Senior Chinese officials repeatedly sidestepped major issues roiling the global economy. Asked about the Chinese currency - which Washington wants to see rise in value to right trade imbalances - the central bank governor said now was not the time to discuss it. When it comes to regulating the risky Wall Street practices that contributed to the global economic meltdown, Chinas chief banking regulator sheathed his former critiques and instead called for teamwork and more financial prudence.

“I dont want to poke my nose into other peoples courtyards,” banking regulator Liu Mingkang said Sunday at the Boao Forum for Asia, a government-sponsored annual gathering for the political and economic elite on tropical Hainan island.

The meeting featured the now usual Chinese calls against trade protectionism in the West, including one from Chinas vice president and presumptive next leader, Xi Jinping.

But the tenor was a far cry from last years Boao meeting, held at the depths of the economic crisis. Then, Liu and others directed barbs at the U.S., calling for a new financial world order and indirectly threatening that China might stop buying U.S. Treasury notes that help finance Washingtons growing deficit. The elbowing continued for much of the year as Beijing resisted U.S. and European calls to halt North Koreas and Irans nuclear programs and take bolder steps to curb the threat of climate change.

While the turnaround in Beijings attitude may be temporary, the change points to indecision among the leadership about Chinas role in the world, especially its crucial but fraught ties with the U.S., and about keeping the Chinese economy humming amid a still anemic global recovery.

“We are in a time of reassessment by Beijing about Chinas foreign policy,” said Russell Leigh Moses, a Beijing-based political analyst. “There is no overarching slogan or concept guiding the decision-making process in foreign affairs these days here.”

Though Washington likely welcomes the toned-down rhetoric, Chinas overall reticence befuddles the U.S. and others looking to Beijing to provide constructive leadership. The countrys economy, after all, will soon be the second largest and is increasingly entwined in the world order.

Though China warded off the worst of the economic turmoil, it now feels the aftereffects of its remedies, $1.8 trillion in bank lending and government stimulus.

With the economy awash in money, housing prices are soaring and inflation is rising. The domestic demand created by supercharged investment may flag as the stimulus eases, leaving China still partly in need of export markets in the U.S. and Europe. The Chinese currency - which the government pegged to the U.S. dollar at the start of the crisis - has been attacked by the U.S., Europe and other trading partners as undervalued, thereby allowing China to flood the world with cheap exports.

Worries are growing, too, that some of the bank loans may sour. Liu, the banking regulator, announced an aggressive plan Sunday to assess the safety of loans to local government-backed investment companies.

Those problems loom as Chinese President Hu arrives in Washington on Monday to attend a summit on nuclear safety. Its an issue Beijing dislikes being out front on. With a nuclear arsenal estimated at about 100 warheads, China says the U.S. and Russia should lead on disarmament, given their huge stockpiles. Beijing has also been reluctant to push ally and neighbor North Korea or trade partner Iran, a willing supplier of oil and gas to China.

At the Boao meeting, senior Chinese officials parried calls from Geithners predecessor, Henry Paulson, among others to mount a higher-profile, energetic response to global problems. Central bank governor Zhou Xiaoquan said Beijing still followed three-decade-old policy guidance “to keep a low profile” on foreign affairs.

“The Chinese voices may become higher and higher,” Zhou said. “But we respect the global players from other countries.”

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The bank has changed its financial year to coincide with the calendar year, as other Irish banks do, and did not detail comparisons for the final nine months of 2008.

During the fiscal year ending March 31, 2009, Bank of Ireland made a profit of euro18 million, with impairment charges amounting to euro1.44 billion.

Irish Finance Minister Brian Lenihan announced Tuesday that the states “bad bank” - the National Asset Management Agency - would take on euro1.93 billion of Bank of Irelands loans and ultimately assume a total of euro12 billion off the banks balance sheets.

The value of Bank of Irelands bad loans was discounted by 35 percent, which the bank will record as a loss. At that, Bank of Ireland fared better than other banks, which on average had their bad loans discounted by 47 percent.

Lenihan said Bank of Ireland needs to raise euro2.7 billion by the end of the year to meet new capital requirements, and expects to raise a substantial amount from private sources. Lenihan said the government would convert its preference shares in Bank of Ireland to ordinary shares, and expects to remain a minority shareholder.

