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The U.S. economy needs to grow more quickly if it is to produce enough jobs to bring down the unemployment rate further, Federal Reserve Chairman Ben Bernanke said on Monday.

Bernanke said the recent decline in jobless rate, which dropped from 9.1 percent last summer to 8.3 percent in February, was “somewhat out of sync” with the rather modest pace of economic growth.

U.S. gross domestic product grew 3 percent in the fourth quarter, but is expected to have slowed to just below 2 percent in the first three months of this year.

“Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” Bernanke told a gathering of the National Association for Business Economics paydayloan.

Bernanke reiterated his concern about long-term unemployment, but argued against the notion that much of the problem is due to structural factors that monetary policy could not address.

“The continued weakness in aggregate demand is likely the predominant factor. Consequently, the Federal Reserve’s accommodative monetary policies, by providing support for demand and for the recovery, should help, over time, to reduce long-term unemployment as well,” he said.

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Hong Kong picks its new chief executive today, after a campaign marked by personal scandals, public discontent over a widening wealth gap and protests for greater democracy.

A 1,193-member committee of billionaires, including Hong Kong

China had its largest trade deficit since at least 1989 last month as Europe

JEFFERSON CITY – A state-sponsored workers’ compensation company has given out huge severance checks to its former executives and hefty bonuses to other employees, according to a state audit released today.

The company, Columbia-based Missouri Employers Mutual Insurance Co., also has bankrolled lavish vacation trips to Hawaii and Mexico as well as paid for sporting events tickets for its board members, executives, employees and guests, the auditor found.

The audit paints a picture of a firm that operates like a private entity, while enjoying federal tax-exempt status and other advantages that its private competitors lack.

Because it is considered an “independent public corporation,” the company has been able to avoid about $50 million in federal taxes since 1993, the audit revealed. That tax exemption has enabled the company to accumulate a surplus of $163 million. The firm has never paid any dividends to its members.

“MEM essentially operates as a private entity, compensates officers and employees at rates that are in excess of public sector entities, incurs expenses that are not considered acceptable in the public sector, and does so without complying with state open records laws,” the audit states.

Missouri Auditor Tom Schweich released the findings today. He undertook the audit after the Post-Dispatch raised questions last year about MEM’s public records policy and the legal status of its board members, along with its executive compensation and other expenditures. The auditor concluded that MEM is a “quasi-public governmental body for purposes of the Sunshine Law” – and thus subject to public records requests.

In a formal response filed with the audit, the company said: “The auditor’s report raises some immaterial, questionable expenditures that MEM already had identified and addressed prior the audit. MEM’s new management has strengthened governmental policies to be sure that expense policies are clearly understood and followed and that the company follows best practices. MEM’s board and management are responsible stewards who operate with integrity.”

The Legislature established Missouri Employers Mutual in 1993 to encourage competition and lower workers’ compensation premiums for employers, particularly small businesses. The state provided a start-up loan of $5 million, which was repaid in 1999 with interest.

Since then, Missouri Employers Mutual has become the leading workers’ compensation insurer in the state, controlling about 16 percent of the market.

The firm’s inner workings drew questions last spring after two former board members were indicted separately for alleged theft and fraud involving other organizations. Questions mounted in June when the company fired its chief executive officer, former Missouri Gov. Roger Wilson, without explanation.

In August, the board agreed to a one-time audit by Schweich. Amid the swirling controversy, both indicted board members – Doug Morgan and Karen Pletz – died late last year. The company is now run by chief executive officer Jim Owen of Chesterfield, a law school classmate and close friend of Gov. Jay Nixon’s.

The 20-page audit sheds light on MEM’s executive compensation, perks, severance benefits, freebies, and political contributions, as well as legal questions surrounding the company’s taxes and refusal to observe public records laws.

According to the audit, MEM also paid about $1.58 million in severance benefits or settlement payments to four former top executives and employees who either resigned or whose employment was terminated in 2009 and 2010.

Schweich’s audit does not name names, so it is impossible to tell who received the severance money. Former state Sen. Dennis Smith served as the company’s first chief executive from 1994 through June 2009, when he became “CEO emeritus.”

