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The International Monetary Fund cleared its chief, Dominique Strauss-Kahn, of any wrongdoing in connection with his relationship with a female employee while faulting him for a “serious error of judgment.''

An investigation by the fund's board “concluded that there was no harassment, favoritism, or any other abuse of authority,'' a statement by the Washington-based agency said yesterday. “Nevertheless, the Executive Board noted that the incident was regrettable and reflected a serious error of judgment on the part of the managing director.''

Strauss-Kahn, in a separate statement, said: “I very much regret the incident and I accept responsibility for it.'' The 59-year-old former French finance minister, who took the helm of the lending agency in November 2007, said he accepted the board's findings and repeated an apology to his staff and his family.

The report said “this matter is now closed,'' lifting a cloud that threatened to distract Strauss-Kahn just as the IMF steps up lending to countries swamped by the global financial crisis. The fund today agreed to lend Ukraine $16.5 billion, and it's in talks for as much as $10 billion in support for Pakistan. Iceland got $2.1 billion last week.

“Our conclusion was that this will in no way effect the effectiveness of the managing director in the very challenging period ahead,'' Shakour Shaalan, senior member of the 24-person board, told reporters in a conference call yesterday. He described Strauss-Kahn as “very competent'' and said that the board had “accepted his apology.''

Focus of Inquiry

The IMF investigation focused on Strauss-Kahn's relationship with Piroska Nagy, wife of former Argentine central bank President Mario Blejer, according to a fund director who spoke earlier on condition of anonymity internet payday loan.

The report said Strauss-Kahn made “initial contact'' with a female staff member, who wasn't identified, concerning “legitimate IMF business.'' There followed “a two-week-long exchange of consensual and very personal messages.'' In early January the two engaged in a “consensual physical relationship of short duration.''

Nagy, who worked in the IMF's Africa department, left the agency in August, according to her lawyer, Robert Litt. He said on Oct. 18 that Nagy hadn't alleged any misconduct by Strauss- Kahn, and that she resigned voluntarily in response to a severance offer available to all staff.

The IMF report said Strauss-Kahn “played no role in her subsequent employment'' at the European Bank for Reconstruction and Development in London.

Wolfowitz Resignation

The investigation follows last year's resignation of World Bank President Paul Wolfowitz following an uproar over Wolfowitz's decision to secure a pay increase for his companion. Both Washington-based institutions were created in 1944 as the post-World War II economic order was being planned, and now have 185 member nations.

Strauss-Kahn has won praise for overhauling the fund's voting structure to give more say to emerging nations and for cutting costs. Last December, he announced plans to cut staff by as much as 15 percent, or almost 400 people, to stem losses as the fund's loan-book dried up.

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Lend Lease Communities LLC of Denver said Friday that it may quit as developer of the proposed Lowry Range mixed-use real estate development east of Aurora by the end of this year, if it can’t find a sustainable water source for the project at a “reasonable cost,” Lend Lease said on Friday.

The developer submitted a letter to the Colorado State Land Board on Friday, saying it intends to terminate its development agreement on Dec. 31 of this year.

“We have determined that various, essential pre-development conditions set forth in the development management services agreement dated June 22, 2007, are seemingly unlikely to be met by the end of the year,” the letter said.

Lend Lease contends that so far, it has been unable to get an adequate water supply or adequate wastewater treatment facilities at “a commercially reasonable cost” for the project from the Rangeview Metropolitan District and Pure Cycle Corp. (NASDAQ: PYCO) of Thornton. That circumstance has impeded the developer’s ability to look at alternative sources of sustainable water, Lend Lease said.

Pure Cycle owns water rights representing millions of gallons a year of surface and underground water.

But Lend Lease still hopes to find sources of sustainable water, according to the company.

“We have consistently and publicly maintained that our vision for the Lowry Range project includes a sustainable water supply that could consist of an appropriate balance between renewable and nonrenewable sources, and provides adequate wastewater treatment facilities,” the Lend Lease letter said freecreditreport.

