Bank of America, Citigroup earnings disappoint investors

NEW YORK — Bank of America Corp.'s and Citigroup Inc.'s lackluster earnings led Wall Street to question how long it will take two of the country's biggest banks to emerge from the shadow of the financial crisis.

While BofA's fourth-quarter profit fell 63% and Citi's climbed 25%, both disappointed investors who are growing impatient with the firms' efforts to cleanse their books of problem mortgages and prune sagging businesses.

Both banks' bottom lines sank under the weight of settlements and steep legal expenses that only seem to keep mounting as state and federal officials seek payback for the housing meltdown that led up to the financial crisis.

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"Not only are the companies growing tired, but the investors are as well," said Todd Hagerman, a banking analyst at Sterne Agee.

"What is going to be the ultimate resolution?" Hagerman added. "They're obviously struggling to put the legacy mortgage [problem] behind them — it's been going on for four years now."

Investors dumped shares of the two banks, which were among the most actively traded Thursday. BofA's stock shed 50 cents, or 4%, to $11.28 a share; Citi's stock lost $1.24, or 3%, to $41.24.

The big banks' performance during the fourth quarter highlighted varying fortunes for the industry four years after the crisis.

Wells Fargo & Co. and JPMorgan Chase & Co. reported strong results, largely because of the boom in mortgages. Goldman Sachs Group Inc., the giant New York investment bank, also surprised analysts with strong fourth-quarter profit.

BofA's problems stem mainly from its disastrous 2008 acquisition of Countrywide Financial Corp. of Calabasas, which had become the largest U.S. home lender by aggressively writing subprime and other high-risk loans.

The takeover made BofA the country's No. 1 mortgage originator, with 22% of the market in 2009, according to trade publisher Inside Mortgage Finance. But after losing tens of billions of dollars on soured Countrywide loans, the bank retreated from the mortgage business and now has less than 5% of the market.

In the fourth quarter, BofA booked a $2.7-billion charge related to its recent settlement with Fannie Mae involving mortgages originated by Countrywide. The bank also had to swallow a $1.1-billion hit for its portion of a settlement reached last week among regulators and major banks over foreclosure abuses. The bank reported a further litigation expense of $900 million.

Net income was $732 million, or 3 cents a share, down from $2 billion, or 15 cents, a year earlier. Revenue fell 25% to about $19 billion on the bank's legal settlements, sale of mortgage-servicing rights and accounting adjustments.

Among its many retrenchments, Bank of America stopped participating in two big parts of the mortgage business — using independent brokers to generate loans and buying mortgages from smaller lenders. It's now focused on selling home loans through its own branches, mainly to customers it already has — a business BofA Chief Executive Brian Moynihan said was growing.

"Our retail mortgage production has increased by an average of 10% per quarter over the past three quarters," Moynihan told analysts. "The pipeline today remains as strong as it was at the end of the third quarter."

BofA cited improved results in its global markets operation, commercial lending and wealth management, the latter being mainly Merrill Lynch & Co., the brokerage it acquired in 2008.

At Citi, profit was dragged down in part by $1.3 billion in legal costs and related expenses. Of that, the bank said $305 million would go toward its share of the foreclosure settlement reached with regulators last week.

Executives declined to specify what accounted for the rest of those costs, but Chief Financial Officer John Gerspach said the Consumer Financial Protection Bureau has been "reviewing various consumer products" in the industry and is "currently reviewing us." He declined to elaborate.

Also dragging on earnings: Citi released less of its reserves set aside to cushion the bank against loan losses. Citi freed up $86 million of reserves in the quarter, significantly less than the $1.5 billion released during the same period in 2011. Banks release reserves as their borrowers' credit improves, making them less likely to default on their loans.

Citi earned $1.2 billion, or 38 cents a share, up from $956 million, or 31 cents, in the fourth quarter 2011. Excluding restructuring and other one-time accounting charges, Citi earned 69 cents a share in the fourth quarter — lower than what Wall Street analysts had estimated.

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JPMorgan, Goldman profits rise sharply

NEW YORK — Two major Wall Street banks reported a surge in profits during the last three months of 2012, but analysts cast doubt on whether that will continue this year.

JPMorgan Chase & Co., the country's largest bank by assets, posted $5.7 billion in earnings in the fourth quarter, a 53% increase from the same period a year ago. Investment banking giant Goldman Sachs Group Inc. reported earnings of $2.8 billion, nearly tripling its haul from the same period a year ago.

