Obama's tough auto stance may include bankruptcy

WASHINGTON (Reuters) – President Barack Obama ordered General Motors Corp and Chrysler LLC to accelerate their survival efforts and brace for possible bankruptcy, saying neither company had done enough to justify the taxpayer money they were seeking.

Obama, describing the industry as a pillar of the economy, nevertheless gave GM and Chrysler a little more time and money to wring further concessions from workers, creditors and other stakeholders.

"We cannot, we must not, and we will not let our auto industry simply vanish," Obama said in White House remarks on Monday that were partly overshadowed by his decision to force out GM CEO Rick Wagoner.

U.S. stock indexes tumbled on the harsher-than-expected government stance, which could push GM and Chrysler closer to a bankruptcy court restructuring that could threaten equity holders and force deeper losses on creditors.

A committee representing GM bondholders planned to meet later on Monday to discuss a debt restructuring plan according to a source familiar with the situation.

With about $28 billion in debt to bondholders, the GM offer would translate into $2.2 billion in cash, $4.3 billion in debt and an additional stock-based payout in a recapitalized company that would all but wipe out current stockholders.

The Obama administration is giving GM 60 days to rework its survival plan. The new CEO of the biggest U.S. automaker said a court-supervised restructuring in bankruptcy might be necessary.

Chrysler's operation would be funded for the next 30 days as it works to complete an alliance with Italy's Fiat SpA, considered the No. 3 U.S. maker's best chance of surviving.

A source familiar with the negotiations said Fiat's stake in Chrysler could start as low as 20 percent.

GM had sought more than $16 billion in new aid after getting $13.4 billion in December, while Chrysler wanted $5 billion on top of $4 billion at the end of 2008.

GM shares closed 25 percent lower on Monday while stock of Ford Motor Co, which has not sought a bailout, closed down 2.8 percent. Chrysler is privately held by Cerberus Capital Management.

BANKRUPTCY OPTION

Jared Bernstein, a member of the government's autos task force, told Reuters Financial Television that a process that splits off the "bad" assets of GM or Chrysler, and sends those through a court-supervised bankruptcy, is a possibility, but U.S. officials have not determined yet to pursue that option.

"I don't think we're at that level of analysis until we see the kinds of changes and adjustments, concessions that are going to be made over the next 60 days," Bernstein said.

With U.S. auto sales near 30-year lows, Obama moved to reassure would-be car-buyers, saying the government would stand behind the warranties of GM and Chrysler. He also offered his support for a tax credit incentive of up to $5,000 to trade in older and less fuel-efficient vehicles.

The U.S. auto industry, including cash-strapped dealers and suppliers, has cut 400,000 jobs over the past year while losing billions of dollars.

Deutsche Bank economist Joseph LaVorgna said in a note on Monday that a GM and Chrysler bankruptcy could eliminate a million of the roughly 3 million auto sector jobs.

"As we have long feared, a bankruptcy -- even a controlled one -- would put downward pressure on production, further upward pressure on the unemployment rate and likely negatively impact consumer confidence," LaVorgna said.

PLANS REJECTED

Obama's auto task force rejected the turnaround plans submitted by GM and Chrysler following their December bailout.

"While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger," Obama said.

The Obama administration did not say how much working capital the government would extend to GM and Chrysler over the coming weeks, but GM has said it needs $2 billion for April.

The U.S. government team raced to make the auto announcement before Obama heads to Europe for eight days of meetings surrounding the G20 conference.

Separately, Canada said plans set out by the Canadian branches of GM and Chrysler did not go far enough to make them viable, but it offered $3.2 billion in bridge loans to tide the companies over while they restructure.

Chrysler said on Monday it had reached agreement on a framework for an alliance with Fiat.

The next step for Chrysler is trying to reach cost-saving deals with creditors and the United Auto Workers (UAW), which could yield a $6 billion government investment if all restructuring and alliance pieces fall into place.

Fiat Chief Executive Sergio Marchionne said the talks with the Obama administration have been "tough but fair" and a deal will make Chrysler stronger and preserve U.S. jobs.

NEW GM CEO

GM's new chief executive, Fritz Henderson said the company would address elusive concession agreements with bondholders and the UAW, conditions crucial elements of its 60-day window extended by the government to prove viability.

"Our strong preference is to complete this restructuring out of court," Henderson said. "However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."

Wagoner and GM's board had long argued that bankruptcy by any of the major automakers would threaten thousands of jobs, including suppliers, and could lead to a GM liquidation.

Wagoner, who had presided over the company's rapid decline in the past five years and had run the automaker since 2000, was forced out at the request of the Obama auto task force, headed by former investment banker Steve Rattner. A majority of GM's board will also be replaced.

Europe's No. 2 carmaker by sales, PSA Peugeot Citroen, ousted CEO Christian Streiff on Sunday, replacing him with former Corus head Philippe Varin from June 1. PSA Peugeot Citroen shares fell 7.7 percent in Europe.

(Additional reporting by Walden Siew, Poornima Gupta and David Bailey in Detroit; Jeff Mason in Washington, John McCrank in Ottawa; Helen Massy-Beresford and Estelle Shirbon in Paris; Gilles Castonguay in Milan and Angelika Gruber in Berlin)

GM CEO Wagoner to step down at White House request

DETROIT – General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Barack Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.

The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.

Two people familiar with the plan said Sunday that the Obama administration would give GM enough government aid to restructure over the next 60 days, while Chrysler will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA. The officials spoke on condition of anonymity because they were not authorized to make details public.

Wagoner's departure indicates that more management changes may be part of the deal, but it is still unclear who will be in charge of GM. The automaker recently promoted Fritz Henderson, its former chief financial officer, to become president and chief operating officer. Many in the company thought he would eventually succeed Wagoner.

Detroit-based GM issued a statement Sunday saying that the company expects the administration to make an announcement about the automaker's restructuring soon but that "it would not be appropriate for us to speculate on the content of any announcement."

A person familiar with Chrysler's management said the company has been given no indication that the government will require any changes at the Auburn Hills, Mich., company, which has been led by former Home Depot CEO Robert Nardelli since August 2007. The person also spoke on condition of anonymity because Obama's plan has not been made public.

Wagoner, 56, has repeatedly said he believed it was better for him to lead GM through its crisis, but he has faced sharp criticism on Capitol Hill for what many lawmakers regard as years of missteps, mistakes and arrogance by the Detroit Three automakers.

Wagoner joined GM in 1977, serving in several capacities in the U.S., Brazil and Europe. He became president and chief executive in 2000 and has served as chairman and CEO since May 2003.

Wagoner, in an interview with The Associated Press in December, declined to speculate on suggestions from some members of Congress that GM's leadership team should step down as part of any rescue package.

