1 of 13. A military honor guard carries the casket of Senator Daniel Inouye (D-HI) as it arrives on Capitol Hill in Washington December 20, 2012.

WASHINGTON | Thu Dec 20, 2012 3:54pm EST

WASHINGTON (Reuters) - Scores of members of the U.S. Congress put aside partisan fights on Thursday to gather in solemn tribute to Senator Daniel Inouye, who represented Hawaii in Congress since its statehood and received the rare honor of lying in state in the Capitol Rotunda.

A highly decorated World War Two veteran who lost an arm in battle, the Democrat who led the powerful Appropriations Committee was remembered as quiet, unassuming and genuine.

"Lord, we're grateful for the excellence that distinguished his significant career, the quiet grace and dignity with which he represented the Aloha State," Senate Chaplain Barry Black prayed as nearly every member of the U.S. Senate and many U.S. representatives gathered around the flag-draped casket.

Inouye died on Monday at the age of 88. He was chairman of the Appropriations Committee, the second-longest serving senator ever and third in the line of presidential succession as the Senate's senior member.

Inouye became Hawaii's first full-fledged member of the U.S. House of Representatives on August 21, 1959, when Hawaii became the 50th state. He was elected to the U.S. Senate in 1962.

After nine consecutive Senate terms, he was the only member of Hawaii's original congressional delegation still serving on Capitol Hill. He was the highest-ranking elected Asian-American official in U.S. politics.

"He leaves behind a legacy of public leadership and private kindness that will not be forgotten as long as these walls stand," Senate Majority Leader Harry Reid, a Democrat, said.

In what Republican House Speaker John Boehner called "a quiet ceremony for a quiet man," members of the U.S. armed services carried in and saluted Inouye's casket as many of his friends and colleagues placed their hands on their hearts.

Congressional leaders and Vice President Joe Biden, who served in the Senate with Inouye, later placed three wreaths around the casket.

The last U.S. dignitary to lie in state in the Rotunda was former U.S. President Gerald Ford, in 2006.

BIPARTISAN SHOW

In a rare show of bipartsanship, Reid, Boehner and Biden recounted stories from Inouye's career in the military and in Congress, echoing each other in recalling his loyalty to the United States, genuineness and quiet presence that inspired respect.

"No one, no one, in the 40 years I served with him, ever, ever, ever, ever, ever once doubted he would do what he said," Biden said. "No one ever doubted his motive."

Inouye enlisted in the U.S. Army at age 17, shortly after the 1941 Japanese attack at Pearl Harbor. A son of a Japanese immigrant, Inouye had to petition the government for the right to serve in the U.S. military because he was declared an "enemy alien" for his Japanese heritage.

Inouye lost his right arm in battle in Italy in 1945, earning a Purple Heart. He also received the Medal of Honor, the highest award for military valor.

"Danny had the most fulsome embrace of life with one arm as any man could have with two," Biden said.

"He was, in every sense, the quintessential American."

Under Hawaii law, Democratic Governor Neil Abercrombie will name a successor to fill Inouye's seat until a new senator is chosen in the 2014 general election.

Inouye will lie in state at the National Cathedral in Washington on Friday, and at Hawaii's state capitol in Honolulu on Saturday before a final memorial service at the National Memorial Cemetery of the Pacific on Sunday.

(Reporting by Alina Selyukh; Editing by Vicki Allen)

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LAS VEGAS | Fri Dec 21, 2012 2:26am EST

LAS VEGAS (Reuters) - A seven-term U.S. congresswoman from Nevada, Shelley Berkley, violated ethics rules by using her office to try to help her husband's medical practice but had no "corrupt intent" in doing so, the U.S. House Ethics Committee said on Thursday.

The committee said no further action was needed against the Democratic member of the House of Representatives. It had launched a probe in July into allegations Berkley may have been improperly involved in a bid to help save a hospital program linked to her husband's business.

Berkley's husband, Larry Lehrner, is a kidney specialist who owns a string of dialysis facilities and had a contract with the transplant unit at University Medical Center in Las Vegas when it was threatened with closure.

Nevada Republicans asserted in their initial complaint to Congress that Berkley would have directly benefited financially from her involvement in the 2008 case due to her husband's links to the hospital's kidney center.

Berkley, who failed in November to unseat Nevada Republican Dean Heller from his U.S. Senate seat in a narrow race, has said her effort to help keep the center open when it was facing federal action that could have resulted in its closure was not motivated by a potential financial interest.

She said she did nothing wrong.