Lowry Range, the former bombing range for the now-defunct Lowry Air Force Base, is located at Interstate 70 and E-470 in unincorporated Arapahoe County. Lend Lease hoped to break ground in 2009 on the project at the site, which would have taken roughly 20 years to complete. Lend Lease Communities, through its Lend Lease Lowry Range LLC subsidiary, planned to develop 3,870 acres of the total, 26,000-acre range for residential and commercial use. Its project was to include 13,000 homes as well as retail space, schools, parks and open space.

In preparation for its work at the Lowry Range development, Pure Cycle was to build a $400 million pipeline from the Arkansas River Valley to the Denver area to transport as much as 40,000 acre-feet of water a year. The company also planned to build as many as four reservoirs at the Lowry Range site.

Lend Lease Communities is part of one of Australia’s largest real estate companies, Lend Lease Corp. Ltd.

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Foreclosures in Maryland, Virginia, and Washington, D.C., surged in the third quarter.

But foreclosures around Greater Baltimore, however, declined.

Foreclosures in D.C. more than quadrupled to 1,330 compared to the third quarter 2007. Virginia foreclosures nearly tripled to 16,023. Maryland had the smallest increase, up 22 percent to 7,974 foreclosures. That compares to a national increase of 71 percent to a record 765,558 foreclosures, according to Irvine, Calif cash advance today.-based RealtyTrac Inc.

The Baltimore area ranked 84 out of the top 100 cities for foreclosures in the third quarter with a total of 2,723, down nearly 6 percent from the year ago quarter.

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Lockheed Martin Corp. has announced that its third quarter profits increased 2 percent over last year, but its sales during the period declined 5 percent.

The Bethesda, Md.-based defense contractor (NYSE: LMT) reported net earnings of $782 million or $1.92 per diluted share during the third quarter, compared to $766 million or $1.80 per share last year.

The latest quarter’s earnings were helped by a $44 million, one-time deferred gain from a 2006 sale of a stake in a company. For the year, earnings are up 7 percent to $2.4 billion.

However, the company also reported that net sales were down to $10 faxless payday advances.57 billion, a 5 percent drop from the nearly $11.1 billion recorded in the third quarter of 2007. Sales for the year are up 2 percent to $31.6 billion.

Nonetheless, the company is forecasting slower growth in profits next year because of anticipated weakness in U.S. military spending.

Lockheed Martin employs more than 5,000 people in Central Florida.

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Malaysia's government plans to make it easier for foreigners to invest in the country and buy property as it predicts the global financial crisis will lead to slower-than-expected economic growth next year.

“We have to make Malaysia more competitive,'' Finance Minister Najib Razak said in Kuala Lumpur today. “We have to take steps to ensure our long-term competitiveness while we manage the short-term crisis.''

Slowing growth from the U.S. to China has increased concern the world will fall into a recession, hurting prospects for Asia's export-dependent nations. Malaysia, which relies on exports as the biggest contributor to economic expansion, joins Australia, South Korea, China and the U.K. in trying to soften the economic slowdown.

Malaysia will double the size of state-run asset manager Valuecap Sdn. to 10 billion ringgit ($2.8 billion) to help support the stock market, said Najib, announcing his first series of measures since taking over the finance role from Prime Minister Abdullah Ahmad Badawi last month. There will be a package of initiatives to “liberalize'' the services industry, he said.

“It is a good starting move, but the impact would not be translated into a positive boost to the economy very soon,'' Enrico Tanuwidjaja, an economist at Oversea-Chinese Banking Corp. in Singapore, said in an interview with Bloomberg television today. “In the current market, which is relatively subdued, these moves will only have an implication in the next two to three years.''

Stocks Pare Drop

Malaysia's benchmark stock index pared declines of as much as 1 pay day advance.9 percent, falling 0.1 percent to 903.96 at the 12:30 p.m. midday break in trading in Kuala Lumpur.

Valuecap was formed in 2003 to bolster government-linked shares after the country's stock market failed to recover from the 1998 Asian financial crisis.

Malaysia will cut its 2009 economic-growth forecast on Nov. 4, from the current estimate of 5.4 percent, Najib said. Still, “Malaysia is not in a crisis and we will not go into a recession,'' he said in Putrajaya in a separate speech today.

The country will review its foreign-investment guidelines and ease rules on some purchases of industrial land and properties, he said.