"I'm doing what I do because it adds a lot of value to the company," Wagoner said in a Dec. 4 interview as GM sought federal aid from the Bush administration. "It's not clear to me that experience in this industry should be viewed as a negative, but I'm going to do what's right for the company and I'll do it in consultation with the (GM) board (of directors)."

Auto industry analysts credit Wagoner with doing more to restructure the giant automaker than any other executive. But given that he has been at GM's helm for so long, many of his critics say he moved too slowly to take on the United Auto Workers and shrink the company as its market share tumbled.

"Given the history, a change in management could hardly hurt and might do some good," Sen. Charles Schumer, D-N.Y., said Sunday.

Among his biggest accomplishments as CEO, Wagoner presided over a landmark contract agreement with the UAW in 2007. In that four-year agreement, the automaker successfully transferred nearly $50 billion in health care liabilities to the union as it sought to reduce labor costs, especially huge liabilities to retirees.

In 2004, Wagoner sought to reduce GM's brands by shutting down the Oldsmobile line of cars — a costly project because it required huge payouts to dealers. He also sought to streamline the company by selling the company's defense unit to General Dynamics Corp. for $1.1 billion in 2003. He has also reduced the company's work force by tens of thousands and closed factories around the country.

But Wagoner's critics say GM relied for too long on sales of pickup trucks and sport utility vehicles for its profits and was unprepared for a drastic market shift when gasoline prices hit $4 per gallon last year.

During the Congressional debate over whether to give GM and Chrysler loans last year, many lawmakers criticized Wagoner, including Sen. Chris Dodd, D-Conn., chairman of the Banking Committee.

Dodd accused automakers' top management of having a "head-in-the-sand" approach to problems and said Wagoner "has to move on" as part of a government-run restructuring that should be a condition of financial life support for the auto industry.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Sunday that Wagoner's departure gives the government a rationale to provide additional aid to the automaker. He was not surprised by the move, but said he is disappointed because he considers Wagoner a capable leader.

"I think that as a condition for further government support, this helps give them a little cover with the public," Cole said. "Essentially he's taking one for the team."

Cole noted that other automakers have been shaking up management as well. Toyota Motor Corp.'s president, Katsuaki Watanabe, recently said he would be stepping down as the Japanese automaker weathers financial difficulty. Also, France's biggest carmaker, PSA Peugeot-Citroen, abruptly ousted CEO Christian Streiff on Sunday, saying "exceptional difficulties" confronting the auto industry require new management at the top.

In the financial sector, where the overwhelming majority of government bailout money has been directed, some corporate leaders found their days numbered. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the company in September, just a day after the government pumped $85 billion into the insurer to keep it from going under.

The terms of Wagoner's departure are unclear. However, GM disclosed in its annual report last month that it cannot make severance payments to Wagoner or other senior executives under the terms of its governments loans. Wagoner is eligible to retire under GM's salaried employee and executive retirement plans, but the amount he would receive is unclear.

Nardelli's departure is less likely than Wagoner's because Nardelli is "relatively new" to the automaker, with less than two years at the helm, Cole said.

GM and Chrysler were required by the Bush administration to get major concessions from debtholders and the United Auto Workers, with a deadline of March 31 for signed contracts. But very little headway was being made with either party this weekend as they awaited Obama's announcement.

Members of Obama's auto task force have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The deals also call for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations

China dismisses cyber-espionage claims

(CNN) -- Analysts in China are dismissing claims that nearly 1,300 computers in more than 100 countries have been attacked, and have become part of a cyber-espionage network apparently based in China.

"This is purely another political issue that the West is trying to exaggerate," Song Xiaojun, a Beijing-based strategy and military analyst, told the state-run news agency, Xinhua.

Zhu Feng, a professor with the school of international studies at Peking University, added: "Cyber security has been a global issue, but this time those who see China as an emerging threat again have picked the subject as a new weapon."

Computers -- including machines at NATO, governments and embassies -- are infected with software that lets attackers gain complete control of them, cyber-security experts alleged in two reports Sunday.

One report was issued by the University of Toronto's Munk Centre for International Studies in conjunction with the Ottawa, Canada-based think tank The SecDev Group; the second came from the University of Cambridge Computer Laboratory.
Researchers have dubbed the cyber-espionage network GhostNet. The network can not only search a computer but see and hear the people using it, according to the Canadian report.

"GhostNet is capable of taking full control of infected computers, including searching and downloading specific files, and covertly operating attached devices, including microphones and web cameras," the report says.

The discovery of GhostNet grew out of suspicions that the office of the Dalai Lama had been hacked.

His staff sent a foreign diplomat an e-mail invitation to meet the Tibetan spiritual leader, but before the Dalai Lama's people could follow up with a phone call, "the diplomat's office was contacted by the Chinese government and warned not to go ahead with the meeting," according to the Cambridge report.

The investigation resulted in both reports. Both found links to computers in China, but the researchers did not conclude who they thought was behind the "malware," or malicious software.

"Chinese cyber espionage is a major global concern... (b)ut attributing all Chinese malware to deliberate or targeted intelligence gathering operations by the Chinese state is wrong and misleading," says the Canadian report, titled, "Tracking GhostNet: Investigating a Cyber Espionage Network."

"The sheer number of young digital natives online can more than account for the increase in Chinese malware," it adds.

But the report also points out that China is among a handful of countries, also including the United States, Israel and the United Kingdom, which are "assumed" to have considerable cyber-espionage capabilities.

Attempts by CNN to contact the Chinese government in Beijing, and its American embassy and consulate offices were unsuccessful.

Hackers gained access to computers in the Dalai Lama's office by tricking computer users into downloading attachments in e-mail which had been carefully engineered to appear safe, according to the authors of the Cambridge report, titled, "The snooping dragon: social-malware surveillance of the Tibetan movement."

"The attackers took the trouble to write e-mails that appeared to come from fellow Tibetans and indeed from co-workers," say the report's authors, Shishir Nagaraja and Ross Anderson. Once the attackers gained an initial foothold, "they also stole mail in transit and replaced the attachments with toxic ones," they add.

The Dalai Lama investigation led to the discovery of hundreds more infected machines in locations from The Associated Press in Britain and Deloitte and Touche in New York, to the ministries of foreign affairs in Indonesia, Iran and the Philippines. The office of the prime minister of Laos was also snared, as was a single non-secure computer at NATO, "Tracking GhostNet" claims. Infected computers "checked in" with control servers as early as May 2007 and as recently as March 12 of this year, the report adds.

Attempts by CNN to verify the reports' allegations with NATO, the Laotian government and the Dalai Lama's organization in India were not immediately successful on Sunday.

The attack has broader implications, Nagaraja and Anderson warn, since a single person could carry out a similar one.