A House Ethics panel agreed that her work to help the transplant center did not constitute a violation, but said that it was a mistake for her office to assist her husband's dialysis business in getting payment reimbursements.

"Representative Berkley had a legitimate concern, raised at the time that these issues were ongoing, that failures on the part of government insurers to reimburse providers in a timely fashion might result in the providers opting not to see patients insured by those programs," the Ethics Committee said in a statement.

It added that Berkley testified credibly that she had not helped her husband to obtain future benefits, and that the level of assistance her office provided him was not unusual compared to that given to other doctors.

But the panel ruled that she was mistaken when she determined her course of action was proper, although her lack of "any corrupt intent" mitigates the severity of the violations.

Heller, who had been a member of the House at the time, also joined in the Nevada delegation's efforts to keep the government from closing the kidney unit.

(Reporting by Cynthia Johnston; Editing by Lisa Shumaker)

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United States Ambassador to the United Nations Susan Rice speaks with Reuters at the B'Nai Torah Congregation in Boca Raton, Florida, in this May 10, 2012 file photo.

NEW YORK | Thu Dec 20, 2012 3:36pm EST

NEW YORK (Reuters) - With any hopes for replacing Hillary Clinton as the top U.S. diplomat dashed, Susan Rice told the annual U.N. Correspondents Association dinner "there's nowhere in the world I'd rather be tonight" - speaking against a backdrop of the State Department.

In a rare lighthearted moment, Rice made fun of her ill-fated appearance on several Sunday morning television shows in September that sparked anger among Republicans. On those shows she suggested that street protests, and not militants, were behind a September 11 attack on the U.S. mission in Benghazi, Libya, in which four Americans were killed, including the U.S. envoy.

Her television remarks turned out to be incorrect and Republican critics accused Rice, the U.S. ambassador to the United Nations, of misleading the American public. She defended herself by saying her remarks had been cleared by U.S. intelligence agencies beforehand.

"My talking points for this evening have been provided to me and fully cleared by the intelligence community, so how could this possibly go wrong?" Rice told a New York audience of 540 on Wednesday that included Hollywood actor and former California governor Arnold Schwarzenegger and U.N. chief Ban Ki-moon.

Rice withdrew her candidacy for the post of secretary of state last week, saying the Senate confirmation hearings would have been overly contentious.

The 48-year-old diplomat, who has a reputation for bluntness and caustic language during closed-door negotiations of the U.N. Security Council, also made fun of her diplomatic dust-ups with Russian envoy Vitaly Churkin, who has criticized her vocabulary.

To have a dig at Churkin, she recalled the oft-ridiculed remark of former Alaska governor and 2008 Republican vice-presidential candidate Sarah Palin that she could see Russia from Alaska.

"Day after day, I engage in highly substantive, highly technical negotiations with my colleagues here at the U.N., like the Russians," Rice said. "As a matter of fact, I can see the Russian mission from my house."

(Reporting By Louis Charbonneau and Michelle Nichols; Editing by Vicki Allen)

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1 of 4. House Speaker John Boehner makes a brief statement to the media at the Capitol in Washington December 19, 2012.

WASHINGTON | Thu Dec 20, 2012 10:28pm EST

WASHINGTON (Reuters) - Republican lawmakers delivered a stinging rebuke to their leader, House of Representatives Speaker John Boehner, on Thursday when they failed to back an effort designed to extract concessions from President Barack Obama in year-end "fiscal cliff" talks.

The dramatic twist threw into disarray attempts to head off $600 billion worth of indiscriminate tax hikes and spending cuts that could push the U.S. economy into recession next year.

It also cast doubt over Boehner's future as speaker after failing to control unruly conservatives in his caucus.

With only 11 days left for bickering politicians to prevent automatic tax hikes and spending cuts, U.S. stock futures fell sharply on the news of the rebuke to Boehner.

The Ohio congressman had hoped to demonstrate Republican unity by passing a bill through the House, known as "Plan B," that would limit income-tax increases to the wealthiest sliver of the population - those earning $1 million and more, a far smaller slice of taxpayers than Obama wants to pay higher taxes.

But Boehner canceled the vote after failing to round up enough support from his party because many conservative Republicans are opposed to tax hikes on even the richest wage-earning Americans.

"The House did not take up the tax measure today because it did not have sufficient support from our members to pass," Boehner said in a statement after huddling with other Republican leaders.

The White House pledged to work with Congress to reach a deal as quickly as possible.

"We are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy," White House spokesman Jay Carney said in a statement.

