player after player came off the board.

Nugent-Hopkins was the first to go Friday night, starting a run of pivots with six of the first eight selections. Then came the defensemen, with six being chosen in the top 14. After that came a couple of eyebrow-raising trades.

Nugent-Hopkins, the first Western Hockey League player to be drafted first since 1996, has been raising eyebrows at the junior level for a while. The Oilers, slotted first overall for the second straight year, selected the slick passer from the Red Deer Rebels. The 18-year-old center led the WHL last season with 75 assists, and maybe, just maybe, he'll be the next great player for the Oilers.

Edmonton took left wing Taylor Hall No. 1 in 2010, and Nugent-Hopkins could eventually find himself on a line with him. The first British Columbia native to be taken first overall in the NHL draft, Nugent-Hopkins has already spoken with Hall.

"He was so great to talk to. Everything looks good right now," Nugent-Hopkins said. "He just said, 'Enjoy this whole experience. You're going to be nervous and stuff, but try to enjoy it as much as you can.'"

As for their chemistry?

"I guess we'll never know until we get on the ice together, but hopefully we do. I can see it working," Nugent-Hopkins said.

To get there, Nugent-Hopkins has to bulk up. Listed at 6-foot-1 and 164 pounds, he said this week he's added 10 pounds to that total since the end of his junior season and plans to pack on five more.

"Steak and potatoes, mostly," he said when asked about his diet. "Just trying to put some weight on."

Nugent-Hopkins said he's heard general manager Steve Tambellini is in "no rush" to bring him to Edmonton.

"If I do go back to junior, I won't be disappointed at all," Nugent-Hopkins said. "It'll be a great opportunity for us as Red Deer as a team to hopefully get to the Memorial Cup. Personally, it'll be a good development year for me, too. But my goal right now is to make the Oilers."

The remaining rounds, two through seven, will take place on Saturday.

The home fans will return happy, after the Minnesota Wild drew roars from the crowd following the announcement of their big deal with the San Jose Sharks. The Wild sent All-Star defenseman Brent Burns and their 2012 second-round pick to the Sharks, and they received a pair of forwards Devin Setoguchi, a former 30-goal scorer, and Charlie Coyle, a first-round pick last year; plus another first-round pick this year, 28th overall. Setoguchi had just agreed to a three-year, $9 million-deal on Thursday.

Chicago then dealt right wing Troy Brouwer to the Washington Capitals for the 26th overall selection, giving the Blackhawks a pair of first-rounders. After the first round, Chicago traded defenseman Brian Campbell to Florida for forward Rostislav Olesz. The 32-year-old Campbell had 19 goals and 38 assists over three seasons with the Blackhawks. He was the third-highest paid player on the team last season at $7,142,000.

Left wing Gabriel Landeskog of Sweden went second overall to the Colorado Avalanche. He had 36 goals in 53 games last season for the Kitchener Rangers of the Ontario Hockey League. There were a record four Swedes picked in the top 10.

Jonathan Huberdeau, a center from Quebec, was taken third by the Florida Panthers, who were also in the same slot for the second year in a row. Huberdeau was the MVP of the Quebec Major Junior Hockey League playoffs after getting three goals and three assists in four games for the Saint John's Sea Dogs.

Huberdeau attended an English-speaking high school to help ease his transition to the NHL, and he spoke this week about finishing his exams, another reminder of just how young these players are under the spotlight on the stage with the whole hockey world watching.

Landeskog spoke of the "surreal" experience, hearing his name called while sitting in the seats with his family.

"I was just telling my dad, 'I can't believe this is really happening,'" Landeskog said.

Adam Larsson, a 6-foot-3, 200-pound defenseman from Sweden, was selected fourth by the New Jersey Devils. He played two full seasons for Skelleftea and was the third blue-liner to make his debut in the Swedish Elite League at age 16.

Then the New York Islanders chose center Ryan Strome of the Niagara IceDogs of the OHL. Strome was third in the league with 106 points in 65 games. Islanders right wing Kyle Okposo, a native of Minnesota, introduced Strome. The Islanders, too, were picking fifth for the second straight year.

After that, the Ottawa Senators chose center Mika Zibanejad from Djurgarden of the Swedish Elite League with the first of their three first-round picks. His mother is Finnish, and his father is Iranian, but he was born in Stockholm.

Then came the big announcement by Winnipeg: The team will be called the Jets. Formerly the Atlanta Thrashers, the franchise waited until the seconds before choosing center Mark Schiefele with the seventh selection to announce the new — er, old — nickname.

Team chairman Mark Chipman turned to general manager Kevin Cheveldayoff to make the pick "on behalf of the Winnipeg Jets." That drew cheers and "Go Jets go!" chants from the dozens of fans wearing white T-shirts with the old red-and-blue Jets logo.

The Philadelphia Flyers, using the eighth pick they obtained in one of Thursday's stunning trades, the one that sent leading scorer Jeff Carter to the Columbus Blue Jackets, took center Sean Couturier of the Drummondville Voltigeurs of the QMJHL.

Defenseman Dougie Hamilton was drafted ninth overall by the Stanley Cup champion Boston Bruins. The son of an Olympic rower (dad) and basketball player (mom), Hamilton had 58 points in 67 games last season for Niagara in the OHL.

Then came more cheers from the crowd, with defenseman Jonas Brodin from Farjestad of the Swedish Elite League drawing a roar from the Wild fans in attendance at Xcel Energy Center.

The Avalanche were the first team to pick twice. They took defenseman Duncan Siemens at No. 11, a selection obtained earlier this year in a trade with the St. Louis Blues headlined by defenseman Erik Johnson, himself a former No. 1 overall pick. Siemens was plus-40 for the Saskatoon Blades in the WHL last season.

The run of defenseman continued when Ryan Murphy went at No. 12 to the Carolina Hurricanes. He led OHL blue-liners with 26 goals last season for Kitchener. Then at No. 13, the Calgary Flames picked left wing Sven Baertschi of the Portland Winterhawks of the WHL. The native of Switzerland had 34 goals and 51 assists in 66 games last season.

The first U.S. college player taken was defenseman Jamieson Oleksiak of Northeastern University by the Dallas Stars at No. 14. Then the first of three players from the U.S. national team development program, center Jonathan Miller, went 15th to the New York Rangers. Miller, headed for the University of North Dakota in the fall, had 37 points in 48 games last season in the United States Hockey League.

Five Americans went in the first round.

Ottawa took right wing Stefan Noeson from Plymouth of the OHL with the No. 21 pick that they got from the Nashville Predators and the Senators then nabbed forward Matt Puempel from Peterborough of the OHL at No. 24, a selection they picked up from Detroit during the draft.

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