"Even a capable motivated individual could have carried out the attacks we describe here," they say. "Russian crooks will do (it) in 2010, and even low budget-criminals from less developed countries will follow in due course."

The computer systems of businesses are almost certain to be hacked by similar means, if they have not been already, the experts claim.

"Social malware will be used for fraud, and the typical company really has no defense against it," since it is so expensive and inconvenient, for example, to keep sensitive information or processes on computers with no Internet access. "We expect that many crooks will get rich before effective countermeasures are widely deployed."

The Information Warfare Monitor web site, where the Canadian report was released, was down Sunday afternoon.

GhostNet is not affiliated with GhostNet Inc., a business technology company

NJ girl, 14, arrested after posting nude pics

TRENTON, N.J. – A 14-year-old New Jersey girl has been accused of child pornography after posting nearly 30 explicit nude pictures of herself on MySpace.com — charges that could force her to register as a sex offender if convicted.

The case comes as prosecutors nationwide pursue child pornography cases resulting from kids sending nude photos to one another over cell phones and e-mail. Legal experts, though, could not recall another case of a child porn charge resulting from a teen's posting to a social networking site.

MySpace would not comment on the New Jersey investigation, but the company has a team that reviews its network for inappropriate images. The National Center for Missing and Exploited Children tipped off a state task force, which alerted the Passaic County Sheriff's Office.

The office investigated and discovered the Clifton resident had posted the "very explicit" photos of herself, sheriff's spokesman Bill Maer said Thursday.

"We consider this case a wake-up call to parents," Maer said. The girl posted the photos because "she wanted her boyfriend to see them," he said.

Investigators are looking at individuals who "knowingly" committed a crime, he said, declining to comment further because the case is still being investigated.

The teen, whose name has not been released because of her age, was arrested and charged with possession of child pornography and distribution of child pornography. She was released to her mother's custody.

If convicted of the distribution charge, she would be forced to register with the state as a sex offender under Megan's Law, said state Attorney General Anne Milgram. She also could face up to 17 years in jail, though such a stiff sentence is unlikely.

Some observers — including the New Jersey mother behind the creation of Megan's Law — are criticizing the trend of prosecuting teens who send racy text messages or post illicit photos of themselves.

Maureen Kanka — whose daughter, Megan, became the law's namesake after she was raped and killed at age 7 in 1994 by a twice-convicted sex offender — blasted authorities for charging the 14-year-old girl.

The teen needs help, not legal trouble, she said.

"This shouldn't fall under Megan's Law in any way, shape or form. She should have an intervention and counseling, because the only person she exploited was herself."

Called "sexting" when it's done by cell phone, teenagers' habit of sending sexually suggestive photos of themselves and others to one another is a nationwide problem that has confounded parents, school administrators and law enforcers.

Prosecutors in states including Pennsylvania, Connecticut, North Dakota, Ohio, Utah, Vermont, Virginia and Wisconsin have tried stop it by charging teens who send and receive the pictures.

In northeastern Pennsylvania, a prosecutor recently threatened to file child porn charges against three teenage girls who authorities say took racy cell-phone pictures that ended up on classmates' cell phones.

The MySpace case may be a first, though.

"I'm not sure I've seen a prosecution like this coming out of a social networking site," said Seth Kreimer, a constitutional law professor at the University of Pennsylvania.

Milgram, the attorney general, could not recall another such case in New Jersey. She cautioned parents to get on those sites and monitor what their kids are talking about and posting.

"Unfortunately, youth don't have the same judgment as adults," she said, "and often, adults don't have the same technical savvy as the youth."

Layoffs hit Google: 200 jobs cut

The Internet giant announced Thursday that it plans to cut global sales and marketing positions, marking its second round of layoffs.

NEW YORK (CNNMoney.com) -- Google said Thursday that it plans to cut "just under" 200 positions in its sales and marketing organizations around the globe, according to a posting on the company's official blog.

The Mountain View, Calif.-based Internet giant attributed the layoffs to its rapid expansion and said that it would give affected employees the opportunity to find a new job within the company.

"We did look at a number of different options but ultimately concluded that we had to restructure our organizations in order to improve our effectiveness and efficiency as a business," wrote Omid Kordestani, senior vice president of global sales and business development, in the blog post.

"We will give each person time to try and find another position at Google, as well as outplacement support, and provide severance packages for those who leave the company," Kordestani said.

Shares of Google closed up $9.22, or 2.7%, at $353.29 a share Thursday, amid a broad rally on Wall Street, but the company's stock has fallen sharply over the past year and a half. In November 2007, shares of Google climbed past $700. Even in May 2008, shares of the Internet giant were still hovering around $580 per share.

The recession has taken a toll on Google (GOOG, Fortune 500) as the global downturn cut sharply into budgets for technology and advertising. In January, Google had its first layoffs, terminating 100 recruiters made redundant because the company has dramatically reined in its hiring.

One analyst said that it was a good move for Google to reduce its headcount, and recommended that the Internet giant keep on chopping away at its staff. Google ended last year with 20,222 employees, 8,000 of them in sales and marketing.

"What you have seen today is 200 cuts. I think this is just the start. I expect another 600 people to be let go," said Trip Chowdhry, senior analyst at Global Equities Research. He expects some of the positions to go will be at a more senior level.

"When the economy is booming, they don't take a hard look at each and every employee," Chowdhry said. But when times are tight, company executives scrutinize the job performance of each staffer. "They are revaluating - they are getting rid of dead wood."

Chowdhry thinks the company's cost-cutting initiatives will be welcomed by investors because taking out excess spending improves the company's profits. But Chowdhry reiterated that the job cutting should have happened sooner.

"It is long overdue," Chowdhry said. "They should have done this two years back."

Seychelles: Paradise goes bankrupt

The Seychelles, the idyllic archipelago in the Indian Ocean off the coast of Africa, is best known as an island paradise playground for celebrities, royalty and the ultra-wealthy. These days, it's better known for something else: bankruptcy.

The tiny country's debt burden may be tiny compared to Iceland, which needed a $2.1 billion bailout from the International Monetary Fund last fall, but the Seychelles' problems illustrate the degree to which the global economic crisis has leveled some economies altogether.

And because of its small size, with just 87,000 people, the Seychelles now has the unenviable stature of being perhaps the most indebted country in the world. Public and private debt totals $800 million - roughly the size of the country's entire economy.

Last year, as tourism and fishing revenue began slowing, the Seychelles defaulted on a $230 million, euro-denominated bond that had been arranged by Lehman Brothers before its own bankruptcy. The IMF came in in November with a two-year, $26 million rescue package, and the country has since taken a series of emergency steps: It laid off 12.5% of government workers (1,800 people), floated its currency (the Seychelles rupee, which has fallen from eight to the U.S. dollar to 16, effectively doubling the prices of imports), lifted foreign exchange controls and agreed to sell state assets.