The audit called the severance benefits “excessive” and said that “recent discussions with a MEM official indicate that any future severance benefits paid to executives will be substantially reduced, or eliminated.”

Executive compensation at MEM also “appears significantly higher than would be considered appropriate for a public sector entity,” the audit states.

During 2010, MEM’s top 10 compensated employees made salaries totaling $1.8 million. The top salary was $312,820.

In addition to their salaries, MEM paid its top 10 executives a total of $659,405 in incentives, for an average bonus of $65,940. In other words, when bonuses are counted on top of salaries, the top 10 employees were paid an average almost $250,000 apiece.

Lower-level MEM employees also received substantial bonuses, based on the company’s “performance benchmarks” such as premium growth.

“Compensation and employee incentive bonuses for 2010 totaled over $17 million for approximately 200 employees, an average total payout of approximately $85,000 per employee,” the audit said.

MEM executives also received valuable perks such as the use of company automobiles, paid health insurance coverage for a spouse, five weeks paid time off, paid dues in professional societies and paid memberships in golf and athletic clubs.

Responding to the audit, MEM wrote that its “compensation and expenses are reasonable and necessary for a mutual insurance company. … MEM’s employee compensation averages in the 50th percentile” of other private insurers.

The audit also highlights numerous miscellaneous expenditures that MEM paid:

 A total of $300,000 for an all-inclusive “Presidents Trip” for 64 invitees including MEM board members, top executives, top performing employees, and other guests to Lanai, Hawaii, from Feb. 20 through Feb. 25, 2010. In 2009, MEM’s board chairman, vice chairman and their guests attended the company’s President’s Trip to Cabo San Lucas, Mexico. About $17,000 for St. Louis Cardinals suite tickets. The suite was used to entertain insurance agents as an incentive to doing business with MEM. The tickets were purchased from an unnamed associate of a former board member. About $60,000 for a suite, tickets, and parking passes for University of Missouri football games; an additional $12,000 for basketball tickets and parking passes; and about $5,000 to cater its tailgate party at the university’s homecoming in 2010. $80,000 for company functions in 2010, including $10,000 for a board of directors retreat in Ridgeville, Mo.; $16,000 for MEM’s annual golf tournament; about $8,800 for 15-year anniversary jackets; and about $7,000 for a 15-year anniversary luncheon.

In addition, the audit challenges MEM’s $7.2 million purchase of a for-profit subsidiary. Under state law, the auditor concluded, it is unclear whether the company may legally insure workers who work outside the state.

The audit also noted that MEM conducted an internal inquiry, which revealed that company funds were used for $8,000 in political contributions to the Missouri Democratic Party; $7,400 in cash and in-kind donations to the Insurance Coalition Political Action Committee; $4,000 in donations to gubernatorial inaugural festivities in 2005 and 2009; and $8,000 for a former top executive’s personal legal fees.

The audit is likely to raise additional questions in the Legislature about whether Missouri Employers Mutual should continue to enjoy tax-free status and other advantages over private insurers.

Originally, the company was supposed to become a private firm after the governor appointed the original five board members. But instead, the state has retained control. The governor appoints three of the firms’ five board members, based on nominations from the board and policyholders.

The structure is authorized in company bylaws but not in state law. Schweich said he took no position on whether MEM can prolong its public corporation status beyond that allowed by law by amending its bylaws.

MEM contended that it faces special mandates that partially offset its tax advantages. For example, it must let any of the 4,000 workers compensation insurance agents in the state write a policy for MEM. The company also is required to design and monitor work safety programs for policyholders.

Schweich said the firm was unable to quantify the impact of those requirements.

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In March, Sherry Hunt and a co-worker were called into a meeting at CitiMortgage’s big operations base in O’Fallon, Mo.

A high company executive awaited her there.

“It’s your asses if these defects don’t improve,” Hunt recalled being told by her “boss’s boss’s boss.”

Hunt didn’t create the “defects” in mortgage applications. It was her job to find them — red flags for bad loans. She felt the executive wanted her to stop doing her job and let the bank make bad loans that would be guaranteed by the federal government.

