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Lehman Brothers liquidated three investment funds last quarter after their assets declined in value amid the larger credit crisis, according to a regulatory filing.

Lehman moved the funds’ assets - worth about $1 billion - onto its balance sheet. The bank purchased another $800 million in "deteriorated" assets from other funds, according to Lehman’s report for the quarter ended Feb. 29.

Lehman did not specify what types of assets were affected. Mortgage-backed securities and complex derivatives of those investments have been declining in value as more home loans enter some stage of default. That has made investors skittish about buying many other types of complicated Wall Street products, causing the market for those securities to seize up.

"Due to market disruptions that occurred in the second half of the 2007 fiscal year and further deterioration in the 2008 quarter, certain investments held by the funds were either downgraded by rating agencies and/or experienced a decline in fair value," Lehman said in the Wednesday filing.

Lehman has written off $3.93 billion on its credit and lending portfolios since the third quarter of 2007, including $1.8 billion in the first quarter of this year payday loan. The bank did not indicate whether any of that total was for the assets in the liquidated funds.

The bank was not required to purchase the distressed assets. Not doing so, though, would likely have caused the funds to fail, Lehman said.

In electronic premarket trading, Lehman (LEH, Fortune 500) shares slid $1.01, or 2.5%, to $39.53. The stock closed at $40.54 Wednesday, falling in late trading after the regulatory filing was made. 

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The Food and Drug Administration on Tuesday said more than 100 patients have died while taking the blood thinner heparin since early 2007.

The agency has been investigating contamination of heparin made by the manufacturer Baxter International Inc., which it linked to 19 deaths and hundreds of allergic reactions.

New data posted to the FDA’s Web site shows the agency has received 103 reports of death with heparin made by various manufacturers since January 2007.

FDA recorded a spike in deaths beginning in December 2007 and continuing through February this year, when Baxter recalled its contaminated product payday loan.

FDA said about 40% of the deaths were associated with allergic reactions and that the remaining deaths showed no evidence of allergic reactions.

For both 2006 and 2007 FDA received 55 reports of death with the blood thinner.

A Baxter (BAX, Fortune 500) representative was not immediately available for comment.

An FDA spokeswoman said the agency decided to release the additional numbers on heparin deaths at the request of consumers. 

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Delta Air Lines is trying to determine whether to push ahead with a Northwest Airlines merger, without a prearranged deal between their pilots, a move that could change certain details of the deal, two people familiar with the discussions said Monday.

Delta (DAL, Fortune 500) and Northwest (NWA, Fortune 500) are looking at their route structures and how a combination now would affect them given $100-a-barrel oil and a decision by both carriers to cut domestic capacity.

"When that happens, the merger details could change," the person said. "That will also affect the pilots."

Overarching issues such as retaining the company’s Atlanta headquarters, Delta Chief Executive Richard Anderson taking charge of the combined entity and using the Delta name for the new company, are not likely to change, the person said.

The other person said there is no particular timeline or deadline for the airlines to decide whether to proceed with a deal, and things could still fall apart.

The people requested anonymity because of the sensitivity of the talks.

No meetings are scheduled this week between officials from both companies, though Delta’s board met last week, one of the people familiar with the talks said.

The usual approach in airline combinations has been to have pilots work out a joint union contract after a deal announcement. Atlanta-based Delta and Eagan, Minn.-based Northwest for months took a different approach in their talks, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner.

With that in mind, pilots were in line to get raises and equity in the combined company payday loans. But the two groups couldn’t agree on seniority, which determines who flies more desirable aircraft and routes.

Now, the rising cost of oil has put all airlines under intense financial pressure. Since the talks began, Delta and Northwest have announced plans to reduce capacity this year, and Delta has announced plans to eliminate 2,000 jobs.

The pilot negotiating committees at Delta and Northwest have not had any recent meetings, but there has been informal contact between members of the two unions, one of the people familiar with the discussions said.