“I believe that Bank of Ireland has a strong future,” Lenihan said in the Dail, the Irish legislature.

“In recapitalizing Bank of Ireland we will secure an institution that will maintain a presence in the international capital markets, provide loan finance to individuals and businesses and support our economic recovery.”

Richie Boucher, Bank of Ireland Group Chief Executive, said he believed that impairment charges had peaked on loans which will not be transferred NAMA.

“Trading conditions in the first quarter of our 2010 financial year remain challenging. Revenues remain under pressure, in particular due to higher funding costs as we continue to extend the maturity profile of our wholesale funding,” Boucher said.

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The move is a major step in the governments effort to unravel investments it made in banks under the $700 billion Troubled Asset Relief Program at the height of the financial crisis.

Yet a year and a half after Congress passed the big bailout, other parts of it - particularly troubled automakers General Motors and Chrysler and insurer American International Group - show no signs of being profitable.

Despite the returns from Citi and other banks, analysts and even the Treasury Department predict the bailout will wind up costing taxpayers at least $100 billion. The bailouts of mortgage giants Fannie Mae and Freddie Mac, which were not included in TARP, will add billions more.

But the money the government makes off banks helps offset the damage. With the sale of the Citi shares, the eight major banks that got bailout money funds will have repaid the government in full. Those investments have netted the government $15.4 billion from dividends, interest and the sale of bank stock warrants, which gave the government the right to buy stock in the future at a fixed price.

Based on Mondays share price, selling its 27 percent stake in Citi would add about $7.5 billion in profits. The stock fell 3 percent to $4.18 a share Monday after news of the planned Treasury sales. But that still puts it well above the $3.25 a share the government paid. The government also still holds Citi stock warrants, which will add to its profits down the road.

Overall, its a 14 percent rate of return on the $165 billion invested in the biggest banks. Hundreds of smaller banks also received money and have been paying the government a steady stream of dividends and interest.

By comparison, someone who invested money in the Standard & Poors stock index in early October 2008, when the bailout was passed, would actually have lost about 3 percent.

“Overall, TARP may cost taxpayers money. But the banking part of it is going to be a moneymaker,” banking analyst Bert Ely said. “When you strip away all that emotion,” he added, “this has turned out to be a good bet.”

The governments bank profits can be misleading. The banks benefited heavily from other subsidies, including the $182 billion bailout of AIG. Tens of billions of that money went to banks that had suffered losses with AIG, and the banks didnt have to repay a penny.

“Its baloney to say weve made money off the bank bailouts,” said Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund. “You have to add up all the money weve put into the economy and other firms” related to banks.

Douglas Elliott, a fellow at Brookings Institution and former investment banker at J.P. Morgan, predicted the government will lose about $100 billion on the overall bailout program. Thats slightly less than Treasurys own estimate of $117 billion.

And those estimates dont include losses expected from the takeover of Fannie Mae and Freddie Mac. In September 2008, the government seized the mortgage companies and has since pumped $126 billion into them to keep the housing market from plummeting further. That number is only expected to grow, and the Obama administration has not detailed any exit strategy.

The banks have been the one bright spot in the governments portfolio. And few benefited as much from taxpayer help as Citigroup.

Citi, one of the hardest-hit banks during the credit crisis and the recession, received a total of $45 billion in bailout money, one of the largest rescues in the TARP program.

Of the $45 billion, $25 billion was converted to the governments ownership stake in the bank. Citi repaid the other $20 billion in December.

The government received 7.7 billion shares of Citigroup in exchange for the $25 billion. It said it will sell the shares over the course of this year, depending on market conditions.

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Close connections with community banks give the Fed a better understanding of the nations financial risks, including problems in commercial real-estate and small-business lending, according to Bernankes prepared remarks.

A Senate bill to overhaul financial regulation would strip the Fed of its power to supervise state-chartered banks and bank holding companies with assets of less than $50 billion. That would leave the Fed overseeing only 35 big bank holding companies. The legislation, written by Sen. Christopher Dodd, D-Conn., is set to be debated on Monday by the Senate Banking, Housing and Urban Affairs, which he leads.