The IMF has given a thumbs-up to the initial progress, but it warned that the economy would contract 9.5% this year. The government of Australia is sending tax experts to help overhaul the revenue collection system and audit local companies.

Now the Seychelles is negotiating with the governments of Britain, France and other Western countries including the U.S. - the so-called Paris Club - to reschedule $250 million in debt it owes them. It is asking for 50% of it to be forgiven - a rate it hopes its commercial creditors will then apply to its remaining $550 million outstanding.

"We borrowed more than we can repay," complains Ralph Volcere, the editor of Le Nouveau Seychelles Weekly and a vocal government critic. "This was wholly irresponsible."

Heavily reliant on tourism, the Seychelles is desperately searching for ways to raise capital - at a time when tourism is forecast to drop precipitously this year. In early March, Seychelles Vice President Joseph Belmont told a meeting of local tourism industry business owners that the country has already seen a drop of 15% in visitor arrivals from the start of 2009; tourism revenue for the year, he said, could drop by some 25% more as a result of the global recession.

Seychelles officials have another idea though: to promote the country's longstanding virtue of being an off-shore business haven, with no corporate tax, no minimum capital requirements, only one shareholder or director required, and an annual licensing fee of just $100.

It also hopes to grow revenue from fishing licenses in its territorial waters, and on March 26 it will present a proposal to the United Nations to expand its exclusive rights to the surrounding seabed, potentially increasing prospects of revenue from underwater minerals, oil and gas.

And hopes for expanding tourism remain high. In addition to the usual roster of luxury-seeking royals and high-spending celebs, the middle-tier traveler is now being heartily courted, too. The government in early March announced an "Affordable Seychelles" campaign - what would have until recently been an oxymoron - with the motto: "Once-in-a-lifetime vacation at a once-in-a-lifetime price," based on lower prices caused by the halving in value of the currency.

Most hotels and meals in restaurants frequented by foreigners, however, remain priced in euros - like the new Four Seasons Seychelles, which opened its five-star resort, more than two years in the works, in February. Rates start at 1,000 euros ($1,345) per night, although current packages include stay-an-extra-day offers. Free-standing, multi-room houses with private swimming pools, billed as "Presidential" and "Royal" suites, are also available (from 4,500 euros, or $6,055).

The company claims it's seeing interest from travelers: "We have extremely strong demand; a lot of people are calling and asking for information," says General Manager Markus Iseli, surveying the property of 67 private, luxury villas perched on a hillside overlooking a stunning powdery-sand beach. But while normal luxury hotel occupancy averages 70-to-75%, he says he expects perhaps 30-to-35% occupancy this year.

"That's still good in a recession," Iseli says. "When you look around the world, everybody is suffering."

Canadian Sex Acts

I have just received word that yet another show-related web site will accompany tonight’s episode. http://www.canadiansexacts.org/ will go live after the show airs tonight.

Discussed in tonight’s episode (in great detail) will be all the euphemisms for sex acts that are prevalent in Canada. The site will be mentioned in the show, and once you visit you have to confirm you’re over 18 (the content of the site is very explicit) before you get to see all the different raunchy Canadian sex acts.

A lot of traffic is expected to hit the site so I’m really hoping it can hold up. If you visit and get some kind of error once you confirm your age, just keep trying.

Modern media........

Your comments are valuable

David Letterman marries longtime girlfriend

LOS ANGELES – David Letterman said he and longtime girlfriend Regina Lasko had a bumpy trip to matrimony last week.

During a taping Monday of CBS' "Late Show," Letterman said he and Lasko married March 19 at the Teton County Courthouse in Choteau, Mont., but only after their truck got stuck on a muddy road.

Letterman and Lasko, whose son, Harry, was born in November 2003, didn't take an immediate honeymoon. The late-night host was back at work in New York on Monday to deliver the news — and a few jokes about the marriage.

"Regina and I began dating in February of 1986, and I said, `Well, things are going pretty good, let's just see what happens in about 10 years,'" Letterman, who turns 62 next month, said at the taping, according to a transcript.

After avoiding marriage for more than two decades, Letterman said, "I secretly felt that men who were married admired me ... like I was the last of the real gunslingers, you know what I'm saying?"

The road to the ceremony wasn't smooth, he told the audience. He, Lasko and their son were on their way to the courthouse Thursday when their pickup truck got stuck in the mud.

"So now we think, `Well, somebody'll come.' No, nobody comes along. Nobody comes along — it's Thursday afternoon; who's coming along? Zorro? No, nobody. So I get out of the truck and I walk 2 miles back to the house into a 50-mile-an-hour wind," Letterman said.

"It's not Beverly Hills, it's Montana, for God's sakes. And the whole way, I'm thinking, 'See, smart ass, see, see, you try to get married, this is what happens,'" he said.

When he returned, Letterman said, Harry asked if they were still going to town and was assured they were.

"And he gets very upset because mom had told him if I wasn't back in an hour, the deal was off," Letterman said.

David Letterman marries longtime girlfriend

David Letterman announced during a taping of tonight's Late Show that he and his longtime girlfriend, Regina Lasko, were married last Thursday in a small town in Montana, reports the Associated Press. Lasko and Letterman have a five-year-old son, Harry. The host said he began dating Lasko in 1986, and joked that in staying unmarried for so long he was the "last of the real gunslingers."

FAA: Kids among 14 to 17 dead in MT plane crash

BUTTE, Mont. – A small plane — possibly carrying children on a ski trip — crashed Sunday as it approached the Butte airport, killing 14 to 17 people aboard, a federal official said. The single engine turboprop nose-dived into a cemetery 500 feet from its destination.

The aircraft crashed and burned while attempting to land, said Federal Aviation Administration spokesman Mike Fergus. The plane crashed in Holy Cross Cemetery.

An investigator with the National Transportation Safety Board offered few details at a press conference in Butte Sunday night. No cause of the crash was given.

"We are just beginning our investigation," said Kristi Dunks. "We don't have a lot of information at this time.

"Certain family members were contacted," she said. "At this point, I don't have an exact number."

Dunks would not say if there had been a distress call from the pilot. It was partly cloudy, the visibility was 10 miles and winds were blowing from the northwest around 10 mph at the time of the crash, according to hourly temperature information from the National Weather Service.

The aircraft had departed from Oroville, Calif., and the pilot had filed a flight plan showing a destination of Bozeman, about 85 miles southeast of Butte. But the pilot canceled his flight plan at some point and headed for Butte, Fergus said.

Preliminary reports indicate the dead include numerous children, he said.

"We think that it was probably a ski trip for the kids," Fergus said.

