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US seeks $864M from BofA over Countrywide loans

Written By Unknown on Minggu, 10 November 2013 | 23.40

NEW YORK — Federal prosecutors want Bank of America Corp. to pay about $864 million over losses incurred by the government after it bought thousands of home loans made by Countrywide Financial during the housing boom.

U.S. attorney Preet Bharara made the request in documents filed late Friday with the U.S. District Court in Manhattan.

A jury last month found Bank of America Corp., which acquired Countrywide in 2008, liable for knowingly selling thousands of bad home loans to Fannie Mae and Freddie Mac between August 2007 and May 2008.

The panel also returned the verdict against Countrywide and a former executive, Rebecca Mairone.

The trial related to mortgages the government said were sold at break-neck speed without regard to quality as the economy headed into a tailspin.

The government had accused the financial institutions of urging workers to churn out loans, accept fudged applications and hide ballooning defaults through a loan program called the Hustle, shorthand for high-speed swim lane, which operated under the motto, "Loans Move Forward, Never Backward."

Bank of America, based in Charlotte, N.C., denied there was fraud.

Thousands of loans made through the Hustle program were sold to Fannie and Freddie, which packaged loans into securities and sold them to investors. The companies were effectively nationalized in 2008 when they nearly collapsed from mortgage losses.

In the filing Friday, Bharara asked the court to make the penalty on BofA equal to the maximum losses racked up from the Hustle program by the government-run mortgage buyers.

Bank of America spokesman Lawrence Grayson said Saturday that the lender plans to respond to the government's penalty filing before a Nov. 20 deadline.

"We believe the filing overstates the volume of loans and the appropriate measure of damages arising from one narrow Countrywide program that lasted several months and ended before Bank of America acquired the company," he said.

Bharara also wants the court to impose a penalty on Mairone — who prosecutors say was the driving force behind the Hustle program — that is in line with her ability to pay.

Mairone's lawyer, Marc Mukasey in New York, said Saturday that he intends to file papers with the court arguing there should be no penalties imposed on his client.

Countrywide, once the country's largest mortgage lender, played a major role in the collapse of the housing market because of its heavy reliance on subprime mortgages. Facing serious financial challenges, it was acquired by Bank of America in 2008 in an all-stock deal valued at about $4 billion.

In 2010, Bank of America agreed to pay $600 million to settle class-action lawsuits claiming that Countrywide officials concealed mounting financial risks as they loosened lending standards during the housing boom. That same year, former Countrywide CEO Angelo Mozilo agreed to pay $67.5 million to settle accusations by the Securities and Exchange Commission that he had misled investors and engaged in insider trading.


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Lady Gaga lends image to USA Today logo

Lady Gaga is lending some of her artistic eye and star power to USA Today's pages in advance of the singer's new album, "ARTPOP."

USA Today says a logo featuring an image of a statue of the pop provocateur will appear in Monday's editions of the newspaper's "LIFE" section.

The newspaper says Lady Gaga is the first guest contributor to design a logo for the newspaper.

The logo was designed in collaboration with the performer and artist Jeff Koons, who designed Lady Gaga's cover art for "ARTPOP," due out Tuesday.

The album is Lady Gaga's third release.

The singer has sold nearly 9 million albums on her way to becoming one of music's more colorful figures.


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HereĆ¢€™s a primer on continuously variable transmissions

I read your column with interest each Saturday in a local newspaper and was wondering if you would be willing to comment on the pros and cons of continuously variable transmissions (CVT) and multi-geared transmissions.

Absolutely! So that everyone is on the same page, let's identify what a CVT transmission is. It's important to recognize that the purpose of any automotive transmission is twofold — transmit engine power to the drive wheels and to optimize vehicle performance at any and all speeds by keeping the engine in its most efficient RPM range as much as possible.

Multi-gear transmissions have historically been the transmission of choice for this purpose. Either manually — the driver selects each gear with a lever — or automatically selecting individual gear ratios based on road speed and load, these transmissions do a reasonably efficient job of keeping the engine in its "power band" at varying road speeds.

But, of course, road speed is infinitely variable, and these transmissions have only a fixed number of gear ratios. Remember the original GM Dynaflow and Powerglide transmissions? They had only two forward gears, coupled to a torque converter to multiply engine torque. Today's electronically controlled automatic transmissions feature up to eight forward speeds to help optimize efficiency and performance.

