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Other News: Stocks Sink, California Approves Budget

Stocks plummeted after bleak unemployment and manufacturing reports, and the California legislature approved and sent a budget to Gov. Arnold Schwarzenegger after a long political deadlock. Jim Lehrer recaps the day's other news headlines.

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    Also today, Wall Street took another hit from worries about banks, high-tech firms, and the general economy. The Dow Jones Industrial Average fell to its lowest level in more than six years. It lost 89 points to close below 7,466. The Nasdaq fell 25 points to close at 1,442.

    The California legislature adopted a package of tax increases and spending cuts to close a huge deficit. Passage came after months of political stalemate and a week of all-night sessions. Gov. Arnold Schwarzenegger welcomed the outcome.

    GOV. ARNOLD SCHWARZENEGGER (R), California: The legislature's actions to solve our $42 billion deficit was difficult but courageous, and just what California needs. It is the perfect medicine for our ailing economy, and it will boost public confidence in California, reassure the financial community, and allow us to resume selling our bonds and rebuild our state.


    The budget impasse had forced furloughs of state employees and a halt to public works projects.

    Switzerland insisted it continues a tradition of keeping bank accounts confidential. Last night, the Swiss handed U.S. authorities the names of more than 250 American clients of UBS, Switzerland's largest bank. They're suspected of tax fraud, and the Swiss president said, as such, they are not protected. Today, the U.S. government filed a new suit for 50,000 more names.

    Allegations of fraud against a Texas billionaire sent shockwaves across the Caribbean and South America. Venezuela seized a bank controlled by Allen Stanford, and there was a run on deposits in Antigua. We have a report from Keme Nzerem of Independent Television News.


    Once upon a time, Sir Allen Stanford was a prince, but now he's more of a pariah. Antiguans queued up today to withdraw what they could from what used to be Stanford's main bank, which is why the Antiguan government today promised to underwrite local deposits.

  • WINSTON BALDWIN SPENCER, Prime Minister, Antigua:

    The Eastern Caribbean Central Bank is in touch with the Bank of Antigua and the government and is currently putting in place a contingency plan. Therefore, there is no need for panic.


    But across Latin America, investors are starting to do exactly that: Ecuador, Peru, Panama and Colombia all suspending Stanford's banking operations, Venezuela first seizing them and then putting them up for sale.

    Today in the U.K., the Serious Fraud Office began to look into Stanford's links here. The billionaire's books were audited by what turned out to be a family accountant with somewhat underwhelming offices in north London. They're still listed here, but in fact moved out four years ago.

    So today the Sir Allen Stanford trail leads us to that well-known global accountancy hub, Enfield in North London, specifically here, this small room about five meters by five meters, which is where his accountancy firm was based at the time.

    Now, what's remarkable about this is that the authorities could possibly think that a firm of this size, no matter how brilliant, could possibly be in charge of looking over the books of a claimed $50 billion worth of global investments.

    And in a separate investigation in Mexico, the FBI is said to be looking at Stanford's connection with a powerful Gulf drug cartel. The last week, the authorities realized he was moving large amounts of money out of his banks and decided to act quickly.


    The U.S. case against Stanford involves the Securities and Exchange Commission. It alleges he carried out a fraud scheme amounting to $8 billion. Stanford has insisted he's innocent, but FBI agents formally served him with a civil complaint this afternoon.

    Secretary of State Clinton raised concerns about how stable North Korea is. She spoke on the way to South Korea, the latest stop in her tour around Asia. She said it's unclear who is in charge in North Korea. It is widely believed Kim Jong-il, the North Korean leader, suffered a stroke last August. Clinton said even a peaceful succession would create more uncertainty about North Korean policy.

    The parliament of Kyrgyzstan endorsed a decision to close a key U.S. air base. The site is a major hub and transit point for U.S. troops and cargo entering and leaving Afghanistan. The parliament vote was 78-1 to evict American forces from the base. The legislation now goes to the president, who is expected to sign it shortly.

    Still, U.S. Defense Secretary Gates said the matter remains open. He said the U.S. will consider paying more rent to keep the base.

    A Russian jury acquitted three men in the murder of a famed journalist. Anna Politkovskaya was gunned down in 2006. Her reporting targeted the regime of then-President Vladimir Putin for alleged abuses. The defendants left court in Moscow after not-guilty verdicts on charges they aided in the killing. Prosecutors said they will appeal.