The results sailed past analyst projections, providing a window into Wall Street's profitability as the economy struggles to recover and as the industry grapples with new banking regulations.

"We're definitely coming out of the abyss," said Ken Leon, a banking analyst at S&P Capital IQ. But, he cautioned: "We are not anywhere near euphoria."

Investors sent both firms' shares higher Wednesday, during a week in which Citigroup, Bank of America and Morgan Stanley will also report earnings.

JPMorgan's profit was buoyed by growth tied to an improving housing market, investment banking and its own investments. The bank reported big jumps in mortgages — originations of $52 million, up 33%. Commercial loans grew 14% in the fourth quarter, to a record $128 billion.

The bank's profit also got a boost from reserves released because of borrowers' improving credit and the decreased likelihood they would default on their loans.

JPMorgan's earnings were weighed down by an approximately $700-million expense for its chunk of the so-called Independent Foreclosure Review settlement. The bank was one of 10 major financial companies that reached the $8.5-billion settlement — announced last week — with federal regulators to end their probe of alleged foreclosure abuses.

While the bank saw a 12% jump in profit overall last year thanks in large part to a decline in provisions for credit losses, revenue was essentially flat compared to 2011.

Despite JPMorgan's surge in profit, the bank's board punished Chairman and Chief Executive Jamie Dimon for management failures that led to the bank suffering about $6 billion in losses from risky derivatives bets made by a trader nicknamed the "London Whale."

JPMorgan's board of directors slashed Dimon's pay 50%, saying he "bears ultimate responsibility" for missteps by the bank's chief investment office. The losses were disclosed last May.

"This was one huge, embarrassing mistake," he said.

One of the highest-paid and most-respected figures on Wall Street, Dimon will take in $11.5 million in 2012 compensation, down from a $23-million pay package in 2011.

His 2012 salary remained flat at last year's $1.5 million, but his overall compensation includes $10 million in restricted stock units, down sharply from the previous year. Dimon said he respected the board's decision.

Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said the rare docking of a major bank chief's pay made an important symbolic statement that executives should be paid based on their performance.

"It's not going to change his lifestyle," Elson said of Dimon's pay cut, "but it certainly makes the point."

Looking ahead, Dimon expressed optimism about the economy.

"Consumers, businesses, housing and small businesses — they're all in pretty good shape," he said in a call with analysts.

But sustaining growth in mortgage origination could prove challenging this year, and low interest rates make traditional banking less profitable, analysts said.

"Traditional banking is not making nearly as much money," said Lance Roberts, who heads StreetTalk Advisors, an investment advisory firm. "There's a big disconnect between the profitability of the banks and Main Street America."

While Goldman's profit in investment banking and trading surged, the bank's results were lifted by its own private-equity investments and an 11% reduction in compensation, Goldman's biggest expense. Goldman has become a profit powerhouse and its employees are among the most highly compensated on Wall Street.

JPMorgan's stock added 47 cents, or 1%, to $46.82 in trading Wednesday. Goldman gained $5.50, or 4%, to $141.09 a share.

andrew.tangel@latimes.com

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NVIDIA’s ‘Project SHIELD’ Console Faces Three Challenges

Despite being announced at last week’s Consumer Electronics Show, NVIDIA’s Project SHIELD isn’t the first game-console-in-a-controller to be announced this year. That honor goes to the GameStick, an indie project being funded on Kickstarter. As relative newcomers to the gaming scene, GameStick‘s creators face an uphill battle for acceptance, from both potential buyers and game developers.

But despite NVIDIA‘s established position as a gaming hardware company, it may have a struggle ahead of it, too. Here are three problems which may hinder Project SHIELD‘s adoption.

The size

Unlike GameStick, which is sort of like a classic NES gamepad with a detachable memory stick that plugs into the TV, Project SHIELD is a completely self-contained console. It’s thick and bulky, enormous compared to any of today’s controllers, or even Nintendo’s 3DS XL game console. The closest thing it compares to is an original Xbox controller, before the redesign, but with a flip-up multitouch screen that’s five inches across and has 720p resolution.

You’re not going to be able to just toss Project SHIELD in your pocket, like a smartphone or iPod or very small tablet. It’ll be portable in roughly the same sense that an iPad or netbook is portable, in that you’ll need a handbag or carrying case to put it in. This puts it in a separate size category from most of its competitors, and makes it less convenient to carry around.