Delta has said it would be interested in a combination under the right circumstances, including the ability to protect its employees’ seniority. It has said it has a strong standalone plan and is not obligated to find another partner if a deal with Northwest falls through.

Another option that remains on the table is a "light" deal between Delta Air Lines Inc. and Northwest Airlines Corp. in which they would combine some corporate functions but keep separate pilot ranks and operations, the people familiar with the talks said. 

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Taiwan's inflation accelerated for a second month in March, as rising grain costs boosted food prices.

Consumer prices climbed 3.96 percent from a year earlier, the state statistics bureau said today in Taipei. That was less than the 4.3 percent median estimate of 11 economists surveyed by Bloomberg. Prices rose a revised 3.87 percent in February.

Accelerating inflation fueled by higher food costs, which make up about a quarter of the index, may prompt the central bank to raise interest rates at its next policy meeting in June. Policy makers increased borrowing costs for a 15th straight quarter on March 27, citing inflation risks.

“Rising food prices are gradually showing their impact,'' Fang Wenyen, a Taipei-based economist at KGI Securities Co., said before the announcement. “The central bank hasn't given any indication that it will pause from raising rates.''

Food prices rose 9.33 percent from a year earlier, while transportation costs increased 3.86 percent. Housing, which includes rent and utility expenses, climbed 1.12 percent instant payday loan.

Wheat futures reached a record $13.495 a bushel on Feb. 27. The U.S. has forecast global stockpiles will decline to the lowest in 30 years after excessive rain hurt U.S. crops in 2007 and drought curbed yields in Canada and Australia. Taiwan imports almost all its wheat for bread, cakes, and noodles.

Core consumer prices, which exclude vegetables, fruit, fish and energy, rose 3.07 percent in March after gaining a revised 2.62 percent in February.

Import prices increased 11.84 percent from a year earlier, while wholesale prices rose 7.15 percent.

Policy makers in Taipei increased the discount rate on 10- day loans to banks by 12.5 basis points on March 27 to 3.5 percent, the highest in almost seven years. Inflation may top a government target of 2 percent this year, the central bank said.

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WASHINGTON — If history is any guide, government efforts to combat recessions often come too late to do much good. Furthermore, such efforts can sow the seeds for the next downturn.

Efforts to head off or alleviate recessions with crash spending programs and tax rebates — classic anti-recessionary plays — often did not kick in until after the recession had ended.

"History shows very often these programs even go on for years and years after the recession is over," said economist Bruce Bartlett, who worked in the Reagan and elder Bush administrations.

Of the eight U.S. recessions in the six decades since the end of World War II, only once was the stimulus package passed before recession’s end, Bartlett found. That was legislation enacted in June 2001 — containing the first round of President George W. Bush’s tax cuts — to combat a recession that began in March 2001 and ended in November 2001.

In the seven other postwar recessions stimulus packages were either passed right as they were ending, or considerably later.

Part of the reason for the mismatches is because it often wasn’t known for months, even years, when a recession officially began and ended payday loan. Two straight quarterly contractions in the gross domestic product is the common definition. But the official determination — made by the National Bureau of Economic Research — takes longer and is based on a more complicated formula.

It’s too early to know the impact on the economy of the $168 billion stimulus package passed by Congress and signed by President Bush in January. Rebate checks of up to $1,200 per couple and more for families with dependent children will start arriving in mailboxes in May.

Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, cites an "unquenchable taste in Washington" to find quick fixes, one that is even more pronounced in an election year. "Congress and the administration want to be seen as doing something."

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Nearly two-thirds of the nation’s small- and mid-sized business owners don’t anticipate much of a boost to their bottom line from the government’s financial stimulus package, according to a survey released Thursday.

The PNC Economic Outlook found that 63% of business owners expect to see "little or no benefit" from the government’s tax rebate checks, which are coming in May.