CVTs feature a drive belt riding between variable pulleys. The pulleys change diameter in proportion to speed and load by varying the distance between the inner and outer tapered "sheaves." When starting from a stop or under heavy load, the engine-driven pulley is smaller and the driveline pulley is proportionally larger so that engine RPM is higher, providing more torque to the drive pulley. As vehicle speed rises, the engine pulley gets larger in diameter while the driveline pulley gets proportionally smaller, meaning the engine is turning lower RPM as it drives the vehicle at a higher speed.

The fundamental advantage of CVTs is their ability to keep the engine in a very narrow, highly efficient RPM range to maximize performance, efficiency and fuel mileage.

Snowmobiles, ATVs and some motorcycles have had CVTs for decades, and they have been used in cars since at least the early 1960s. In fact, the very first vehicle I ever drove — in 1960 at age 11 on a long, looping private driveway — was a very small Dutch-built DAF with a belt-driven, variable-ratio CVT.

While engineers and carmakers have known the advantages of CVTs for decades, it wasn't until relatively recently that technology has provided a drive belt for them that could handle the much higher horsepower and torque of today's engines. The belts are no longer fabric and rubber; they are steel and provide the strength and durability necessary for modern automobiles.

Driving a CVT-equipped vehicle is a somewhat peculiar experience. Under acceleration, engine speed rapidly climbs into its optimum RPM range, which tends to create a sense of slippage although none is occurring, and the vehicle speed "catches up" to engine speed. When slowing, engine speed falls until re-accelerating when RPM jumps back up and vehicle speed starts "catching up" again. The engine, under load, is always operating in its most efficient RPM range, maximizing performance and fuel economy.

Paul Brand, author of "How to Repair Your Car," is an automotive troubleshooter, driving instructor and former race-car driver. Readers may write to him at: Star Tribune, 425 Portland Ave. S., Minneapolis, Minn., 55488 or via email at paulbrand@startribune.com. Please explain the problem in detail and include a daytime phone number. We cannot provide personal replies.


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Cos. left to their own devices

Venture capital funding for one of the Bay State's key industries — medical device companies — is drying up, forcing startups to adapt and become mature quicker than in the past, according to industry insiders.

"In terms of VC funding, we're really in a lull," said Debbie Paul, CEO Americas of EvaluatePharma USA, which presented a state of the industry report to investors and others last week.

Funding for medical device companies dropped in 2012 for the first time in years, and seems to be on track to finish this year at the same level, Paul said.

Paul said investors are looking for a clear path to return on investment from a company before putting money in, a definite shift in mentality. She said companies now have to have more than just a great idea to get the funding they need.

"It's not just a business plan, it's not just having a thoughtful exit strategy, it's really thinking about who's your key target market," she said. "You have to be a sure bet to get the funding unless you've got really innovative technology."

Paul said another thing startups have to consider now is how their devices will be reimbursable by insurance companies.

Donna Brezinski, founder and CEO of Little Sparrows Technologies, said her focus as she looks for investors is the specifics of her product, a low-cost tent that addresses neo-natal jaundice.

It's "really identifying the market, identifying the customer," she said.

Still, there are options for those who can't find venture capital funding.

"If you're a startup and you can't get VC money, I think you'd know you need to talk to more angel investors," Paul said. "They may be filling a gap traditional venture financing may be opening."

Still, Brezinski is confident about her early-stage company and is optimistic about getting funding.

"Massachusetts in and of itself is an incredibly supportive and rich environment for early start startups," she said. "I don't think it's impossible."


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Journalists in Syria face growing risk of kidnap

BEIRUT — Behind a veil of secrecy, at least 30 journalists have been kidnapped or have disappeared in Syria — held and threatened with death by extremists or taken captive by gangs seeking ransom.

The widespread seizure of journalists is unprecedented, and has been largely unreported by news organizations in the hope that keeping the kidnappings out of public view may help to negotiate the captives' release.

The New York-based Committee to Protect Journalists says at least 30 journalists are being held and 52 have been killed since Syria's civil war began in early 2011. The group also has documented at least 24 other journalists who disappeared earlier this year but are now safe. In a report this week, Paris-based Reporters Without Borders cited higher figures, saying at least 60 "news providers" are detained and more than 110 have been killed.