The cost

Project SHIELD’s Tegra 4 processor will let it play Tegra-enhanced HD Android games straight from the Google Play store, as well as stream PC games from gaming PCs running Steam and equipped with certain types of NVIDIA graphics cards. Besides that, it’s a full-fledged Android device running Jelly Bean.

But at what cost? Google’s $ 199 Nexus 7 tablet lacks a built-in game controller, doesn’t have a much bigger screen, and uses a less powerful Tegra 3 processor. Dedicated game consoles like the 3DS XL and PlayStation Vita are priced in the same ballpark as the Nexus 7. NVIDIA has yet to announce how much Project SHIELD will cost, or even when it will be on store shelves.

The Tegra-enhanced HD graphics

For many, this will be a plus. There are a lot of Tegra HD (or “THD”) games on the Google Play store right now which boast improved graphics over the versions that run on other graphics processors.

It complicates things for game developers, though, who have to write a separate version just for Tegra processors. Unlike normal ARM processors and Android itself, Tegra is owned solely by NVIDIA, which means there are a lot of tablets and smartphones out there which can’t run those versions of these games. It also means gamers may have to repurchase certain games for Project SHIELD, in order to get the enhanced versions.

Looking towards the future

Things aren’t all gloomy. So far, NVIDIA’s managed to keep developer interest in the Tegra platform, and has gotten a lot of people excited about Project SHIELD. Its partnership with Valve also puts it in position to take advantage of the excitement surrounding Big Picture mode, and the upcoming gaming PCs (like Piston) designed to work with it and connect to a television.

Finally, a wireless game controller can cost upward of $ 50 by itself, so seen in that light Project SHIELD may not turn out to be so expensive — assuming gamers buy Tegra HD titles and NVIDIA graphics cards to use it with.

Jared Spurbeck is an open-source software enthusiast, who uses an Android phone and an Ubuntu laptop PC. He has been writing about technology and electronics since 2008.

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Obama calls for research on media in gun violence

NEW YORK (AP) — Hollywood and the video game industry received scant attention Wednesday when President Barack Obama unveiled sweeping proposals for curbing gun violence in the wake of the Newtown, Conn., school shooting.

The White House pressed most forcefully for a reluctant Congress to pass universal background checks and bans on military-style assault weapons and high-capacity ammunition magazines like the ones used in the Sandy Hook Elementary massacre.

No connection was suggested between bloody entertainment fictions and real-life violence. Instead, the White House is calling on research on the effect of media and video games on gun violence.

Among the 23 executive measures signed Wednesday by Obama is a directive to the Centers for Disease Control and Prevention and scientific agencies to conduct research into the causes and prevention of gun violence. The order specifically cited "investigating the relationship between video games, media images and violence."

The measure meant that media would not be exempt from conversations about violence, but it also suggested the White House would not make Hollywood, television networks and video game makers a central part of the discussion. It's a relative footnote in the White House's broad, multi-point plan, and Obama did not mention violence in entertainment in his remarks Wednesday.

The White House plan did mention media, but suggested that any effort would be related to ratings systems or technology: "The entertainment and video game industries have a responsibility to give parents tools and choices about the movies and programs their children watch and the games their children play."

The administration is calling on Congress to provide $10 million for the CDC research.

The CDC has been barred by Congress to use funds to "advocate or promote gun control," but the White House order claims that "research on gun violence is not advocacy" and that providing information to Americans on the issue is "critical public health research."

Since 26 were killed by a gunman at Sandy Hook in December, some have called for changes in the entertainment industry, which regularly churns out first-person shooter video games, grisly primetime dramas and casually violent blockbusters.

The Motion Picture Association of America, the National Association of Broadcasters, National Cable & Telecommunications Association and the Independent Film & Television Alliance responded to Wednesday's proposal in a joint statement:

"We support the president's goal of reducing gun violence in this country. It is a complex problem, and as we have said, we stand ready to be a part of the conversation and welcome further academic examination and consideration on these issues as the president has proposed."

After the Newtown massacre, Wayne Pierre, vice-president of the National Rifle Association, attacked the entertainment industry, calling it "a callous, corrupt and corrupting shadow industry that sells and sows violence against its own people." He cited a number of video games and films, most of them many years old, like the movies "American Psycho" and "Natural Born Killers," and the video games "Mortal Kombat" and "Grand Theft Auto."