Butte Silver-Bow Sheriff John Walsh said there were a few people at the cemetery at the time of the crash, but no one on the ground was injured. He would not describe witness reports.

"I heard a loud bang," said Nick Dipasquale, 19, who was working at a gas station across the street. "It sounded like someone ran into the building."

He said he ran outside to see flames as tall as the trees.

Dipasquale said people who were fueling their cars said they saw the plane flying low, begin a turn, start to wobble and then slam into the ground.

Fergus said the Pilatus PC-12 aircraft was manufactured in 2001. Such planes are certified to carry 12 people.

The plane was registered to Eagle Cap Leasing Inc. in Enterprise, Ore., Fergus said. He didn't know who was operating the plane.

I. Felkamp is listed in Oregon corporate records as Eagle Cap's president. Attempts to reach him by phone were unsuccessful.

The flight originated at Brown Field Municipal airport in San Diego on Saturday evening and flew to Redlands, Calif., where it left Sunday morning for Vacaville, Calif., according to Flight Aware, a Web site that tracks air traffic. From there it flew to Oroville, Calif., and then to Butte. The NTSB could not confirm that information.

"We are still gathering the information of the aircraft, it's purpose, what they were doing and where they were going," Dunks said.

In California, Tom Hagler said he saw a group of about a dozen children and four adults Sunday morning at the Oroville Municipal Airport, about 70 miles north of Sacramento.

Hagler, owner of Table Mountain Aviation, described the children as ranging from about 6- to 10 year olds. He let the children into his building to use the restroom.

"There were a lot of kids in the group," he said. "A lot of really cute kids."

Hagler said he showed the pilot where he could fuel his plane, and the pilot said he expected his flight to take two-and-a-half hours. The pilot didn't file a flight plan at the Oroville airport.

National Transportation Safety Board spokesman Keith Holloway said its investigators were expected to arrive in Butte late Sunday or early Monday.

The crash is the fourth major plane accident in the U.S. in slightly more than three months.

On Dec. 20, Continental Airlines plane veered off a runway and slid into a snowy field at Denver International Airport, injuring 37 people. No one was killed. In January, a US Airways jetliner landed in New York's Hudson River after a flock of geese disabled both its engines. All 155 people onboard survived. Last month, commuter plane fell on a house in a suburb of Buffalo, N.Y., killing all 49 passengers and a man in the home.

Before the Buffalo crash there hadn't been an accident involving a commercial airliner in the U.S. in which there were fatalities in more than two years.

Oil prices reach new high for 2009 as dollar falls

NEW YORK – A weakened dollar and evidence that OPEC has significantly slowed production sent oil prices soaring to new highs for the year Thursday.

"I think we'll see higher oil prices for a while," said Michael Lynch, president of Strategic Energy & Economic Research. "There's an expectation that the market has bottomed out."

Benchmark crude for April delivery surged $3.47, or 7 percent, to settle at $51.61 a barrel on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.

Crude prices have increased 11.6 percent since OPEC ministers met in Vienna on Sunday. The group said it would not cut production again immediately, but there is growing consensus that the millions of barrels taken off the market already each day are starting to balance a supply and demand picture that has been skewed for months.

With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery, where prices jumped $3.14 to settle at $52.04 a barrel.

Gas prices increased 1.3 cents a gallon overnight to a new national average of $1.933 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 2.7 cents a gallon cheaper than a month ago and $1.346 a gallon cheaper than last year.

Analysts rushed to buy crude after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.

The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

The announcements sent the dollar into a tailspin. The U.S. dollar dropped against other major currencies almost immediately, at one point falling to levels not seen since January. The dollar has fallen about 5 percent against the euro over the past couple days.

Because oil is bought and sold in dollars, a weak U.S. currency makes crude cheaper globally.

"The government is basically printing money to buy back all this paper, and it devalues the dollar," said Phil Flynn, analyst at Alaron Trading Corp.

Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."

A government report that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.

Initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000, however. That was better than analysts' expectations.

Job cuts are part of the reason for a severe drop-off in miles driven by Americans, a growing number whom no longer commute to work.

The Federal Highway Administration said Thursday that motorists logged seven billion fewer miles in January, 3.1 percent less than the same period in 2008.

The dour economic news did little to dissuade investors as prices topped $50.47 a barrel, the previous high for 2009.

Part of the reason is that the Organization of the Petroleum Exporting Countries appears to be pushing through the production cuts it promised to make last year, according to tanker tracker Oil Movements. Member states agreed last year to squeeze global oil supplies, trimming 4.2 million barrels per day.

Crude exports from OPEC countries have been shrinking during the past few months. They're expected to drop 770,000 barrels a day in the four weeks leading to April 4, according to an Oil Movements report.

While the recession kept oil near five-year lows, tighter supplies in the spring and summer should buoy crude prices in the next three months, the report said.

Cameron Hanover analyst Peter Beutel said a new high at closing Thursday, along with OPEC production cuts, the federal stimulus package and other bullish factors "are working together to be more important at this moment than the recession and its impact on demand."

"It means things are better than they've been in a while," Beutel said.

Also surging were natural gas prices after a government report showed that U.S. stockpiles fell slightly more than expected last week.

The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.

In other Nymex trading, gasoline for April delivery jumped 7.16 cents to settle at $1.4373 a gallon, while heating oil rose 9.2 cents to settle at $1.36 a gallon. Natural gas for April delivery jumped 49 cents to settle at $4.174 per 1,000 cubic feet. In London, Brent prices rose $3.01 to settle at $50.67 on the ICE Futures exchange.

13 firms receiving federal bailout owe back taxes

WASHINGTON – At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday. Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece. "This is shameful. It is a disgrace," said Lewis. "We are going to get to the bottom of what is going on here."

The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 of the firms receiving the most money, Lewis said as he opened a hearing on the issue.

The committee said it could not legally release the names of the companies owing taxes. It said one recipient had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.

"If we looked at all 470 recipients, how much would they owe?" Lewis asked.

Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every firm.

"We're not done," he said.

Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, told the hearing that if an executive signed a contract knowing that information about unpaid taxes was false, "that would potentially be a crime." He said his office will look to see if crimes were committed.

No one from the Treasury Department appeared at Thursday's hearing. Lewis said he asked Treasury officials for a private briefing on their efforts to uncover unpaid taxes, as well as someone to testify at Thursday's hearing.

"They said no one was available," Lewis said in an interview.

The Internal Revenue Service "has every expectation that these amounts will be paid and is committed to collect every dollar of taxes that are owed," IRS spokesman Frank Keith said in a statement. "The IRS recognizes that those entities that receive taxpayer support have a special obligation to pay their taxes, and these taxpayer accounts will remain closely monitored by the IRS to ensure that the full amount of taxes due are paid."