“The message was clear to me,” Hunt recalled. “I was threatened.”

Her experience provides a telling window into the inner-workings of mortgage misconduct that continued to occur even after the global financial system nearly collapsed due to the industry’s shady dealings with subprime loans and mortgage-backed securities.

Hunt, rather than cave to pressure, filed a “whistleblower” lawsuit against CitiMortgage and its Citigroup parent, claiming the mortgage lender deliberately ignored fraud and errors in government-insured mortgage programs. The U.S. Department of Justice then joined the suit.

Earlier this month, Citigroup admitted that it approved Federal Housing Administration mortgages that failed to meet government guidelines. It agreed to settle the suit for $158 million, the amount government expects to lose on FHA mortgages it claims Citi should never have made.

Hunt filed suit under the federal False Claims Act, which lets whistleblowers share in the payout if their suits succeed. Her take, minus legal fees, will be $31 million.

“I didn’t do it for the money,” said Hunt in an interview last week with her and her lawyer, Finley Gibbs.

As she tells it, Hunt tried hard to persuade Citi management to root out fraud. She complained weekly in memos, and finally took her case to human resources. When all that failed, and the pressure to bend kept building, she went to a lawyer.

In an emailed statement, Citi said it settled “so we could put these issues behind us and focus on serving our clients. We take our quality assurance processes seriously and have pro-actively undertaken process improvements.”

The bank declined to respond to specific allegations. A spokesman also would not say if Citi had removed or reassigned executives because of the case, or describe other changes it made to satisfy the government.

Now that it’s over, Hunt thinks CitiMortgage will finally reform. But it’s not clear if she’ll be there to see it; she’s now negotiating whether she remains an employee with the company.

INSPECTING LOANS

Hunt lives on a “hobby farm” in Silex with her retired husband, Jonathan. They grow alfalfa and vegetables. She is reticent about her private life. She declined to say how many children she has, for instance, or describe her upbringing. She wouldn’t say what she might do with so much money.

Her entire working life — 37 years — has been spent in the behind-the-scenes paper-shuffle of mortgage processing.

Citigroup, the nation’s third largest bank, is a giant in the mortgage business. It made 30,000 FHA loans since 2004, totaling more than $4.8 billion. About 30 percent have defaulted, according to the government.

Like many big lenders, Citi can make government-backed loans — putting taxpayers on the hook for defaults — without sending applications to the FHA for review. But it has to abide by strict guidelines and set up separate quality control departments, independent of the bank’s other operations, to flag suspicious applications.

That was Hunt’s job at CitiMortgage. She had started in the mortgage business in 1975 at age 18 as a lowly processor, then climbed the ladder into management. By 2008, she supervised nine workers in the quality control department. They scrutinized one out of every 10 mortgage applications.

They caught “over a thousand” applications with problems, according to Gibbs, her lawyer. Some were obvious fraud – such as numbers whited-out on a W-2 wage form faxless payday loans. Others may have been goofs, such as missing documents or wrong calculations.

The cases were passed on to a fraud unit, which verified that about half really were attempts to cheat, says Hunt. Such cases were supposed to be reported quickly to the Department of Housing and Urban Development, which overseas the FHA. But the government wasn’t hearing of the problems.

At first, Hunt didn’t blame the Citi system. “The sheer volume of referrals was overwhelming,” she thought.

More than 1,000 cases referred by Hunt’s unit were backed up in the fraud unit in 2009, according to the government. More than 80 percent were loans that had defaulted shortly after they were made, which the government calls an indicator of fraud. Eventually, Citi simply erased those records from its files, the government charged.

Then Hunt suspected something more sinister, a “pattern of behavior,” she said. “As I found things against the HUD rules and reported them to management, nothing happened, even after more follow-ups.”

According to the government, Citi’s misbehavior started in 2004, when it took the quality control function away from an outside contractor and moved it in house. It continued until mid-2011. That was more than two years after CitiGroup nearly failed over problems that included massive investments in bad mortgages. The government bailed out the bank to the tune of $45 billion.