President Obama's adviser, David Axelrod, had tweeted that he's in favor of gun control, "but shouldn't we also question marketing murder as a game?"

Others have countered that the same video games and movies are played and watched around the world, but that the tragedies of gun violence are for other reasons endemic to the U.S.

The Entertainment Software Association, which represents video game publishers, referenced that argument Wednesday in a statement that embraced Obama's proposal.

"The same entertainment is enjoyed across all cultures and nations, but tragic levels of gun violence remain unique to our country," said the ESA. "Scientific research an international and domestic crime data point toward the same conclusion: Entertainment does not cause violent behavior in the real world."

Several R-rated films released after Newton have been swept into the debate. Arnold Schwarzenegger, the former California governor and action film star, recently told USA Today in discussing his new shoot-em-up film "The Last Stand": "It's entertainment. People know the difference."

Quentin Tarantino, whose new film "Django Unchained" is a cartoonish, bloody spaghetti western set in the slavery-era South, has often grown testy when questioned about movie violence and real-life violence. Speaking to NPR, Tarantino said it was disrespectful to the memory of the victims to talk about movies: "I don't think one has to do with the other."

In 2011, the Supreme Court rejected a California law banning the sale of violent video games to children. The decision claimed that video games, like other media, are protected by the First Amendment. In dissent, Justice Stephen G. Breyer claimed previous studies showed the link between violence and video games, concluding "the video games in question are particularly likely to harm children."

In the majority, Justice Antonin Scalia wrote that the government can't regulate depictions of violence, which he said were age-old, anyway: "Grimm's Fairy Tales, for example, are grim indeed."

___

AP Entertainment Writer Derrik J. Lang contributed to this report from Los Angeles

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Study Confirms Benefits of Flu Vaccine for Pregnant Women

While everyone is being urged to get the flu vaccine as soon as possible, some pregnant women avoid it in the belief that it may harm their babies. A large new study confirms that they should be much more afraid of the flu than the vaccine.

Norwegian researchers studied fetal death among 113,331 women pregnant during the H1N1 flu pandemic of 2009-2010. Some 54,065 women were unvaccinated, 31,912 were vaccinated during pregnancy, and 27,354 were vaccinated after delivery. The scientists then reviewed hospitalizations and doctor visits for the flu among the women.

The results were published on Thursday in The New England Journal of Medicine.

The flu vaccine was not associated with an increased risk for fetal death, the researchers found, and getting the shot during pregnancy reduced the risk of the mother getting the flu by about 70 percent. That was important, because fetuses whose mothers got the flu were much more likely to die.

Unvaccinated women had a 25 percent higher risk of fetal death during the pandemic than those who had had the shot. Among pregnant women with a clinical diagnosis of influenza, the risk of fetal death was nearly doubled. In all, there were 16 fetal deaths among the 2,278 women who were diagnosed with influenza during pregnancy.

Dr. Marian Knight, a professor at the perinatal epidemiology unit of the University of Oxford, who was not involved in the research, called it “a high-quality national study” that shows “there is no evidence of an increased risk of fetal death in women who have been immunized. Clinicians and women can be reassured about the safety of the vaccine in the second and third trimesters of pregnancy.”

The Norwegian health system records vaccinations of individuals and maintains linked registries to track effects and side effects. The lead author, Dr. Camilla Stoltenberg, director of the Norwegian Institute of Public Health, said that there are few countries with such complete records.

“This is a great study,” said Dr. Denise J. Jamieson, an obstetrician and a medical officer at the Centers for Disease Control and Prevention, who was not involved in the work. “It’s nicely done, with good data, and it’s additional information about the importance of the flu vaccine for pregnant women. It shows that it’s effective and might reduce the risk for fetal death.”

In Norway, the vaccine is recommended only in the second and third trimesters, so the study includes little data on vaccination in the first trimester. The C.D.C. recommends the vaccine for all pregnant women, regardless of trimester.

“We knew from other studies that the vaccine protects the woman and the newborn,” Dr. Stoltenberg said. “This study clearly indicates that it protects fetuses as well. I seriously suggest that pregnant women get vaccinated during every flu season.”

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Container traffic at L.A., Long Beach ports up slightly in 2012

The ports of Los Angeles and Long Beach, which together make up one of Southern California's most important job engines, held their own against spirited competition from smaller harbors in 2012.