The discrepancy stems from varying definitions of what constitutes a journalist because much of the reporting and news imagery coming out of Syria is not from traditional professional journalists. Some of those taken have been activists affiliated with the local "media offices" that have sprouted up across opposition-held territory.

Only 10 of the international journalists currently held have been identified publicly by their families or news organizations: four French citizens, two Americans, one Jordanian, one Lebanese, one Spaniard and one Mauritanian. The remaining missing are a combination of foreign and Syrian journalists, some of whose names have not been publicly disclosed due to security concerns.

Groups like the Committee to Protect Journalists are alarmed by the kidnappings.

While withholding news of abductions is understandable in many cases, especially with lives at stake, the organization says, this has also served to mask the extent of the problem.

"Every time a journalist enters Syria, they are effectively rolling the dice on whether they're going to be abducted or not," said Jason Stern, a researcher at CPJ.

Jihadi groups are believed responsible for most kidnappings since the summer, but government-backed militias, criminal gangs and rebels affiliated with the Western-backed Free Syrian Army also have been involved with various motives.

By discouraging even experienced journalists from traveling to Syria, the kidnappings are diminishing the media's ability to provide unbiased on-the-ground insights into one of the world's most brutal and combustible conflicts.

And those who do go into the country from outside appear often to be among the less-prepared and less-protected — which in turn increases the chances of capture, deepening the fears and compounding the problem.

The kidnappings have helped shift the narrative of the war in a wider sense: What might have at first seemed to many like an idealistic rebellion against a despotic ruler now is increasingly viewed as a chaotic affair in which both anti-Western extremists and criminal gangs have gained dangerous influence

"It is vital that journalists witness and tell the story of the Syrian civil war," said John Daniszewski, senior managing editor for international news at The Associated Press. "However, the impunity with which journalists are attacked and kidnapped in this conflict means that we must be doubly cautious. It is not an arena for novices, and extreme care needs to be exercised to obtain the news. At the same time, actors in the civil war must acknowledge and protect the right of journalists to cover it fairly and accurately as a basic human right."

The spate of kidnappings has drawn comparisons to Lebanon during its vicious 1975-90 civil war, when Westerners, including then-AP Middle East Correspondent Terry Anderson, were taken captive by Muslim extremists and held for long periods.

In Iraq, 150 journalists were killed between the U.S. invasion in 2003 and the departure of American troops in 2011 — a rate similar to the CPJ's figures for Syria — but the numbers of abducted journalists was smaller. Reporters Without Borders said it registered 93 kidnappings of journalists there from 2003 to 2010 — a far lower rate than it found in Syria. In Libya, a handful of journalists were detained during the war.

Stern said the kidnappings in Syria are unprecedented in scale: "Simply no other country comes close."

Addressing the U.N. Security Council at a meeting in July, AP Executive Editor Kathleen Carroll, vice chairwoman of the Committee to Protect Journalists, said reporters serve as the public's eyes and ears in conflict situations by going to places and asking questions that most people cannot.

"An attack on a journalist is a proxy for an attack on the ordinary citizen, an attack on that citizen's right to information about their communities and their institution" and their world, she said.

Richard Engel, the chief foreign correspondent for U.S. television network NBC who was kidnapped by pro-Assad militiamen in northern Syrian and held for five days in December 2012, said journalists must reflect long and hard before going to the country.

"Because right now, if you go to into the rebel-held or contested areas in northern and eastern Syria, there is a very sizable percentage that you're not going to make it out alive," he said.

While reporting in Syria has always been a dangerous business, the risk has evolved during the uprising. Early on, President Bashar Assad's government expelled foreign journalists covering anti-government protests, including an AP team in Damascus. Scores of Syrian journalists were imprisoned. As rebels began seizing territory, some rebel factions began detaining journalists as well, often on unfounded accusations that they were spies.

Abductions increased significantly in recent months, as extremist groups grew more powerful in some areas.

Most kidnappings since the summer have taken place in rebel-held territories, particularly in chaotic northern and eastern Syria, where militant al-Qaida-linked groups hold influence. Among the most dangerous places is the northeastern city of Raqqa, which was taken over by al-Qaida militants shortly after it became the first city to fall entirely into rebel hands; the eastern Deir el-Zour province; the border town of Azaz, and the corridor leading to Aleppo, once a main route for journalists going into Syria.