Indivdual taxpayers who earn less than $75,000 annually will receive $600, while married couples, who together earn less than $150,000 and file jointly, will get $1,200. The stimulus package also includes a $300-per-child tax rebate.

The survey revealed heightened levels of pessimism about the economy among business owners, according to the PNC Financial Services Group (PNC, Fortune 500). Only 6% were optimistic about the economy over the next six months, and 19% said they expect to see profits shrink.

"The inherent optimism we have found among these business owners is absent in these new findings, reinforcing our view that the U.S. economy is falling into a short and shallow recession for the first half of this year," said Stuart Hoffman, chief economist for the PNC Financial Services Group.

Sentiment about the stimulus plan’s influence varied by region and industry. Business owners in the Midwest were the most skeptical - only 8% of them expect to see any benefits, according to the survey. Industrywide, wholesale and retail business owners were more optimistic about the plan than those in the manufacturing and service industries.

On the upside, 66% of business owners surveyed said they had no plans to change their employment levels over the next six months fast cash now. However, a full 10% of respondents expect to cut jobs. That’s the highest percentage since the survey began five years ago. A majority of business owners also expect to see higher prices from suppliers, and 43% those surveyed said they’re prepared to pass those extra costs on to customers by raising prices.

Furthermore, an increasing number of business owners are worried about the availability of credit, with nearly one out of five saying it is more difficult to get credit now, compared with just three months ago. Only one in seven said it was easier to get credit. Nearly half of those surveyed said they foresee housing prices to fall over the next six to 12 months, which could have a negative impact on business. Customers who have less valuable homes feel less wealthy and are less inclined to spend money, explained PNC chief economist Stewart Hoffman.

The survey, conducted every six months since 2003, polled 957 small- and midsized- business owners - 457 of which were in New Jersey, Pennsylvania and Maryland - between late January and late February. 

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The Federal Reserve would have the power to regulate virtually the entire banking and securities industry under proposals to be unveiled Monday by Treasury Secretary Henry Paulson, according to a summary of the proposals provided to CNN late Friday.

Paulson will introduce the proposals, designed to modernize the financial oversight structure, in a speech Monday, said Treasury Department spokeswoman Michele Davis.

While Davis said that the proposals have been in the works since June — two months before the current sub-prime mortgage crisis began affecting financial markets — it is a long-term restructuring project that is at least in part a response to criticism that the federal government has not been ahead of the current problems.

Some of the proposals — broadening the focus of a presidential working group on financial markets and tightening oversight on mortgage originators — are classified as short-term recommendations, while the department expects the rest to take some time to finalize.

Davis said the department does not expect to finish those longer term proposals before President Bush leaves office next year. Instead, she said, Paulson is trying to start the process of creating "a better regulatory framework so we’re in better shape next time" there’s a rough patch in economy.

The banking and financial industry regulation structure has been developed over decades, from the establishment of the national bank charter in 1863 to the creation of the Federal Reserve system in 1913 to recent changes made in response to other crises. Now, however the ever-expanding complexities of global markets have largely outgrown some of the structure’s component parts, creating weaknesses and redundancies.

Paulson will propose the Federal Reserve have authority to look at the financial status of any institution that could affect market stability; the Securities and Exchange Commission merge with the Commodity Futures Trading Commission; stock exchanges have more room for self-regulation; and bank supervision be consolidated into one regulator, according to Brookly McLaughlin, another department spokeswoman.

One of the most dramatic changes would extend the powers of the Federal Reserve — designed to regulate the commercial banking industry — to oversight of virtually the entire financial industry.

That change would make the Fed the first responder to a potential financial crisis payday loans in one hour. Currently, several agencies and commissions have oversight over various parts of the industry, but none has the broad authority.

The proposed change would help the oversight and regulatory system catch up with the events of the last two weeks, when the Federal Reserve intervened to facilitate the sale of failing brokerage Bear Stearns (BSC, Fortune 500) to JP Morgan Chase (JPM, Fortune 500).