BULLYING

Hunt wasn’t alone in her worries. According to the government’s suit, Michael Watts, the director of quality control, complained repeatedly to company officials charged with controlling risk. He warned that employees had “marching orders” to fight quality control decisions.

At one large staff meeting, managers praised loan processors for “beating back” the quality control team and getting them to withdraw complaints, she said. The quality control team was standing there listening. “Someone was allowing them to bully us,” Hunt said.

In June of last year, Hunt wrote a memo complaining about pressure from Jeffrey Polkinghorne, Citi’s director of “front-end” risk. “We also have Polkinghorne telling us it is our asses . . . if the quality does not improve,” she wrote, according to the federal complaint.

At that point, Hunt could have shut up and started overlooking problems. Instead, she complained to CitiMortgage human resources department. There were meetings. Five months later, nothing had changed.

That’s when she decided to blow the whistle outside Citi.

Part of the decision was self interest — she wanted to separate herself from an illegal activity. Hunt also felt an obligation to keep the mortgage industry honest. The FHA had certified her to handle its mortgages. “I uphold their standard,” she said.

She talked with her husband about the costs of standing up, about everything they could lose. Her career. Their home.

She talked to Gibbs, a lawyer from Columbia, Mo., who she knew. Gibbs knew about the federal false claims act, although he had never handled such a case. He filed suit in August.

Then Hunt went back to work. “I kept a low profile. It wouldn’t serve a purpose for me to go blasting this all over the place,” she said.

False Claims Act suits are filed under seal, and they remain sealed until the government decides whether to participate. For the first few weeks, Citigroup didn’t know it was being sued.

The Justice Department got interested and took up the case. It began negotiating with Citgroup. The law forbids employers from retaliating against whistleblowers, and Hunt said she felt no blowback at work.

“I don’t believe much of this filtered down to the O’Fallon office,” she said. “I was comforted in my mind that nobody I was passing in the hallways knew.”

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German business confidence probably rose to the highest in seven months in February as progress in taming Europe

Companies restocked at a faster pace in December, a positive sign that they expect consumers to step up spending.

Business stockpiles grew 0.4 percent in December, the Commerce Department said Tuesday. That followed a similar gain in November. Sales rose 0.7 percent, almost double the November gain.

Companies are building up their stockpiles again after cutting them over the summer amid recession fears. Higher inventories require more production, which boosts economic growth. It also suggests companies expect more sales.

Rising inventories were a key reason growth accelerated in the final three months of last year. Still, some economists expect the restocking to slow this year.

Wholesalers reported a 1 percent increase in inventories. Retailers reported a 0.2 percent gain and manufacturers 0.1 percent.

Inventories rose to a seasonally adjusted $1.56 trillion in December. That is 18 percent above the low point reached in 2009, just after the recession ended.

Rising sales are keeping stockpiles from getting too high. If companies feel their inventories are excessive, they could cut back on orders, slowing the economy payday loans direct lenders.

Overall sales rose in December. Wholesalers reported a 1.3 percent jump in sales, followed by a 0.7 increase for manufacturers and flat sales for retailers. That pushed down the ratio of inventories to sales to the lowest level since March. A lower ratio suggests inventories aren’t out of line with sales.

A separate report Tuesday showed that retail sales rose 0.4 percent in January. Consumers rebounded from a slow holiday shopping season and spent more on electronics, sporting goods, building materials and gas.

The economy expanded at a 2.8 percent annual rate in the fourth quarter. But economists expect companies won’t add as much to their stockpiles in the current quarter. That could push growth down to 2 percent or even below.

Stockpiles held by manufacturers account for nearly 40 percent of total business inventories, while wholesalers and retailers each hold about one third.

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Greek lawmakers on Monday approved harsh new austerity measures demanded by bailout creditors to save the debt-crippled nation from bankruptcy, after rioters in central Athens torched buildings, looted shops and clashed with riot police.

