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News Briefs

Side Air Bags May Pose Risk of Injury or Death to Children


The National Highway Traffic Safety Administration will issue a consumer advisory Thursday telling parents that children seated near side air bags are at risk of serious injury or death.

The federal agency, which has been studying the effect of side air bags on children since late last year, decided that parents needed to be warned that the safety devices -- which have some benefit for adults -- can be harmful to children.

“Tests performed by both NHTSA and auto companies indicate that out of position children are at potential risk of serious or fatal injury to the head, neck or chest from the deployment of side impact air bags, especially if they are near the air bag at the time of deployment. Further, because the data are limited, it is not clear whether properly seated and restrained children incur any benefit from the deployment of side-impact air bags,” NHTSA said in a letter sent to car manufacturers advising them of the warning.

Side-impact air bags, which are installed in about 2.4 million vehicles, are designed to protect occupants in crashes that involve the side of the vehicle. Only a small percentage of side air bags are found in the rear of cars, but these are the ones the agency believes pose the most danger to children who sit too close to them or fall asleep near them. There have been no reported deaths from deployment of side air bags.

Probe Costs Slammed in Report


Top officials at the Department of Housing and Urban Development spent about $100,000 to hire outside lawyers to investigate allegations of racial discrimination inside the agency when a routine HUD probe would have cost only $3,000, congressional investigators said Thursday.

In their report, investigators at the General Accounting Office said HUD bent government procurement rules in selecting the lawyers and deviated from standard procedures for handling a bias complaint lodged against HUD’s inspector general (IG). The GAO charges were vigorously denied by HUD.

But the GAO report, released by Sen. Fred Thompson, R-Tenn., was about much more than arcane aspects of federal regulations. It rekindled a long-running feud between senior HUD officials and the IG, Susan Gaffney, sparking accusations that aides to HUD Secretary Andrew Cuomo manipulated the contract awards.

The Cuomo-Gaffney dispute goes back about three years, but intensified last year when the IG appeared before the Senate Governmental Affairs Committee, chaired by Thompson. Gaffney, a Clinton appointee who has faulted HUD initiatives championed by Cuomo, accused the secretary and his top aides of trying to undermine her independence. Her office was also caught up in controversy over her selection of three cities run by black mayors for a probe into housing program corruption.

Thursday, Thompson said the GAO report showed Cuomo aides “manipulated the procurement process” in an “extraordinary effort to discredit this long-time public servant.” Thompson said the lawyers billed HUD $300,000 for their work investigating charges of racial bias in the IG’s office.

HUD’s chief procurement officer, V. Stephen Carberry, said the GAO conclusions were “flatly wrong and not supported by fact or law.” Senior HUD aides said the lawyers would be paid according to their contracts, which specified payments of about $100,000.

GAO and HUD disagreed over several procurement rules, such as whether HUD should have advertised the new contracts, and whether it inappropriately limited competition and invoked an “expert services” exemption to hire the lawyers.

Fed, Treasury Reach Major Deal on Bank-Reform Bill


The Federal Reserve and Treasury Department Thursday struck a deal that removed a long-standing regulatory obstacle to a bill that would lift Depression-era restrictions on banks. The compromise dramatically increases the chances that the 20-year effort to revamp financial services laws will finally bear fruit this year.

Key lawmakers from the House and Senate worked late Thursday night to build on the Treasury-Fed compromise to craft a final version of the legislation, which passed the House and Senate in different forms earlier this year.

The legislation would make it much easier for banks, insurance companies and securities firms to merge and create one-stop financial service companies where consumers could obtain everything from checking accounts to car insurance.

But major disputes over consumer and privacy protections -- which the White House says must be settled to avoid a presidential veto -- were still unresolved.

Fed and Treasury officials have battled for years over which agency will oversee banks that, under the legislation, would be able to sell stocks, peddle insurance or deal in real estate. Under the plan, neither agency would have full regulatory oversight but instead they would divvy up scrutiny of many of these activities.

The White House had guaranteed an automatic veto if the regulatory issue had not been resolved.

But other key issues remained outstanding. One is the Community Reinvestment Act, which requires banks to lend in underserved areas. The White House objects to a provision backed by Senate Banking Committee Chairman Phil Gramm, R-Tex., and other Republicans that would give smaller banks greater leeway in fulfilling their CRA obligations.

Democrats and Republicans also remained at odds over consumer protections and privacy. Consumer groups favor letting individuals stop companies from sharing their financial information with affiliates or third parties, but financial companies argue that an inability to share that information defeats the reason banks, insurers and brokers are merging.