The bill, had it passed, would have put Republicans on record as supporting a tax increase on those who earn more than $1 million per year, breaking with decades of orthodoxy. It won the blessing of influential anti-tax activist Grover Norquist, but other conservative groups fiercely opposed it and many rank-and-file members said they would not support it.

Obama wants to raise taxes on families earning more than $400,000, a much lower threshold.

RECESSION THREAT

Obama and Boehner aim to reach a deal before the New Year, when taxes will automatically rise for nearly all Americans and the government will have to scale back spending on domestic and military programs. Economists say the combined $600 billion hit to the economy could push the U.S. economy into recession.

Boehner said Obama now must first pass a bill through the Democratic-controlled Senate before he holds another vote in the House.

Democrats said Boehner should first hammer out a deal with Obama. "The only way to avoid the cliff altogether is for Speaker Boehner to return to negotiations," said Adam Jentleson, a spokesman for Senate Democratic Leader Harry Reid.

With Republicans in chaos, Boehner will almost certainly need support from House Democrats to pass a deal before the end of the year. But he will have to keep an eye on his right flank before he stands for re-election as the top House lawmaker on January 3.

Alternatively, Boehner could wait until the new year to hold a vote. At that point, tax cuts passed in 2001 and 2003 will have expired for all Americans, and it presumably would be easier to pass a bill that would restore tax cuts for most.

Opinion polls show that more Americans would blame Republicans rather than Obama if they don't reach a deal before then.

So far, negotiations appear to be following the dysfunctional pattern set by the 2011 battle over the debt ceiling: fitful progress alternating with public posturing. Boehner also struggled during that showdown to corral the most conservative members of his own party.

Washington narrowly avoided defaulting on the U.S. government's debt in August 2011, but the down-to-the-wire nature of the effort prompted a first-ever debt rating downgrade and spooked investors and consumers.

This time around, concern over the fiscal cliff has weighed on markets but analysts say that investors appear to be assuming that the two sides will avert disaster.

"The markets are likely to interpret this as signaling even tougher negotiations in coming days," Mohamed El-Erian, chief executive of bond giant PIMCO, told Reuters.

S&P 500 stock futures fell 1.6 percent while Dow Jones stock futures and Nasdaq futures both lost 1.5 percent. At one point S&P 500 e-mini futures were down as much as 3.6 percent.

Lawmakers had hoped to wrap up work before the year-end Christmas break, but leaders in both the House and the Senate have indicated that they may call members back to work next week.

"The brinkmanship will continue," said a senior Republican aide. "This isn't the end of the story. More drama to come."

(Additional reporting by Thomas Ferraro, Mark Felsenthal, Richard Cowan, Jennifer Ablan, Dominic Lau and Kim Dixon; Writing by Andy Sullivan; Editing by Philip Barbara)

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Piles of clothes are seen alongside sewing machines in the Tazreen Fashions garment factory, where 112 workers died in a devastating fire last month, in Savar November 30, 2012.

WASHINGTON | Thu Dec 20, 2012 9:04pm EST

WASHINGTON (Reuters) - A dozen U.S. lawmakers pressed President Barack Obama's administration on Thursday to complete a long-running review that could lead to suspension of trade benefits for Bangladesh after a deadly factory blaze there last month.

"We are seriously concerned about the deterioration of working conditions and worker rights in Bangladesh," the congressional Democrats said in a letter to U.S. Trade Representative Ron Kirk.

"The latest apparel industry fire, with over 100 workers killed, in the Tazreen garment factory is the latest in a series of events and practices constituting this decline," the lawmakers said.

A Bangladeshi panel investigating the November 24 fire at the Tazreen Fashion Factory that killed 112 workers concluded it was the result of both sabotage and negligence.

A U.S. trade official said Kirk's office had been concerned about the worker-rights situation in Bangladesh for some time and had conveyed those concerns to the Bangladeshi government on numerous occasions.

The Tazreen fire had "intensified our concerns," the official said.

"USTR takes the rights and conditions of workers very seriously and we are carefully reviewing this situation to determine next steps, including with respect to an ongoing review of worker rights in Bangladesh under the Generalized System of Preferences (GSP) program," the official said.

The Tazreen tragedy put a spotlight on global retailers that source clothes from Bangladesh, where labor costs are as little as $37 a month for some workers. Human rights groups have called on big-brand firms to sign up a fire-safety program.

The largest U.S. labor organization, the AFL-CIO federation, has raised concerns for years about working conditions in Bangladesh and filed a petition in 2007 asking for a review of trade benefits for the country under the GSP program, which waives U.S. import duties for poor countries on thousands of goods.