There are no reliable estimates of how many journalists are held by the Syrian government, which routinely rounds up writers, activists and reporters who fail to toe the official line.

Local journalists have taken the brunt of the violence. Of the 52 documented by CPJ as killed, all but five were Syrian. Among the foreigners who lost their lives covering battles were French TV reporter Gilles Jacquier, French photographer Remi Ochlik, American journalist Marie Colvin with Britain's Sunday Times and Japanese journalist Mika Yamamoto.

Often the cases of abduction are not reported by media organizations at the request of the families or employers. News organizations on a case-by-case basis are inclined to respect such requests, regardless of the identity of the person abducted, if they are persuaded that publication would increase the danger for the victim.

That, in turn, makes the extent of the problem less visible to the public.

Peter Bouackert, emergency director at Human Rights Watch, said an unintended consequence of such a blackout is that journalists may be less aware of the dangers they face.

In some cases, rebels acting as middle men have offered to "buy" hostages to use for their own purposes, activists say. Unconfirmed reports say at least some kidnappings are done to raise money for weapons.

In some cases, the captors are thought to be holding hostages for ransom, or as pawns for negotiations.

Experts say religious extremists pose a particular danger because they kidnap for ideological reasons, and are less likely to negotiate or yield to foreign pressure.

Bouackert says almost all kidnappings since the summer have involved al-Qaida-affiliated militants and remain unresolved with no ransom demands or discussion about releases.

"They are basically being held hostage as insurance against any future Western intervention against extreme jihadi groups," said Bouackert, who specializes in cases involving missing journalists.

In published accounts of their captivity, some freed journalists wrote of trusted rebels and fixers who betrayed them, and of hard-core Islamic fighters who psychologically and physically tortured them.

"At first they kept accusing me of being a CIA agent, and in order to break me pretended to execute me four times. At the end it was all about money," said Jonathan Alpeyrie, a French-American photographer held in northern Syria for 81 days by Islamic rebels until a benefactor paid $450,000 on his behalf.

Alpeyrie, 34, has reported from Afghanistan, Egypt, Libya, Pakistan and Somalia. He was abducted on his third trip to Syria, apparently betrayed by a fixer. He was freelancing for the New York-based agency Polaris Images when kidnapped.

"I will never go back to Syria," he said.

Among the longest-held captives are American freelance journalists Austin Tice, missing since August 2012, and James Foley, who disappeared in November 2012. Tice, who was one of few journalists reporting from Damascus when he vanished, is suspected of being held by the Syrian government, although his family has said they are uncertain who is holding their son.

"Frankly, it makes no sense for us to speculate on who may be holding him and who may not be," Tice's father, Marc Tice, told the AP by telephone. "We're in a position where we are simply asking whoever does have influence, control or authority over whoever is holding Austin to have mercy on our family and return him to us."

There has been no information on Foley.

More recent abductees include Spanish journalist Marc Marginedas, who has not been seen since his car was stopped by armed jihadists on Sept. 4 near the western town of Hama, and French journalists Nicolas Henin, Pierre Torres, Didier Francois and Edouard Elias — all missing since the summer.

American freelance photographer Matthew Schrier, who escaped in July from an Aleppo basement after seven months in captivity, said his captors tortured him for his credit card and bank passwords and used his money to shop on eBay.

Among the most recent Syrian victims was Rami Razzouk, working for a Syrian radio station that reports critically on al-Qaida-linked militants.

In a harrowing account of his 152 days in Syrian rebel captivity, Italian journalist Domenico Quirico wrote in the daily La Stampa of a revolution gone astray.

"In Syria, I discovered the Land of Evil," he wrote.

___

Associated Press writer Verena Dobnik in New York City contributed to this report.


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Harvard's deficit soars to $34 million

BOSTON — Harvard University finance officials are pledging to manage costs better and pursue innovative revenue strategies after its deficit soared to $34 million in the most recent fiscal year, compared to a $7.9 million shortfall the previous year.

A financial report released Friday says the school saw revenues jump 5 percent to $4.2 billion, due largely to the increased annual distribution from its hefty $32.7 billion endowment.