The two ports handled slightly more cargo than they moved in 2011 despite an eight-day strike that shut down most of the Los Angeles port and half of the cargo terminals in neighboring Long Beach.

The two ports also dodged a potential blow to their reputations for reliability that could have haunted them well into this year and beyond because of that strike, trade experts said.

"In 2012, we had a hurricane shut down the nation's third-busiest port, New York-New Jersey, and shippers have been worried about strikes affecting many other ports," said Paul Bingham, economics practice leader at consulting firm CDM Smith Inc. "That means Los Angeles and Long Beach don't stand out as being unusual."

The nation's big retail chains, manufacturers, shoe and apparel companies, farmers and others are still worried about the state of ongoing labor negotiations affecting 14 Eastern and Gulf Coast ports and the possibility of a potentially crippling strike.

The International Longshoremen's Assn. and the United States Maritime Alliance Ltd., a group of shipping lines, cargo terminal operators and port associations, have been negotiating on a new six-year contract since March. A Feb. 6 deadline looms, which represents the end of the latest contract extension.

International trade grew slightly in 2012, with the 10 biggest U.S. ports handling 34.2 million cargo containers, or about 800,000 more than they did in 2011, an increase of 2.4%. Some ports posted strong gains, including Savannah, the nation's fourth-largest port, which rose an estimated 9%; Hampton Roads, Va., No. 7, up an estimated 10.4% and Tacoma, Wash., No. 9, up an estimated 12.7%.

Overall, Los Angeles and Long Beach captured a 40.9% share of the volume of container cargo moving through the nation's 10 biggest ports in 2012, down slightly from the 41.9% share they held in 2011.

Experts anticipate that 2013 will bring overall slow gains in trade.

"In the past 12 months there have been strikes at the ports, hurricanes and shifts in manufacturing," said Paul Rasmussen, chief executive of Zepol Corp., which tracks trade data. "Not to mention that in a post-recession economy, U.S. companies are running their businesses much more conservatively."

"It's no wonder that 2012 imports were less than dramatic and certainly not back to the massive consumption seen in 2007," Rasmussen said.

Los Angeles and Long Beach together moved 14.1 million containers in 2012, slightly more than they did in 2011, but there were positive signs for both ports. That is good news for the Southern California economy because the two ports are directly responsible for about 595,000 jobs in Southern California and indirectly support an additional 648,500 jobs, said John Husing, principle of Redlands firm Economics & Politics Inc.

For Los Angeles, which handled 8.12 million containers, it was the best post-recession year to date and its third-busiest ever. That was in spite of the fact that its December cargo numbers were down 9.4% compared with the same month in 2011.

It was only the third time in the port's 105-year history that dockworkers handled more than 8 million containers in a year. Those containers carried imports, mostly from Asia, as well as U.S. exports headed overseas and empties that were also headed back across the Pacific.

The mark was reached despite an eight-day strike in late November and early December by the International Longshore and Warehouse Union Local 63 Office Clerical Unit that shut down seven of the port's eight cargo terminals.

"We're pleased with 2012, but as we look forward to the next 12 months we don't see significant growth in global trade," said Geraldine Knatz, executive director of the port.

The port last topped 8 million containers in 2007, when it handled 8.4 million containers. The port's record is 8.5 million containers, reached in 2006.

Los Angeles is the only U.S. port to top 8 million containers in a year and is the 16th-busiest port worldwide.

The neighboring Port of Long Beach sustained steep declines over much of 2012 but had its strongest showing in the latter stages. It was helped in part by a shift of some business from the Port of Los Angeles by French shipping giant CMA CGM Group.

Long Beach surpassed 6 million containers in 2012, and officials there were heartened by the strong late-year numbers.

"December was the port's best month for imports ever," said Art Wong, spokesman for the Port of Long Beach. "We're pretty happy about that."

ron.white@latimes.com

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San Diego Zoo, Audubon pair up to help save animals

SAN DIEGO — Two organizations known for their work in saving imperiled species agreed Tuesday to build a breeding center that will bring some of the world's most exotic and endangered birds and hoofed mammals to a 1,000-acre site near the Mississippi River.

The new facility will include open-air enclosures for animals of more than two dozen species, including whooping cranes, okapis, bongos (a type of antelope), storks, flamingos, Masai giraffes, oryx and other creatures, under the agreement signed by the San Diego Zoo Global and New Orleans-based Audubon Nature Institute.