The government may have to do “some tweaking'' of its budget-deficit targets, he said, without elaborating. The finance ministry in August forecast the budget shortfall would widen to 4.8 percent of gross domestic product this year before easing to 3.6 percent in 2009.

Southeast Asia's third-largest economy may expand as little as 4 percent in 2009, central bank Governor Zeti Akhtar Aziz forecast last week, saying Bank Negara Malaysia is ready to shift its focus to boosting growth as inflation worries ease. Economic expansion this year will probably fall below the government's official forecast of 5.7 percent, she said.

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Revenue at the six local casinos dropped 3.6 percent in September compared to a year ago, according to new figures from the Missouri Gaming Commission and Illinois Gaming Board.

Gamblers, more concerned about cutting back discretionary spending amid a troubled economy, spent $80.3 million in September, down 3.6 percent from $83.3 million in September 2007.

President Casino also suffered revenue losses when it had to close Sept. 16-21 due to flooding.

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The British government is to give more details about its 400 billion pound banking rescue plan next week, Finance Minister Alistair Darling said on Saturday.

“What we are doing over the weekend is looking at the specifics, how do we implement it, and we will be making an announcement at the beginning of the week,” he told BBC television in Washington where he has been attending a G7 finance ministers’ meeting.

Last Wednesday’s financial bail out, which followed a dramatic fall in the value of banking shares on the London stock exchange on Tuesday, was targeted at stabilizing banks and getting them lending again.

The package of measures also included a 50 billion pound cash injection, guaranteeing interbank lending by 250 billion pounds to help unfreeze wholesale markets and extending a Bank of England scheme that swaps banks’ risky assets for government debt to provide 200 billion pounds of cash to the system.

Darling, writing in the News of the World newspaper this weekend, said his “extraordinary steps” were necessary to help stave off lower growth, lower living standards and fewer jobs across the country.

“I did not step in because I wanted to prop up failing banks,” he wrote.

“If the banks stopped lending to people and to businesses that would have serious repercussions for our economy and every one of us.”

WASHINGTON MEETING 

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World financial officials should orchestrate rapid interest-rate cuts of at least 1.5 percentage points to help avert a depression, said Nouriel Roubini, the professor who two years ago predicted the financial crisis.

Other steps need to include a temporary guarantee of all bank deposits, unlimited liquidity for solvent financial institutions and fiscal-stimulus measures, Roubini said in a commentary e-mailed to Roubini Global Economics subscribers.

“It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging-market economies to avoid this economic and financial disaster,'' the New York University professor of economics said. From late 2006, Roubini highlighted the dangers flowing from a likely U.S. housing crisis.

The economist urges immediate action as officials from the International Monetary Fund, World Bank and Group of Seven nations meet in Washington this weekend. Stocks tumbled around the world today as the year-long credit crisis deepened, sending Japan's Nikkei 225 Stock Average to its worst weekly drop in history.

In the U.S., the Dow Jones Industrial Average fell below 9,000 for the first time since 2003 yesterday. More than $4 trillion has been erased from global equities this week.

“At this stage the risk of an imminent stock-market crash — like the one-day collapse of 20 percent plus in U.S. stock prices in 1987 cannot be ruled out,'' said Roubini. “The financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and investors have totally lost faith in the ability of policy authorities to control the meltdown.''

Emergency Rate Cuts

In a coordinated emergency move on Oct faxless payday loan guaranteed. 8, the Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank cut their benchmark rates by half a percentage point. Switzerland also took part and China announced a cut at the same time.

Roubini suggests “another rapid round of policy rate cuts of the order of at least 150 basis points on average globally.''

Officials are trying a range of approaches. U.S. Treasury Secretary Henry Paulson plans to buy stakes in banks, U.K. Chancellor Alistair Darling wants guarantees for their lending and German Finance Minister Peer Steinbrueck is pushing for greater regulation.

One of Roubini's proposals is an agreement between countries with current-account deficits and those with surpluses to maintain orderly financing of deficits and “avoid a disorderly adjustment of such imbalances.''

Bursting Bubbles

The world is experiencing the simultaneous bursting of housing, equity, bond, credit, commodity, hedge-fund and private-equity bubbles, the economist said, and even better- performing economies such as Brazil, Russia, India and China are at risk of “a hard landing.''