Nearly all of the proposals will require the approval of Congress, where Democrats are already at work on their own proposals. Sen. Charles Schumer, D-New York, said that Democrats "agree with large parts" of Paulson’s plan but think the proposals should go further.

"Very complex financial instruments have evolved in recent years, like (collateral debt obligations) and credit default swaps, which pose potential problems in terms of systemic risk," he said. "The Treasury Department should address these issues as well."

Initial response from the financial industry was positive. Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association called Paulson’s proposals "a thoughtful and sweeping plan."

"Our present regulatory framework was born of Depression-era events and is not well suited for today’s environment where billions of dollars race across the globe with the click of a mouse," he said. "That fact, teamed with the current market conditions, result in an universal agreement that it is time to modernize and revitalize the current system."

- CNN’s Alan Chernoff, Ali Velshi, Ed Henry and Gene Bloch contributed to this report.  

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French liquor group Pernod Ricard SA outbid three other companies to buy Sweden’s state-owned Vin & Sprit, the maker of Absolut vodka, for $8.89 billion, the government said Monday.

The deal ends months of speculation over who would take over one of the world’s biggest vodka brands, which was put on the auction bloc as part of a sell-off of state-owned companies.

Managing Director Pierre Pringuet said the acquisition will fill a strategy gap for Pernod Ricard, which didn’t previously have any premium vodka brands in its portfolio.

"We wanted to bolster our presence in the U.S. and Absolut, with its 5 million cases will definitely do that," Pringuet told reporters in Stockholm, referring to Absolut’s yearly sales of 9-liter cases of vodka in the U.S.

"We intend to develop the brand and if possible accelerate its strengths," he said.

The government said it selected Pernod Ricard’s bid on Sunday over three other offers, by liquor groups Fortune Brands (FO, Fortune 500) and Bacardi Ltd. and an investment group controlled by Sweden’s Wallenberg family.

"Pernod Ricard submitted an offer that on an overall assessment is the most attractive," the government said in a statement. "Pernod Ricard will be an excellent home for V&S. The board of V&S has expressed that they see significant industrial logic in the transaction."

The government said the French company - owner of brands such as Chivas Regal whisky, Mumm champagne and Beefeater gin - intends to keep Vin & Sprit and Absolut vodka based in Sweden.

"There is no written contract about that but the value of the brand is because it is Swedish," Pernod Ricard Chairman Patrick Ricard said. "A Swedish brand must be produced in Sweden."

The government said the deal includes the whole company, except for Vin & Sprit’s 10% share in U.S paydayloan. spirits company Beam Global Spirits & Wine, which would be sold under a previous agreement with Beam shareholders.

The deal will be completed during the summer.

With its range of flavors from peach to blackcurrant, Absolut is the premium brand in Vin & Sprit’s product range. Its other brands include Cruzan rum, Plymouth gin, a handful of Scandinavian aquavits and bitters and hundreds of wines.

Absolut is believed to represent roughly half of the company’s sales of $1.48 billion in 2006.

Pernod Ricard said the deal would generate synergies, estimated at $197-$237 million annually before taxes, partly by integrating distribution networks.

"These synergies should be put into place in between two-four years after the finalization of this acquisition, depending on the timeline of distribution accords," the company said in a statement.

As a result of the deal, Pernod Ricard said it would end its distribution agreement with another vodka brand, Stolichnaya.

The French company said it will buy Vin & Sprit for $6.05 billion plus €1.45 billion and assume outstanding debt of €346 million, giving the deal an enterprise value of $8.89 billion, using Friday’s exchange rate.

The Swedish government, using an average exchange rate over the past 30 days, said the deal was worth $9.24 billion.

The government said last year it would sell Vin & Sprit as part of a broader sale of state assets in a move to pay off the country’s debt.

The state sellout also includes assets in banking group Nordea AB, telecom TeliaSonera AB, Nordic bourse operator OMX AB, real estate company Vasakronan AB and mortgage lender SBAB. 

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