"They have the land and we have the majority of the species that need assistance," said Robert Wiese, chief life sciences officer for San Diego Zoo Global, which manages field programs in 35 countries.

The partnership is based on the realization that animals breed better when they have room to roam. Even at the San Diego Zoo's ample Safari Park, space has become pinched.

The new facility, south of New Orleans, is to be named the Alliance for Sustainable Wildlife.

Many of the species are imperiled by loss of habitat in their native Africa, officials said.

For example, the okapi, an unusual animal that looks a zebra but is related to the giraffe, is threatened by the volatile politics of Central Africa and the continued loss of dense rain forest habitat. The brightly colored bongo, among the largest of the African antelope species, is threatened by poaching and habitat loss in Central and West Africa.

"We want to retain a large population in case the worst happens in Africa," Wiese said.

Jim Maddy, president and chief executive of the Assn. of Zoos and Aquariums, said the partnership "demonstrates the creativity and resourcefulness of these two great organizations."

The Audubon Nature Institute, which operates museums and parks in the New Orleans area, owns the property, which already includes a research facility and a breeding center for cranes.

Construction at the center is set to begin this fall; the breeding program is expected to get underway next year. The San Diego Zoo will transfer some of its animals to the site. There are no plans in the first years to permit public access.

Douglas Myers, president of San Diego Zoo Global, said the two organizations hope the alliance "will be a model for collaborative efforts in the future."

The 1,000-acre site has sufficient elevation and drainage to withstand flooding from storms that sweep in from the Gulf of Mexico, officials said. The site, once owned by the Coast Guard, suffered only slight damage from Hurricane Katrina in 2005.

Still, "there is no totally safe, risk-free place," Wiese said.

tony.perry@latimes.com

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Why the Atlantic removed the Scientology advertorial

LOS ANGELES (TheWrap.com) – The Atlantic apologized on Tuesday for posting a sponsored advertorial from the Church of Scientology, celebrating its leader David Miscavige.

The sponsored post, which went live Monday at 9:25 a.m. PT, touted 2012 as “milestone year” for the secretive church, which has been steeped in controversy throughout the years.

It was taken down about 8:30 p.m. and replaced by a message saying the magazine had “temporarily suspended this advertising campaign pending a review of our policies that govern sponsor content and subsequent comment threads.”

“We screwed up,” Natalie Raabe, an Atlantic spokeswoman told TheWrap after the firestorm of criticism and mockery the advertisement generated on the web. “It shouldn’t have taken a wave of constructive criticism – but it has – to alert us that we’ve made a mistake, possibly several mistakes.”

The Atlantic issued the following statement:

We screwed up. It shouldn’t have taken a wave of constructive criticism – but it has – to alert us that we’ve made a mistake, possibly several mistakes. We now realize that as we explored new forms of digital advertising, we failed to update the policies that must govern the decisions we make along the way. It’s safe to say that we are thinking a lot more about these policies after running this ad than we did beforehand. In the meantime, we have decided to withdraw the ad until we figure all of this out. We remain committed to and enthusiastic about innovation in digital advertising, but acknowledge – sheepishly – that we got ahead of ourselves. We are sorry, and we’re working very hard to put things right.

The timing of the ad was no surprise. New Yorker writer Lawrence Wright’s book-length exposé on Scientology – based on his 2011 profile of former Scientologist Paul Haggis – is due out Thursday.

Sponsored content, otherwise known as native ads or advertorials, have become a popular source of revenue for online publications, including Forbes and Business Insider.

But, normally, advertisers do not want comment threads under their paid-for content, and while this has never been a problem for previous Atlantic clients, the heated feelings surrounding Scientology erupted in the comment section below the article.

The Atlantic’s marketing team was moderating the comments – about 20 in all before the post was pulled – as they were posted, Raabe said.

“In this case, where a mistake was made, where we are taking a hard look at these things, is there were comments allowed on this post,” an Atlantic official with knowledge of the situation told TheWrap. “For a subject like this where people very strong feelings, we realized there’s not a clear policy in place for things like commenting.”

The Church of Scientology told TheWrap no one was available to speak on the controversy, and its media relations team did not immediately respond to an email requesting comment.

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Oxygen halts controversial 'Babies' Mamas' project

NEW YORK (AP) — Oxygen Media has pulled the plug on "All My Babies' Mamas," a reality special the network was developing about a musician who has fathered 11 children with 10 different mothers.