Critics have blamed lax regulation at the Fed and at other agencies for contributing to the financial crisis.

Financial instability can undermine small banks, not just big ones, Bernanke said. Small banks contributed to the problems of the Great Depression, he noted.

Small banks have expressed support for continued regulation by the Fed and have made arguments similar to Bernankes.

Dodds proposal would mean major changes to Feds system of 12 regional banks. For example, Fed banks in Kansas City, Mo., and St. Louis no longer would have any banks under their supervision.

Bernanke defended the Feds structure of regional banks and a board based in Washington. He said it has provided policymakers “with a way to keep in close touch with the continent-spanning, highly varied economy of the United States.”

Dodd, however, is pushing back at Bernankes argument, noting that former Fed officials and others who have testified before his committee have made the opposite point - that bank supervision and monetary policy are not related.

Dodds staff pointed to testimony from a former Fed vice chairman, Alice Rivlin, and a former Fed director of monetary affairs, Vincent Reinhart. “I didnt really experience that we learned a lot from the supervising particular banking institutions that was useful to monetary policy,” Rivlin told the committee last July.

The Obama administration has supported a broader supervisory role for the Fed. Legislation passed by the House to overhaul the regulatory system wouldnt trim the Feds banking duties. President Barack Obama, who used his Saturday radio and Internet address to back a financial overhaul, cited large banks that “engaged in reckless financial speculation without regard for the consequences - and without tough oversight.”

Obama never mentioned the Fed by name in his remarks while praising Dodd for offering “a strong foundation for reform.”

As Congress moves forward on regulatory changes, Bernanke urged lawmakers to adopt a mechanism to safely unwind big financial companies whose failure could endanger the entire U.S. economy. The Fed chief renewed his support for a process similar to the one the Federal Deposit Insurance Corp. uses to dismantle failing banks.

“The unavoidable challenge is to make sure that size, complexity and interconnectedness do not insulate such firms from market discipline, potentially making them ticking time bombs inside our financial system,” he said.

Bernanke urged Congress to waste no time in overhauling financial rules.

“It is unconscionable that the fate of the world economy should be so closely tied to the fortunes of a relatively small number of giant financial firms,” he said. “If we achieve nothing else in the wake of the crisis, we must ensure that we never again face such a situation.”

In a brief question-and-answer session after his speech, Bernanke discussed the delicate balancing act the Fed faces in strengthening bank regulations while at the same time not hurting banks ability to make loans to creditworthy customers.

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Lehman Brothers Holdings Inc. imploded in September 2008, becoming the biggest corporate bankruptcy in U.S. history. The collapse sent financial markets across the globe into a free-fall and prompted a massive bailout of the U.S. banking system.

An examiner appointed by the bankruptcy court said in a 2,200-page report last week that Lehman hid its debt and perilous financial condition by using an accounting gimmick called Repo 105. The report revealed Lees warnings to the bank, though his letter makes public the first internal assessment of the legality of Lehmans bookkeeping.

In a letter dated May 18, 2008, Lee wrote that he discovered that the bank had been underreporting its debt by about $5 billion at the end of each month. Lee, a 14-year Lehman veteran, wrote that he felt compelled to report the “discrepancies” under the firms code of ethics, saying he believed they “possibly constitute unethical or unlawful conduct.”

“I believe the manner in which the firm is reporting these assets is potentially misleading to the public and various governmental agencies,” Lee wrote. “If so, I believe the firm may be in violation of the code.”

Days after sending the letter, the firm told Lee he was being terminated as part of a general layoff, Shustak said. After his firing, Shustak wrote a letter to the bank saying that Lee “believes he has been the victim of retaliation for bringing what he believed, in good faith, to have been ethical and securities law violations by Lehman.”

Lee, 56, later reached a severance agreement with Lehman, however, he stopped receiving payments after the firms collapse, Shustak said. He has filed a claim with the bankruptcy court to recover the unpaid amount.

The bankruptcy examiners report and Lees letter could provide a framework for any future legal action against Lehman executives.

Senate Banking Committee Chairman Christopher Dodd on Friday called for Attorney General Eric Holder to investigate the circumstances that led to Lehmans collapse. A Justice Department spokeswoman said the department would review the request.