Keith noted there could many reasons why a taxpayer has an unpaid balance. For example, taxpayers could be challenging their bills.

"In and of itself, this does not signal any intent not to pay," Keith said.

Treasury Secretary Timothy Geithner is already under fire on Capitol Hill for not preventing $165 million in bonuses from being paid to employees at troubled insurance giant AIG.

People will ask, said Rep. Artur Davis, D-Ala., why there are "large companies getting taxpayer dollars, making false representations, and we can't even name them, much less make them pay the money back, much less prosecute them."

Davis continued: "Will they get their day on a billboard, hopefully?"

"Absolutely," said Barofsky. If someone lied, he said, "They need to be prosecuted."

The revelation is sure to spark outrage on Capitol Hill, where the House is expected to vote Thursday on a bill that would impose steep taxes on employee bonuses at AIG and other firms that have received bailout money.

To date, the Troubled Asset Relief Program, or TARP, has paid out more than $300 billion to private companies, with billions more on the way.

Obama reaches out to Iran, looks for engagement

WASHINGTON – President Barack Obama told Iran's people and leaders that the United States wants to engage with their country and end decades of strained relationship, but not unless their officials stop making threats.

Obama on Friday released a video message with Farsi subtitles that urged the two countries to resolve their long-standing differences. His video was timed to the festival of Nowruz (no-ROOZ), which means "new day." It marks the arrival of spring and is a major holiday in Iran.

"So in this season of new beginnings I would like to speak clearly to Iran's leaders," Obama said in the video. "We have serious differences that have grown over time. My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community."

Obama has signaled a willingness to speak directly with Iran about its nuclear program and hostility toward Israel, a key U.S. ally. At his inauguration last month, the president said his administration would reach out to rival states, declaring "we will extend a hand if you are willing to unclench your fist."

It's been a rough start for Obama.

Iran's supreme leader Ayatollah Ali Khamenei has criticized Obama as merely a continuation of President George W. Bush's policies toward Tehran's enemy, Israel. Khamenei has called Israel a "cancerous tumor" that is on the verge of collapse and has called for its destruction.

In his message Friday, Obama had a warning for Tehran: "This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect."

Iranian President Mahmoud Ahmadinejad has said Iran would welcome talks with the U.S. — but only if there was mutual respect. Iranian officials have said that means the U.S. needs to stop accusing Iran of seeking to build nuclear weapons and supporting terrorism, charges Tehran has denied.

Obama and his foreign policy team are looking for opportunities to engage Iran and help reduce tensions between the two countries, which increased during Bush's time in office.

"You, too, have a choice. The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations," Obama said. "You have that right, but it comes with real responsibilities, and that place cannot be reached through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization."

The White House said the United States still has serious differences with Iran, particularly on the threat a nuclear-armed Tehran poses to the region. But aides said the president's message was a way to speak directly to Iranians about the U.S. commitment to work with the country.

The video also was an attempt to bypass government leaders. Obama has said there are unelected leaders in Iran who could change the countries' position of hostility.

The White House said a Farsi subtitled version of the video would be given to select news outlets in the region. At the same time, the video would be available online in English and with Farsi captions.

The holiday Nowruz is not Islamic; Iranians of all religions celebrate the 12-day event. Traditionally, the U.S. president and secretary of state release statements for Nowruz.

"For nearly three decades relations between our nations have been strained," Obama said in his video message. "But at this holiday we are reminded of the common humanity that binds us together."

Obama asks patience, guarantees better days ahead

LOS ANGELES – Buoyed by adoring crowds far from Washington's political wars, President Barack Obama guaranteed Americans on Thursday that the nation's economy will recover, though he asked them for patience.

Obama looked every bit the campaigner as he sometimes mocked his GOP critics, and sometimes asked people to forgive his shortcomings. In general, his demeanor and message were more upbeat than in recent days when public fury over executive bonuses dominated Congress.

"We will come out on the other side stronger and a more prosperous nation," he said, acknowledging the nation's economic crisis. "That I can guarantee you. I can't tell you how long it will take, what obstacles we'll face along the way, but I promise you this: There will be brighter days ahead."

The comments brought another roar of approval from about 1,000 people at a town hall forum in Los Angeles, where questions were more fawning than pressing. "I'm very glad and thankful that you are our president," the first questioner began. The second said, "thank God for you."

Obama capped his day by taping an appearance on comedian Jay Leno's late-night talk show. He told Leno he was "stunned" when he first was informed of the big bonuses received by some employees at the bailed-out AIG insurance company.

"We're going to do everything we can to get these bonuses back", the president said.

Earlier, in the town-hall meeting — his second in California in as many days — Obama asked Americans to back his plans to overhaul health care, change energy policies, and spend more on roads, education and many other areas to boost the stalled economy. The resulting large deficits will be temporary and justified, he said.

He told Americans not to expect "something for nothing" from their government. Improvements to the economy and medical care will take time, he said.

"Nothing is free," the president said. Responding to a woman's complaint about cuts in jobs and salaries for California teachers, Obama urged people not to ask the federal and state governments to cut taxes and improve services at the same time.

"At some point you've got to make some choices," he said.

"We are not always going to be right," he said. "And I don't want everybody disappointed if we make a mistake here or there."

The important questions, he said, are whether things are moving "in the right direction" and whether he is keeping his main campaign promises.

Obama mocked Republican officials who call his plans too costly even though they presided over huge deficits while they controlled Congress and the White House.

"Where have you been?" he said. "What have you been doing?"

Obama also announced fresh aid to struggling homeowners in California. He said the state would receive $145 million to help communities hardest hit by the home foreclosure crisis. He said the money would be used to buy up and rehabilitate vacant homes, and provide loans to poorer and middle-income families to help with home assistance.

He announced a new Web site to help people around the nation: http://www.makinghomeaffordable.gov/.

California's GOP governor, Arnold Schwarzenegger, gave the president a far warmer greeting than Obama has received from Republicans in Congress. "It's great to have him here," Schwarzenegger said in introducing Obama to the crowd. He thanked Obama for "courageous leadership."

Obama called the governor "one of the great innovators of state government" and "an outstanding partner with our administration."

House passes bill taxing AIG and other bonuses

WASHINGTON – Denouncing a "squandering of the people's money," lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies. The House vote was 328-93. Similar legislation has been introduced in the Senate and President Barack Obama quickly signaled general support for the concept.

"I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said in a statement.

House Speaker Nancy Pelosi, D-Calif, told colleagues, "We want our money back now for the taxpayers. It isn't that complicated."

The outcome may not have been complicated. But the lopsided vote failed to reflect the contentious political battle that preceded it.

Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165 million after the majority party stripped from last month's economic stimulus bill a provision that could have banned such payouts.