Revenue also was bolstered by a 17 percent increase in gifts for current use, from $289 million in the previous fiscal year to $339 million in the most recent year.

Operating expenses for the nation's oldest school rose 6 percent to $4.2 billion. Benefits, wages and other compensation expenses accounted for about half of expenses.

The financial report, authored by Harvard's Vice President for Finance and Chief Financial Officer Daniel S. Shore and Treasurer James F. Rothenberg, notes that the $34 million deficit is slightly less than 1 percent of the school's revenue. In that context, they said, it is manageable, while still meaningful.

"However, the ability to stay in financial balance going forward depends in large part on institutional commitment to cost management and an embrace of innovative revenue opportunities," they said.

The Ivy League school can manage costs better by consolidating operations and procurement, which could also help improve efficiency, yield higher quality service and improve ability to manage vendor-related risks, according to the report.

"Culture change of this sort is hard for any large and decentralized organization," Shore and Rothenberg said in the report. "Changing Harvard's culture will require time, transparency, a willingness to make mistakes along the way, and the capacity to learn from them. "

Reducing costs of benefits can be difficult because they are "experienced at a more personal level," they said. "Yet these changes are inevitable and will allow us to protect the integrity of the high-quality teaching and research that has allowed Harvard to lead throughout the centuries."

The report noted that Harvard is no exception from other colleges and universities facing substantial pressure as net income from tuition, particularly at the undergraduate level, grow slowly. Although the endowment earned an 11.3 percent gain on investments in the most recent fiscal year, Harvard must use caution in planning for future distribution due to the volatility of global financial markets, the report said.

Political bickering in Washington is not helping matters either.

"The federal government's ongoing commitment to research funding is more uncertain than it was last year, and we have already begun to feel the chilling effects of the budget sequester on research grants," the report said.

Harvard President Drew Faust noted the nation's wealthiest university has not been immune to the fact that a faltering economy has raised questions in the public's mind about the value of a college education as well as the reality that every revenue stream upon which institutions of higher learning depend has come under pressure.

"We will need to meet those challenges by acting thoughtfully and decisively as a community; we will adapt where circumstances demand it; and we will remain steadfast in defending the values that make Harvard an essential contributor to the pursuit of knowledge in the world," Faust said.


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Miami Herald writer freed from Venezuela custody

CARACAS, Venezuela — Venezuelan authorities on Saturday released a Miami Herald reporter they had detained two days earlier while he reported on the South American country's economic crisis.

The Miami Herald reported on its website that Jim Wyss was released from a detention facility in Caracas and handed over to U.S. Embassy officials.

Herald executive editor Aminda Marques Gonzalez said on the website that "Jim is safe and soon will be reunited with his loved ones."

Wyss later sent a message on Twitter thanking the Herald and others who worked to secure his speedy release.

From the immigration detention center in Caracas, he joked about the diet of ham sandwiches he was fed and the tight living conditions in the room he was held with eight other people.

"It's like living in a bar with bunkbeds," he told the Herald.

Wyss, the Herald's Andean bureau chief, was detained Thursday by the National Guard in San Cristobal, a western city near the border with Colombia that is a hotbed for illegal transactions used to circumvent rigid currency controls.

The Herald's World Editor John Yearwood had flown to Caracas Saturday to usher the reporter out of the country.

Throughout the ordeal, Venezuelan authorities never said why Wyss was being detained or whether he was facing charges. Nor did President Nicolas Maduro, an outspoken critic of the U.S., mention the case during a four-hour televised speech Friday night.

Wyss, who is based in Bogota and has made many trips to Venezuela, traveled to San Cristobal to report on next month's municipal elections, which are taking place amid an economic crisis marked by 54 percent inflation and shortages of staples such as milk and toilet paper.

Maduro blames hoarding and speculation by the private sector, and accuses right-wing agitators and the U.S. government of waging an "economic war" to destabilize his government. However, economists say that only scrapping the decade-old controls imposed by the late Hugo Chavez can curb a sharp slide in the currency's value on the black market.

Journalists have encountered harassment before while reporting on the crisis. Last week, three reporters for Caracas newspaper Diario 2001 were detained, and one allegedly beaten by police, after witnessing a group of frenzied shoppers break through a barricade to receive a government-provided Christmas food basket.