The historic vote paves the way for Greece’s European partners and the International Monetary Fund to release $170 billion (euro130 billion) in new rescue loans, without which Greece would default on its mountain of debt next month and likely leave the eurozone _ a scenario that would further roil global markets.

Lawmakers voted 199-74 in favor of the cutbacks, despite strong dissent among the two main coalition members. A total 37 lawmakers from the majority Socialists and conservative New Democracy party either voted against the party line, abstained or voted present.

Sunday’s clashes erupted after more than 100,000 protesters marched to the parliament to rally against the drastic cuts, which will ax one in five civil service jobs and slash the minimum wage by more than a fifth.

At least 45 businesses were damaged by fire, including several historic buildings, movie theaters, banks and a cafeteria, in the worst riot damage in Athens in years. Fifty police officers were injured and at least 55 protesters were hospitalized. Forty-five suspected rioters were arrested and a further 40 detained.

As the vote got under way early Monday, Prime Minister Lucas Papademos urged calm, pointing to the country’s dire financial straits.

“Vandalism and destruction have no place in a democracy and will not be tolerated,” Papademos told Parliament. “I call on the public to show calm. At these crucial times, we do not have the luxury of this type of protest. I think everyone is aware of how serious the situation is.”

Since May 2010, Greece has survived on a $145 billion (euro110 billion) bailout from its European partners and the International Monetary Fund. When that proved insufficient, the new rescue package was approved. The deal, which has not yet been finalized, will be combined with a massive bond swap deal to write off half the country’s privately held debt.

But for both deals to materialize, Greece had to persuade its deeply skeptical creditors that it has the will to implement spending cuts and public sector reforms that will end years of fiscal profligacy and tame gaping budget deficits.

As protests raged Sunday, demonstrators set bonfires in front of parliament and dozens of riot police formed lines to keep them from making a run on the building. Security forces fired dozens of tear gas volleys at rioters, who attacked them with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Clouds of tear gas drifted across the square, and many in the crowd wore gas masks or had their faces covered, while others carried Greek flags and banners. Masked rioters also attacked a police station with petrol bombs and stones.

A three-story building was completely consumed by flames as firefighters struggled to douse the blaze. Streets were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias no fax pay day loan.

“I’ve had it! I can’t take it any more. There’s no point in living in this country any more,” said a distraught shop owner walking through his smashed and looted optician store.

Athens Mayor Giorgos Kaminis said rioters tried to storm the City Hall building, but were repelled. “Once again, the city is being used as a lever to try to destabilize the country,” he said.

Conservative New Democracy leader Antonis Samaras said the rioting “hurts the entire country.”

“We are seeing scenes from a future that we must do our utmost to avert,” he said.

Papademos’ government _ an unlikely coalition of the majority Socialists and their main foes, New Democracy _ had been expected to carry the austerity vote. Combined, they control 236 of Parliament’s 300 seats.

Still, they faced strong dissent: Besides the 37 lawmakers who voted against the bill or abstained, a further six voted against sections of the proposed measures. After the vote, the coalition government announced those 43 lawmakers had been expelled.

Finance Minister Evangelos Venizelos said the measures were vital to the country’s very economic survival.

“The question is not whether some salaries and pensions will be curtailed, but whether we will be able to pay even these reduced wages and pensions,” he told lawmakers before the vote. “When you have to choose between bad and worse, you will pick what is bad to avoid what is worse.”

The new cutbacks, which follow two years of harsh income losses and tax hikes amid a deep recession and record high unemployment have been demanded by Greece’s bailout creditors in return for a new batch of vital rescue loans.

Greece’s eurozone partners, meanwhile, kept up the pressure for real reform.

German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper on Sunday that Greece “cannot be a bottomless pit.”

Highlighting previous pledges he said weren’t kept, Schaeuble said “that is why Greece’s promises aren’t enough for us any more.”

Asked whether Greece has a long-term future in the eurozone, Germany’s Vice Chancellor Philip Roesler said “that is now in the hands of the Greeks alone.”

“It is not enough just to give financial aid _ they must tackle the second cause of the crisis, the lack of economic competitiveness,” he told said ARD television. “For that, they need … massive structural reforms. Otherwise Greece will not get out of the crisis.”