The threat of a global financial meltdown means a decade- long “L-shaped'' recession — like Japan's after its real estate and equity bubbles burst — cannot be ruled out, Roubini said.

As demand falls, the next challenge may be deflation as the world faces a glut of excess capacity and goods, he said.

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Europe's economy contracted in the second quarter as company investment and consumer spending declined, putting the region on the brink of a recession. Gross domestic product fell 0.2 percent from the previous quarter, the European Union statistics office in Luxembourg said today, confirming a Sept. 3 estimate. Corporate investment dropped 1 percent and household spending declined 0.2 percent.

The outlook for the European economy has continued to deteriorate in the current quarter, with manufacturing and services contracting and confidence dropping to a seven-year low. Coupled with the worsening credit squeeze, which has prompted rescues for banks in countries including the U.K., Spain, Belgium and Germany, economists say the European Central Bank may now cut interest rates as soon as next month.

“Since the end of quarter, we've had a lot of data and all the surveys indicate the third quarter was poor,'' said Gareth Claase, an economist at Royal Bank of Scotland Plc in London. “And now the outlook looks even worse and there is no reason to be optimistic.''

Europe's manufacturing and services industries contracted for a fourth month in September and confidence in the economic outlook fell to the lowest since the wake of the Sept. 11 terrorist attacks. General Motors Corp.'s European unit plans to reduce production by about 40,000 vehicles by the end of the year, the company said yesterday. Renault SA, France's second- largest automaker, is planning to cut around 4,000 jobs.

Lending Rate

While the ECB left its key lending rate unchanged on Oct. 2, President Jean-Claude Trichet said that inflation risks have diminished and that the Governing Council discussed lowering borrowing costs at its meeting as the credit crunch hampers economic growth. RBS, JPMorgan Chase & Co., Barclays Capital, BNP Paribas SA, Bank of America Corp. and Societe Generale all revised their rate-cut forecasts after the comments (pay day loan).

RBS economists said in a note today that the ECB may cut the benchmark rate by half a percentage point from the current level of 4.25 percent before its next policy meeting on Nov. 6.

“The situation in credit markets has continued to deteriorate despite relentless efforts by authorities globally to inject liquidity and propose innovative measures to kick- start lending,'' the economists said.

The U.K. government said today it will invest about 50 billion pounds ($87 billion) to prevent a collapse of the British banking system. Spain will spend as much as 50 billion euros to buy bank assets. The moves follow rescues of Amsterdam- and Brussels-based Fortis, Dexia SA, which is based in Brussels and Paris, and Hypo Real Estate Holding AG of Germany.

U.K. Plan

European stocks tumbled today as the U.K. plan failed to revive confidence in the financial system. The Dow Jones Stoxx 600 Index declined 5 percent as of 10:50 a.m. in London. Government bonds soared, with the yield on the two-year note dropping 18 basis points to 2.99 percent.

The quarterly contraction in the euro-area economy is the first since the introduction of the euro almost a decade ago. From a year earlier, the economy expanded by 1.4 percent.

The decline in company investment was less than the 1.2 percent drop initially estimated. Construction fell 1.8 percent, less than the 2.2 percent estimate. Construction surged 2.6 percent in the first quarter, when mild weather prompted companies to bring forward building projects.

Exports fell 0.2 percent, also less than estimated, while imports declined by 0.5 percent, compared with 0.4 percent reported on Sept. 3.

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Bellatore Financial Inc. Monday said it has agreed to acquire San Francisco-based Advisor Partners LLC as a wholly-owned subsidiary and completed a financial agreement to acquire Colorado-based Capital Allocation & Management.

Advisor Partners offers portfolio solutions, including customized core equity portfolios with the added benefit of tax management. It reports $350 million in assets under management and relationships with more than 40 financial advisory firms across the country.

Advisor Partners is slated to operate as a distinct and autonomous business unit with all members of the investment team remaining in their current capacities (cash loan). Advisor Partners Chairman Andrew Rudd was named to the firm’s investment committee.

Capital Allocation provides professional investment management and consulting services to independent financial advisors through a suite of investment programs, management services, market analysis and marketing services. The outfit will operate as a wholly-owned Bellatore subsidiary. Key members of Capital Allocations management will maintain leadership roles throughout the transition.

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