GSP rules require a country to demonstrate that it is "taking steps to afford internationally recognized human rights," the U.S. lawmakers said. "We believe it is vital that your office complete your assessment of Bangladesh's compliance with these requirements."

(Reporting By Doug Palmer; Editing by David Brunnstrom)

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Thu Dec 20, 2012 9:57pm EST

n">(Reuters) - Research In Motion shares tumbled more than 10 percent on Thursday after the company reported the first ever decline in its subscriber numbers and outlined plans to transform the way it charges for its BlackBerry services.

RIM, which hopes to revive its fortunes and reinvent itself via the launch of a brand new line of BlackBerry 10 devices next month, caught investors off-guard on its quarterly conference call, when it said it plans to alter its service revenue model - a move that will pressure the high-margin business that accounts for about a third of RIM's sales.

"RIM provided few details regarding the economics of these changes, thus adding a large cloud of uncertainty to the primary driver of its profitability, which we view as especially worrisome given risks already surrounding the firm's massive BlackBerry 10 transition," said Morningstar analyst Brian Colello.

Those subscribers who need enhanced services like advanced security will pay for these services, while those who do not use such services will generate much lower to no service revenue, RIM Chief Executive Thorsten Heins told analysts and investors on a conference call on Thursday.

"I want to be very clear on this. Service revenues are not going away, but our business model and service offerings are going to evolve ... The mix in level of service fees revenue will change going forward and will be under pressure over the next year," cautioned Heins.

The news startled investors, who had earlier in the evening pushed RIM's stock more than 7 percent higher in post-market trading, after the company reported a narrower-than-expected quarterly loss and said it boosted its cash cushion ahead of next month's crucial launch of the BlackBerry 10 smartphone.

RIM's shares have for weeks been on a tear as optimism around BB10 has grown. Following RIM's surprise announcement on service revenues, however, the stock ended 9 percent lower at $12.85 in trading after the closing bell.

Analysts also expressed concern about the decline in RIM's subscriber base.

"The early reaction was probably just 'Hey, numbers looked OK, better loss, the cash flow was good' but if you know the company, you're looking at the subscriber base falling off," said Mark McKechnie at Evercore Partners in San Francisco.

CASH BALANCE

One reason the shares rose earlier was RIM managed to build up its cash cushion to $2.9 billion from $2.3 billion in the previous quarter.

Analysts have been keeping a sharp eye on the size of RIM's cash pile, as RIM will need the funds to manufacture and effectively promote BlackBerry 10 in a crowded market.

RIM is counting on the new line to claw back market share lost in recent years to the likes of Apple Inc's iPhone and a slew of devices powered by Google Inc's Android operating system.

"They've done a great job at generating cash," said Raymond James analyst Tavis McCourt in Nashville. "They're certainly in a much better position than they were three or four quarters ago."

The Waterloo, Ontario-based company said it is now testing its BB10 devices with more than 150 carriers - up from about 50 carriers as of the end of October. RIM expects more carriers to come on board ahead of the formal launch of BB10 on January 30.

Positive feedback from developers and carriers around RIM's new BlackBerry 10 devices has buoyed the stock in the last three months. Despite the plunge in RIM's share price on Thursday, the stock has more than doubled in value the last three months.

SMALLER-THAN-EXPECTED LOSS

On an operating basis, RIM fared a little better than Wall Street had expected. It reported a loss of $114 million or 22 cents a share, excluding one-time items. Analysts, on average, had forecast a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.

RIM also reported a surprise net profit of $9 million, or 2 cents a share, for its fiscal third quarter ended December 1, on the back of a one-time income tax related gain. That compared with a year-ago profit of $265 million, or 51 cents.

RIM said it shipped 6.9 million smartphones in the quarter, even as its subscriber base fell to about 79 million in the quarter from about 80 million in the period ended September 1.

In recent years, RIM's user base has grown, even as the BlackBerry lost ground in North America and Europe, boosted by gains in emerging markets. While eye opening, the shrinkage was not as bad as some observers expected during the last quarter before the BB10 launch.

"We're encouraged that the subscriber base only declined slightly during a very public transition, and BlackBerry sales were about what we expected," said Morningstar's Colello, who is based in Chicago.

(Reporting by Euan Rocha; Additional reporting by Alastair Sharp, Cameron French, Allison Martell and John Tilak in Toronto; Editing by Janet Guttsman, Frank McGurty, Jan Paschal and Chris Gallagher)

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