The examiner, Anton Valukas, discovered that Lehman put together complex transactions that allowed the firm to sell “toxic,” mostly mortgage-backed, securities at the end of a quarter - wiping them off its balance sheet when regulators and shareholders were examining it - and then quickly buy them back.

His report doesnt conclude whether executives violated securities laws. It does say that the executives decision not to disclose the effects of its business judgments appears to be sufficient evidence to support the awarding of civil damages in a trial.

The executives named by the report include former CEO Richard Fuld and three chief financial officers. Fuld has denied knowing what the transactions were or the accounting for them.

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Associated Press writer Jim Kuhnhenn in Washington contributed to this report.

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“These measures should anchor inflationary expectations and contain inflation going forward,” the Reserve Bank of India said in a statement after trading hours Friday. “As liquidity in the banking system will remain adequate, credit expansion for sustaining the recovery will not be affected.”

Most economists had expected a rate hike, but not until the banks scheduled policy meeting on April 20.

The bank said robust growth in manufacturing, a revival of investment, expanding exports and increasing bank credit gave it confidence that economic growth is consolidating.

Inflation, however, has become a growing concern. Headline Wholesale Price Index inflation for February was 9.9 percent, higher than the bank expected, and inflation is spreading from drought-induced high food prices into other sectors of the economy, like manufactured goods.

“With rising demand side pressures, there is risk that WPI inflation may cross double digits in March 2010,” the bank said.

This is the banks first rate hike since it began implementing aggressive monetary stimulus measures in the wake of the global financial crisis.

Beginning in September 2008, the Reserve Bank cut the benchmark repo rate from 9 percent to 4.75 percent, and slashed the reverse repurchase rate from 6 percent to 3.25 percent. It also cut the cash reserve ratio - the amount of cash banks must keep on hand - by 4 percentage points.

The bank began to unwind that stimulus in January, by raising cash reserve requirements three-quarters of a percentage point, to 5.75 percent.

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Efforts are raging on three continents, with at least as many ideas about the proper fixes. Unless the U.S., Europe and Asia adopt uniformly strict regulations, banks and high-risk traders will shift operations wherever rules are loosest. Experts warn another crisis could follow.

The global proposals are clashing on several levels. Among the differences:

- The Obama administration wants to restrict banks size and ability to take risk. European officials have called that plan unworkable in a region with roughly 40 cross-border banks.

- European Union officials want to crack down on financial derivatives, which they blame for worsening Europes debt crisis. Derivatives are instruments whose value depends on underlying assets, such as mortgages or currencies. U.S. regulators favor making derivatives trading more transparent. But theyve resisted calls to restrict it.

- In Asia, Chinese regulators are forcing banks to set aside more reserves to prevent a U.S.-style credit binge. And India has maintained rules that were already stricter than many in the West.

A report last week on Lehman Brothers 2008 collapse reminded the world of the matters urgency. The report said regulators missed Lehmans accounting tricks, which made the firm appear stronger than it was. Lehmans bankruptcy, the biggest in U.S. corporate history, shocked global markets and triggered the $700 billion financial bailout.

But 18 months later, no deal on stricter rules is in sight - domestically or globally. Senate Banking Committee Chairman Christopher Dodd proposed his own bill Monday - without Republican support. And the U.S. and Europe seem far apart on such issues as how to oversee bank accounts and mortgages and whether banks can do proprietary trading. Thats when they use their own money to make high-risk bets. If those bets go bad and a bank goes under, taxpayers could be on the hook.

The Lehman disaster underscores the “enormous imperative” to tighten international rules, said Kenneth Rogoff, a Harvard professor and former chief economist of the International Monetary Fund. Yet he doubts countries can agree.

“Youre dealing with different accounting standards, different political systems and different banking systems,” Rogoff said. “It will be very hard to create one-size-fits-all regulations.”

A lobbying blitz by Wall Street banks has helped drive the sides apart. Banks argue that some U.S. proposals would give overseas rivals an unfair edge. Especially in their sights is a proposed Consumer Financial Protection Agency to oversee consumer products.