"This political circus that's going on here today with this bill is not getting to the bottom of the questions of who knew what and when did they know it," said House Republican Leader John Boehner of Ohio.

He voted "no," but 85 fellow Republicans joined 243 Democrats in voting "yes." It was opposed by six Democrats and 87 Republicans.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.

It was only this past weekend that the bailed-out insurance giant paid bonuses totaling $165 million to employees, including traders in the Financial Products unit that nearly brought about AIG's collapse.

AIG has received $182.5 billion in federal bailout money and is now 80 percent government-owned.

Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.

In a statement issued by the White House late Thursday, Obama said the House vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat."

"In the end, this is a symptom of a larger problem — a bubble-and-bust economy that valued reckless speculation over responsibility and hard work," he said. "That is what we must ultimately repair to build a lasting and widespread prosperity."

In his statement, Obama did not explicitly endorse the House bill. Instead, he was careful to take a wait-and-see attitude on the details of the final legislation while making clear that he supports the effort to get the bonus money back for taxpayers.

Topic No. 1 raised by Republicans during the House debate was the last-minute altering of a provision in Obama's $787 billion stimulus law to cap executive compensation for firms receiving government bailouts.

The measure might have forestalled payment of the AIG bonuses.

But Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat and the author of the provision, says the administration insisted that he modify his proposal so that it would only apply to payments agreed to in the future.

That, critics claim, cleared the way for the AIG payouts.

"The idea came from the administration," Dodd said Thursday

Dodd said he was not aware of any AIG bonuses at the time the change was made.

Treasury Secretary Timothy Geithner confirmed such conversations with Dodd. He said the administration was worried about possible legal challenges to the provision.

"We expressed concern about this specific version," Geithner said in an interview with CNN. "But we also worked with him to strengthen the overall bill."

The treasury secretary, who has been criticized for not learning of the AIG bonus payments sooner since he helped orchestrate the bailout last year as president of the New York Fed, said anew in the interview that he was not informed of the bonuses until last week.

"And as soon as I heard about the full scale of these things, we moved very actively to explore every possible legal avenue to address this problem," Geithner said.

A similar — but not as punitive — bill to recoup bonus payments with taxes was gaining support in the Senate.

It would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

"This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite," said Rep. Earl Pomeroy, D-N.D. "These bonuses represent a squandering of the people's money. ... Starting right here, right now, we are saying no more."

The Senate measure is sponsored by Sen. Max Baucus of Montana, the chairman of the Senate Finance Committee, and the panel's senior Republican, Chuck Grassley of Iowa. It was expected to be brought to the Senate floor next week.

Meanwhile, New York's attorney general, Andrew Cuomo, said AIG has given him the list of employees who received a total of $165 million in retention bonuses.

Cuomo said he won't release any employees' names until his office has answered any security concerns raised by the AIG employees.

He also said he will work with AIG in the coming days to determine which workers have decided to return the payments.

Cuomo had sought the names from AIG chief executive Edward Liddy through a subpoena. The deadline was Thursday.

Separately, Connecticut's consumer protection division also subpoenaed AIG, demanding that the contracts and names of employees who received the bonuses be provided by March 27. Gov. M. Jodi Rell has said she wants the division to determine whether the bonuses can be voided under the Connecticut Unfair Trade Practices Act.

AIG's financial products division is headquartered in Wilton, Conn.

Connecticut Attorney General Richard Blumenthal says his office also demanded the bonus recipients' names and the amounts.

About 400 AIG employees and future employees received bonuses, but not all of them earned over the $250,000 family income threshold specified by the House bill.

Obama administration special envoy Richard Holbooke was on AIG's board of directors in early 2008, when the insurance company committed to the bonuses, and during the previous years of aggressive investment strategies that brought the firm to brink of collapse. White House spokesman Tommy Vietor said Thursday: "Mr. Holbrooke had nothing to do with and knew nothing about the bonuses."

While the House legislation calls for a 90 percent tax, Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.

"The American people demand protection and that's what we're doing today," he told the House.

Obama tells Leno he was stunned by AIG bonuses

BURBANK, Calif. – President Barack Obama told Jay Leno on Thursday that he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees.

President Barack Obama, left, appears on The Tonight Show with Jay Leno in Burbank, Calif. Thursday, March 19, 2009.

Obama told "The Tonight Show" host the payments raise moral and ethical problems — and vowed again to try to recoup the cash for taxpayers.

"We're going to do everything we can to get these bonuses back", he declared.

Leno asked Obama what he thought when his staff first advised him of the payments, many made to traders in the very division that brought American International Group to ruin.

"'Stunned' is the word," Obama replied in a taped appearance on "Tonight." He said he found it hard to fathom how anyone would accept lavish payments in those circumstances. "People just had this sense of entitlement. We must be the best and the brightest."

But Obama staunchly defended Treasury Secretary Timothy Geithner, who's increasingly come under fire for failing to block the bonuses.

"I think Geithner is doing an outstanding job," Obama said. "He is a smart guy. He is a calm and steady guy. I don't think people fully appreciate the plate that was handed him."

Obama added Geithner's carrying on "with grace and good humor. He understand that he's on the hot seat."

Too many in Washington are trying to figure out who to blame for things — when they should be focused on fixing them, Obama said.

According to NBC, Obama was the first sitting president ever to appear on "The Tonight Show." He'd already appeared twice as a candidate.

Obama spoke with little interference or challenge from Leno, who clearly was enthused about snaring the president as a guest and pronounced it "one of the best nights of my life."

Leno veered away from politics and into the personal toward the end of the 35-minute interview, asking, "How cool is it to fly on Air Force One?" and when Obama daughters Sasha and Malia would get their pet dog.

"This is Washington. That was a campaign promise," Obama replied to audience laughter. "No, I'm teasing. The dog will be there shortly."

The new pet will be in place after he returns from a NATO meeting, Obama said.

The White House bowling alley remains in place, Obama said, bragging that he rolled a 129-point game ("Like the Special Olympics or something," he said), but a basketball court is a priority.

In his opening monologue, Leno said lots of people were surprised Obama would come on NBC — figuring he'd be tired of big companies on the brink of disaster with a bunch of overpaid executives.

Leno also joked about the dismal state of the economy, saying it's so bad Obama flew to California on Southwest Airways — making nine stops.

In recent years, a "Tonight Show" appearance has become a key humanizing touch for aspiring presidents. But its history of such appearances goes back to 1960, when then-Sen. John F. Kennedy came on the show to chat with Jack Paar.

Obama himself has already made two non-presidential appearances — on Dec. 1, 2006, and Oct. 17, 2007.

The White House scheduled the appearance as part of a broader outreach to promote Obama's agenda — one that's already had him on ESPN's "SportsCenter" this week and includes a "60 Minutes" interview airing Sunday, plus a prime-time news conference Tuesday.