Government officials also regularly vilify in public members of the international media as opponents of the Chavista revolution. Still, except for the six-week jailing of an American documentary filmmaker earlier this year, the detention of foreign journalists for more than a few hours is almost unknown.

Wyss himself was nearly barred from entering Venezuela shortly before Chavez's death in March, according to the Herald report.

Claudio Paolillo, chairman of a press freedom committee at the Inter American Press Association, said he was bewildered by Wyss' detention, calling it a "new demonstration of intolerance by a regime that day after day shows its contempt for the work of journalists."


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Housing 100 vets in 100 days

As the country honors its servicemen and servicewomen tomorrow, Navy veteran Tim Pollard will be able to mark the holiday this year in the comfort of his own home.

The 62-year-old is settling into a Boston apartment thanks to a public/private initiative to find homes for 100 of the city's homeless vets in 100 days.

After the death of his brother, for whom he had been an in-home caregiver, Pollard found himself homeless in 2011. He turned to the New England Center for Homeless Veterans, where he had been living until landing his apartment a month ago with rental assistance through the HUD-Veterans Affairs Supportive Housing (VASH) program.

"It's a beautiful apartment — a second-floor walkup, one bedroom," he said. "I can't beat the location. Awesome is the closest word I can describe."

Pollard had bunked dormitory-style for nearly 2 1⁄2 years at the Court Street center, where he now works part-time in security and operations. "I just wanted to get back on my feet, get reoriented again, try to get some kind of steady employment and get housing," he said. "It's been rough, but if it wasn't for (the center), I don't know what I would have done."

The city's Department of Neighborhood Development is leading the "Home of the Brave" initiative to house 100 vets as part of the federal government's goal to end homelessness among veterans by the end of 2015. It's joined by the New England Center for Homeless Veterans, the Pine Street Inn and HomeStart.

The agencies created a registry of homeless vets looking for housing. Twenty-six got housing through VASH vouchers, 28 moved in with family or friends, 19 are renting private apartments, and the rest are in homes through subsidy programs such as Section 8. Each gets support services to ensure they're able to remain housed.

Though the goal is to help 100 homeless vets, the city will sustain the effort, said Elizabeth Doyle, Boston's deputy director for supportive housing. "We've uncovered some places where we can improve," she said. "We can coordinate better. We can make sure the right resources are getting to the right veterans. We're hoping to attract some landlords also."

An annual city census of homeless vets conducted last December documented 457 in Boston.

"One is too many," said Andy McCawley, CEO of the New England Center for Homeless Veterans. "We see veterans in their 20s and veterans in their 80s. We have been serving an increasing number ... from the recent conflicts in Iraq and Afghanistan."

To make vets' transition into housing easier, the Massachusetts Housing and Shelter Alliance is soliciting funds and items such as furniture, new mattresses and basic household items.

Pollard, meanwhile, is trying to get his apartment furnished before the holidays. "I'm keeping everything minimized because settling in, you do have to watch your pennies," he said.


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Health law's troubles give GOP a much-needed boost

WASHINGTON — The health care law's seemingly endless problems are giving congressional Republicans a much-needed boost by helping them move past the government shutdown debacle and focus on a theme for the 2014 elections.

Republicans' approval ratings plunged during last month's partial shutdown and worrisome talk of a possible U.S. debt default.

Now the GOP is back on offense.

Republicans pillory administration officials at congressional hearings.

They note that millions of people are losing their medical insurance despite President Barack Obama's promise that it wouldn't happen.

And they point to the program's flawed enrollment process.

Conservative groups are pouring money into ad campaigns reminding voters that many Democrats had promised that Americans could keep their current insurance policies.

These groups are especially targeting Democratic senators facing tough races next year.


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Mass. activists push for domestic worker rights

BOSTON — Employment rights activists are going to the Massachusetts Statehouse to call for stronger protections for domestic workers.

They'll be pressing a legislative committee on Tuesday to pass a bill that would require employers of domestic workers to provide a maximum of 40 hours of earned sick time a year.

Employers also would be barred from monitoring a domestic worker's private communications and could not force workers to pay for food or lodging unless the worker voluntarily and freely chooses to accept.

Activists say domestic workers are often the target of exploitation and are more vulnerable than employees in other workplaces.

A hearing before the Committee on Labor and Workforce Development is set for 10 a.m. Tuesday at the Statehouse.


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