The House and Senate plans would create a council to monitor threats to the financial system. Both would also set a “resolution authority” to close large failing firms. But key differences remain. One involves the proposed consumer agency. The House favors a freestanding agency; the Dodd bill would place it inside the Federal Reserve.

But trans-Atlantic discord is flaring. The Obama administration wants to bar the biggest banks from using their own money to make high-risk bets. It would also limit the size of banks.

The European Union has rejected that plan. In Europe, banks already have been getting smaller. Regulators insisted they shrink to compensate for government aid.

“Trying to apply sweeping rules about the structure, content and range of activities of banking entities is too difficult,” British Business Secretary Peter Mandelson said this month.

In addition, European officials have threatened to restrict trading of certain derivatives linked to government debt, called “naked” credit default swaps. Naked swaps are a type of insurance in which investors dont actually hold the insured bonds. European officials argue the swaps have worsened Europes crisis by magnifying bets that Greece and other indebted nations will default.

Many experts disagree. They say ballooning deficits - not derivatives - have weakened confidence in Greece and other EU nations.

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WaMu attorney Brian Rosen told U.S. Bankruptcy Judge Mary Walrath on Friday that JPMorgan has agreed to turn over the money to Washington Mutual after deducting $172 million as its share of tax refunds received.

In return, JPMorgan will get 70 percent of expected tax refunds resulting from WaMus prior operating losses that are valued at about $3 billion, with Washington Mutual getting 30 percent.

WaMu also will get about 40 percent of a second round of operating-loss tax refunds valued at about $2.6 billion, with roughly 60 percent going to the FDIC.

“WMI is confident that this agreement will provide substantial recoveries for the companys creditors, and that it is consistent with WMIs efforts over the last 18 months to maximize the value of its bankruptcy estate,” the company said in a prepared statement. “WMI is also pleased that this agreement vindicates the positions it took in court, as the company believes that its court positions created the pressure necessary to move this agreement forward.”

Shares of WaMu closed down 18 cents, or 47 percent, at 19 cents in over-the-counter trading.

Rosen said documentation of the settlement will be submitted to the court and will be included in a reorganization plan to be filed by March 26, followed by a disclosure statement hearing in early May.

The settlement negated the need for a hearing Friday on WaMus request for a judgment that would have forced JPMorgan to surrender the deposits, and on the FDICs request that it be allowed to hold the funds pending resolution of related lawsuits.

“I am happy to report that we have a three-way understanding,” Rosen told Walrath, adding that the agreement is subject to approval by the governing boards of the FDIC and the two banking companies.

Rosen said the deal, which could result in the dismissal of three lawsuits pitting WaMu, JPMorgan and the FDIC against one another, also is contingent on the resolution of claims from holders of billions of dollars of bonds issued by Washington Mutual Bank, or WMB. Without the bondholders approval, or the disallowance of their claims in their entirety, the settlement could turn to “vapor,” Rosen said outside court.

Evan Flaschen, an attorney representing institutional investors who hold about $2 billion in WMB notes and were not part of the settlement negotiations, expressed disappointment at the announcement.

Flaschen said the FDIC appeared to be more interested in getting released from WMIs claims that it improperly sold WaMu assets to JPMorgan at a “fire sale” price after the largest bank failure in U.S. history, rather than exercising its fiduciary duties to the banks creditors.

“Its pretty disappointing that creditors of a bank are treated worse than creditors of a holding company,” Flaschen added, referring to the fact that holders of WMI bonds are expected to recover on their claims.

David Barr, a spokesman for the FDIC, declined to answer questions about the settlement, but issued statement saying the agency was pleased that a tentative agreement had been reached.

A spokesman for JPMorgan did not immediately return a message seeking comment.

Flaschen said the bank bondholders would redouble efforts to pressure Congress to force the FDIC to protect their interests, and that they were exploring their legal options.

“This just hit us over the head, and now were thinking about how to deal with it,” he said.

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“The bank does not believe that the stolen data has or will allow any third party to access any client account,” HSBC said in the statement. The accounts were all opened before October 2006, the bank said.

The willingness of governments to pay for stolen data is fanning tensions with France and Germany as Switzerland seeks to negotiate treaties implementing its commitment to cooperate with international tax probes. The Swiss government said in January it will draft a law barring officials from assisting foreign countries in cases involving theft of client details.