But on ESPN, the talk was mostly about basketball. The First Fan filled out an NCAA tournament bracket — picking North Carolina to defeat Louisville in the final. But recalling he picked the Tar Heels last year, he joked, "This year, don't embarrass me in front of the nation, all right? I'm counting on you."

Google preparing to steer more telephone traffic (AP)

MOUNTAIN VIEW, Calif. - Internet search leader Google Inc. is preparing to steer more telephone traffic through an online command center that it acquired nearly two years ago.

The Mountain View, Calif.-based company is heralding the expansion on Thursday by rebranding GrandCentral Communications as Google Voice. Google bought GrandCentral in July 2007 for an undisclosed amount.

As part of the transition to the new identity, Google is upgrading the service for GrandCentral's current users to include automated transcriptions of voicemails and discounts on international calls.

For now, Google Voice only will be available to the people who already have been relying on GrandCentral to manage incoming calls on their office, home and mobile phone lines. Google says several hundred thousand people have GrandCentral accounts.

The free service has been closed to new users while Google retooled the technology to handle a wider audience. Within the next few weeks, Google Voice will begin welcoming people who had signed up to be on the service's waiting list, said Vincent Paquet, a GrandCentral co-founder who is now running the service for Mountain View-based Google.

Here's how it works: Google Voice assigns a unique phone number to each user. Calls to the Google Voice number can then be directed to any other phone line. The service also provides a hub for all messages. The online command center also enables a user to customize greetings for friends and family or ward off unwelcome callers.

"Google is all about helping you manage your information and one of the big holes right now is in the management of voice communications," Paquet said.

This isn't Google's first attempt to become a bigger player in the telecommunications market. The company has also built a software platform for mobile devices, called Android, that's designed to ensure that people on the go can easily access Google's services when they are away from home or the office.

Google's openness intensifies focus on e-mail woes (AP)

SAN FRANCISCO - Google Inc.'s recent pledge to be more open about periodic service outages appears to be drawing more attention to the breakdowns when they occur, even if it's a minor hiccup affecting a sliver of its users.

A prime example of the phenomenon surfaced Tuesday and Wednesday when some of Google's e-mail users couldn't get into their accounts. The outage occurred around 2 a.m. Pacific time Tuesday, with most of the affected users regaining access to their e-mail within 30 minutes.

A "small subset" of Gmail's more than 100 million users were locked out of their e-mail until early Wednesday morning, according to Google. Company spokesman Andrew Kovacs declined to elaborate on how many people couldn't get their Gmail or what parts of the world were affected.

Word of the trouble quickly spread because two weeks ago Google set up a Web page showing the status of all its online applications after a worldwide outage locked people out of their e-mail for 2 1/2 to four hours. Last month's problems were so severe that Google even gave service credits to businesses and organizations that subscribe to a premium version of its e-mail program.

The service updates, available at http://www.google.com/appsstatus, disclose problems even if the outages involve fewer than 10 people. But Google makes it difficult to know precisely how many people actually are affected because the Internet leader steadfastly refuses to give those specifics.

By making it easier for the public to see when there's a problem, Google also has made it easier for bloggers and reporters to write about the trouble.

Other major providers of free e-mail services aren't as transparent about their outages.

Microsoft Corp. offers a help center with a community board where users can report problems.

A quick check of that board late Wednesday found numerous complaints about Microsoft's e-mail service being unavailable, with some users asserting they had been cut off from their accounts for three days. Microsoft responded with a post that the service was having "login issues."

AOL taps Google executive Armstrong as CEO (AP)

SAN FRANCISCO - An executive from Google Inc. is becoming the latest CEO of AOL, raising hopes that he will be able to turn around Time Warner Inc.'s struggling Internet unit.

Tim Armstrong, who had been a senior vice president at Google and head of the company's North and South American advertising operations, replaces AOL CEO Randy Falco, a veteran TV executive who took the job in November 2006. Falco, along with Ron Grant, AOL's president and chief operating officer, are leaving AOL.

Armstrong, 38, also will take over from Falco as chairman.

This shake-up — one of several the company has experienced lately — could mean a spin-off of AOL is more likely. Time Warner CEO Jeff Bewkes has said he's open to a merger or sale of AOL, and in a statement Bewkes said Armstrong would help Time Warner "determine the optimal structure for AOL."

"Tim is the right executive to move AOL into the next phase of its evolution," Bewkes said. "At Google, Armstrong helped build one of the most successful media teams in the history of the Internet."

Armstrong worked at Google for 8 1/2 years. As the company's first employee outside of Mountain View, he started its New York office.

The transition is another sign of turmoil in Time Warner's decade-long attempts to salvage its 2001 acquisition by AOL, once known as America Online. The $147 billion AOL-Time Warner deal symbolized the astonishing wealth created by the dot-com boom and quickly became one of the most disastrous marriages in U.S. corporate history.

During the past few years, AOL has been realigning itself around three core businesses — its Platform A advertising unit, MediaGlow publishing unit and People Networks social media unit. These businesses are meant to bring in revenue through online advertising, as a way to offset losses from its fading dial-up Internet access service.

Besides realigning AOL, Time Warner has made moves to separate the dial-up operations from these ad-focused businesses, which would make it easier for Time Warner to sell one or both.

Problems have persisted, though. In early February, Time Warner reported that AOL's fourth-quarter revenue dropped 23 percent to $968 million, hurt by falling subscription revenue and ad sales.

There have been numerous management changes as well. A day before its parent company's quarterly report, AOL named former a Yahoo Inc. executive, Gregory Coleman, to head Platform A. Coleman replaced Lynda Clarizio, who had come on just last March.

Another reminder of the ongoing troubles came the day of Time Warner's report, when Google — which paid $1 billion in 2006 for a 5 percent stake in AOL and is its largest shareholder aside from Time Warner — triggered an escape clause in its contract with AOL. The clause forces Time Warner to spin off Google's holdings through an initial public offering or repurchase the stake at current market value.

This came after Google wrote off $726 million of its investment in the fourth quarter because of AOL's falling value. Google had made the investment in an effort to increase its advertising partnership with AOL and prevent rival Microsoft Corp. from trying to get involved with the company.

Richard Greenfield, an analyst with Pali Research, called the management change "a huge positive all around" for Time Warner investors. With Armstrong at the helm, he thinks it's more likely that Time Warner will eventually separate the AOL unit from its main business.

Kevin Lee, chief executive of search marketing firm Didit, feels the same. If the economy and stock market improve, and Armstrong is able to shape up AOL, Lee thinks it is possible that Time Warner would spin the business off as a public company or sell it.

Regardless, he's certain Armstrong has plenty of work ahead of him.

"If he wanted challenges, he picked a great place for challenges," Lee said.