Introducing the legislation Sunday, Socialist lawmaker Sofia Yiannaka said the intense pressure from Greece’s EU partners to pass the measures was the result of delays in implementing already agreed reforms.

“The delays have our imprint. We should not blame foreigners for them,” she said. “We have finally found out that you have to pay back what you have borrowed.”

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German exports fell four times more than economists forecast in December as the sovereign debt crisis damped economic growth across the euro region.

Exports, adjusted for work days and seasonal changes, slumped 4.3 percent from November, when they rose 2.6 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a decline of 1 percent, according to the median of 17 estimates in a Bloomberg News survey. Imports dropped 3.9 percent.

While the German economy probably shrank 0.25 percent in the final three months of last year, data this year suggest it may avoid recession, which is commonly defined as two consecutive quarterly contractions. Business sentiment jumped to a five-month high in January and factory orders gained 1.7 percent in December, driven by demand from outside the 17-nation euro area.

Greece’s coalition government on Monday caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, amid mounting international pressure to agree on austerity measures needed to secure major new debt agreements.

The announcement signals a shift in Greece’s policy, as state jobs have so far been protected during the country’s acute financial crisis, which started about two years ago. Public Sector Reform Minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings.

Unions have called a 24-hour general strike for Tuesday, in response to the new austerity measures, while about 4,000 protesters braved torrential rain late Monday to join protest rallies organized in central Athens by left-wing opposition parties.

Greece is racing to push through painful reforms and clinch a euro130 billion ($170 billion) bailout deal from its European partners and the International Monetary Fund to avoid a March default on its bond payments.

Debt-ridden Greece has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

Its implementation depends on the austerity measures but also on separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt, in exchange for a cash payment and new bonds worth 50 per cent less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds. Greek government officials say they expect private investors to take an overall cut of up to 70 percent on the value of their bonds.

But delays in negotiations with rescue creditors pushed a crucial meeting of coalition party leaders back by one day to Tuesday.

“We are opposed to indiscriminate firings,” Reppas said. “The work force reduction is strictly connected with the restructuring of services and organizations at each ministry.”

Officials at the Public Sector Reform Ministry gave no details of the new plan, or say how many of the job cuts would be compulsory.

The government has promised to reduce the 750,000-strong broader public sector by 150,000 by the end of 2015, but has so far insisted it could reach that target through staff attrition.

Greece’s coalition party leaders pushed back a key meeting by a day till Tuesday, due to the ongoing negotiations with EU-IMF debt inspectors who were to hold a new round of talks later Monday.

They have already agreed to cut 2012 spending by 1.5 percent of gross domestic product _ about euro3.3 billion ($4.3 billion) _ improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing them.

Creditors are also demanding spending cuts in defense, health and social security, a cut in the minimum wage, as well as the civil service layoffs, as European pressure increased on Greece to make more concessions.

European Commission spokesman Amadeu Altafaj Tardio said Greece is already “beyond the deadline” to end the talks.

After talks in Paris with French President Nicolas Sarkozy, German Chancellor Angela Merkel said there can be no bailout deal unless Athens implements creditors’ proposals.

“(The proposals) are on the table,” she said. “And time is pressing. Therefore something has to happen quickly.”

“Time is pressing and for the entire eurozone is much at stake,” Merkel added.

Greece is in its fifth year of recession, while unemployment has hit record highs of about 19 percent _ following a spate of austerity measures in return for the rescue loans, that included significant cuts in pensions and salaries coupled with repeated tax hikes and an increase in retirement ages.

“The current policy of austerity … is turning workers into pariahs, jobless people and pensioners into paupers and deprives our youth of any hope,” a statement from the servants’ union ADEDY said. “This policy has already pushed Greeks beyond their limits and must be stopped at any cost.”

Yiannis Panagopoulos, leader of Greece’s largest union, the GSEE, said the creditors’ demands were certain to lead to more hardship.

“What is going on is not a negotiation,” he said. “It’s blunt, cynical blackmail targeting an entire people.”

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