The French Finance Ministry said in December that it had data on Swiss bank accounts held by French taxpayers, including names provided by a former HSBC employee.

Switzerland suspended treaty negotiations with France in December because of the HSBC case. After talks in January, France agreed to return the original data to Switzerland and not ask for assistance from Swiss authorities based on the stolen information. France will continue to use the data to pursue tax evaders at home.

HSBCs private bank said today that clients withdrew 4.1 billion Swiss francs ($3.8 billion) last year and made deposits with rivals offering higher interest rates.

“Our competitors continue to overpay on deposits to attract funds,” HSBC said. “We made a decision not to compete on rates, which helped secure our net interest income, but contributed to an outflow of deposits.”

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“We have 250 vintner clients saying this downturn is the worst in 20 years,” Bill Stevens, manager of the banks wine division in St. Helena, California, said in an interview. “Anybody who was late to the party wont have staying power.”

Land values in Napa, home to about 400 producers, have fallen 15 percent from the 2007 peak, driven in part by slumping demand for high-end wine, said Robert Nicholson, principal at International Wine Associates, a consulting and financing firm in Healdsburg, California. The decline makes it harder for owners to refinance mortgages, especially if the property is worth less than the loan.

Napa winery and vineyard loan defaults rose fourfold to 18 in the year through January, according to San Diego-based research firm MDA DataQuick. In the survey by Silicon Valley Bank, whose clients are mostly high-end West Coast wineries, 71 percent of respondents said credit is harder to get.

The recession has set in motion a “secular change,” with budget-conscious consumers trading down to less expensive wines, said Peter Kaufman, managing partner at Pleasanton, California- based Bacchus Capital Management LLC, a private-equity fund that provides mezzanine financing to wineries.

Sales Fall

The dollar value of U.S. retail wine sales dropped 3.3 percent to $29 billion in 2009 after rising every year and almost tripling from 1991 through 2008, according to Gomberg, Fredrikson & Associates in Woodside, California. Though consumption increased 1.9 percent to 323 million cases last year, people are buying less expensive labels, the industry consultant said in a March 5 report.

Sales of super-premium bottles priced more than $15 declined 10 percent last year, and those over $30, defined as ultra-premium, fell at least 15 percent, according to Rabobank Nederland NV, the Utrecht, Netherlands-based bank that finances agriculture businesses. Napa and neighboring Sonoma are the top U.S. producers of premium wine, the bank said.

“No more is it about stocking wine cellars with 5,000 bottles of Screaming Eagle,” said Bacchus Capitals Kaufman, referring to a Napa “cult cabernet” that can sell for $750 or more a bottle. “High-rollers are discovering that there are lots of drinkable $20 to $40 bottles of wine.”

Cheaper Imports

Super-premium wineries are likely to bear the brunt of changing consumer habits, and lenders will pressure clients who cant cover costs to “seek solutions before the loan goes into default,” Rabobank said in a January report.

“Consumers are looking at price point and saying that Napa is not the price they want to be buying at,” New York-based Rannekleiv said in an interview. “Wine prices drive grape prices drive land prices.”

Bill Harlan, maker of Napas Harlan Estate Proprietary Red that counts four perfect ratings from widely followed critic Robert Parker, said he expects to see foreclosures mount.

“No area is going to be unaffected by this financial meltdown,” he said in a telephone interview.

Distress Sale

Harlan, whose Oakville, California, winery is 60 miles (97 kilometers) north of San Francisco, has seen the distress up close. In December, he acquired 21 acres next door known as Diamond Oaks Winery from businessman Dinesh Maniar, owner of two separate Napa parcels that are facing foreclosure, according to county land records and documents in U.S. Bankruptcy Court in Santa Rosa, California.

David Chandler, an attorney for Maniar, didnt return calls seeking comment. Diamond Oaks lists a $35 bottle of pinot noir and a $30 cabernet sauvignon as “new products for March” on its Web site.

There have been few recent property deals because sellers are reluctant to accept the low bids they are seeing, said Tony Correia, an appraiser in Sonoma for Correia-Xavier Inc.

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