The network offered no reason for curtailing the project. In a statement issued Tuesday, Oxygen said that, "as part of our development process, we have reviewed casting and decided not to move forward with the special."

The one-hour program would have featured Atlanta rap artist Shawty Lo, his children and their mothers. It was expected to air later this year on Oxygen, an NBCUniversal cable network owned by Comcast.

"All My Babies' Mamas" got a hostile public reception after Oxygen announced it last month. At least one petition calling for Oxygen to shut it down has collected more than 37,000 signatures.

The Parents Television Council called the program's concept "grotesquely irresponsible and exploitive" and pledged to contact advertisers of the show if it reached the air.

Previously, Oxygen denied charges that the show was meant to be "a stereotypical representation of everyday life for any one demographic or cross section of society," but rather would reveal "the complicated lives of one man, his children's mamas and their army of children."

On Tuesday, Oxygen said it will "continue to develop compelling content that resonates with our young female viewers and drives the cultural conversation."

___

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Fitch warns that debt-limit delay could hurt U.S. credit rating

WASHINGTON — As Congress again veers close to the nation's debt limit, a leading credit rating company is delivering a stark warning: Don't wait until the last minute.

Fitch Ratings said Tuesday that the U.S. could lose its AAA credit rating if lawmakers don't raise the $16.4-trillion debt limit in a "timely manner" as a possible default looms as early as mid-February.

Congressional Republicans want major government spending cuts in exchange for another debt-limit increase. But Fitch, one of three major credit-rating companies, said the debt limit should not be used as leverage.

"In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline," the company said.

For that reason, a group of House Democrats on Wednesday plan to announce legislation to eliminate the debt limit. They said Republicans are exploiting it and risking another financial crisis.

QUIZ: Test your knowledge about the debt limit

"In the old days, which weren't that long ago, both parties grandstanded on the debt ceiling," Rep. Peter Welch (D-Vt.) said. "But grandstanding is one thing. Defaulting is another, and they're prepared to do it."

Congress has increased the debt limit 76 times since 1962. But in recent years, as the budget deficit has soared, clashes over the limit have become more contentious.

Standard & Poor's downgraded the nation's AAA rating in 2011 after the last debt-limit battle. Fitch and the other major firm, Moody's Investors Service, did not. But they have given the U.S. rating a negative outlook, a prelude to a downgrade.

Fitch said Tuesday that it wasn't calling for elimination of the debt limit, just raising concerns about how it is being used.

"Fitch is not advocating any particular policy, but we are making the point that regular episodes of running up against the debt ceiling generates considerable uncertainty and undermines confidence in the predictability and reliability of the federal government as a borrower," said David Riley, Fitch's managing director for sovereign and supranational ratings.

A repeat of the 2011 brinkmanship would trigger a formal review of the U.S. credit rating because it would raise doubts about the ability of policymakers to agree on ways to reduce the budget deficit, Fitch said.

But the firm also noted that failure by Congress and the White House to agree on a plan to reduce the deficit could lead to a credit-rating downgrade later this year "even if another debt-ceiling crisis is averted."

House Majority Leader Eric Cantor (R-Va.) seized on that second point and criticized President Obama for saying he would not negotiate budget cuts with Congress in exchange for a debt-limit increase.

"It's time for President Obama to stop putting our credit rating at risk and acknowledge we need a credible deficit reduction plan attached to any increase in the debt limit," Cantor said. "It's time to come together, get to work and solve the problem."

Obama said Monday that borrowing under the debt limit pays only for spending already authorized by Congress and that lawmakers were responsible for raising the limit or risking an economically devastating default.

The U.S. technically reached the debt limit on Dec. 31. But the Treasury Department has been using what it calls "extraordinary measures" to juggle the nation's finances and buy some more time.

Treasury Secretary Timothy F. Geithner informed congressional leaders Monday that those measures would be exhausted as early as mid-February, though they could give lawmakers until mid-March. Geithner said it was difficult to be more precise because the flow of money in and out of the Treasury is more volatile during tax season.

On Tuesday, Geithner wrote to congressional leaders to say that the Treasury had initiated another of those measures, suspending daily reinvestment of a federal employees' pension plan. Treasury has said the move — essentially borrowing from the plan — would free up about $156 billion.

Once the debt limit is increased, the plan would be reimbursed, Geithner said.

jim.puzzanghera@latimes.com

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