1 of 2. The U.S. Consulate in Benghazi is seen in flames during a protest by an armed group said to have been protesting a film being produced in the United States in this September 11, 2012 file photo. U.S. Secretary of State Hillary Clinton said December 19, 2012, she accepted the findings of an independent panel that faulted the State Department over the deadly September attack and had ordered widespread changes to bolster US. Diplomatic security overseas.

WASHINGTON | Thu Dec 20, 2012 5:06pm EST

WASHINGTON (Reuters) - The U.S. State Department will seek billions of dollars in new funds and revamp security procedures around the globe in response to criticism by an independent investigation of the September 11 attack on the U.S. mission in Benghazi, Libya, senior officials said on Thursday.

U.S. Secretary of State Hillary Clinton's two top deputies appeared at a Senate hearing and conceded that U.S. officials had failed to "connect the dots" ahead of the attack, which killed U.S. Ambassador to Libya Christopher Stevens and three other Americans.

"We learned some very hard and painful lessons in Benghazi," said Deputy Secretary of State William Burns. "We are already acting on them. We have to do better."

The State Department said on Wednesday its security chief had resigned and three other officials were relieved of their posts following the report, which cited leadership and management deficiencies, poor coordination and confusion over who had the authority to make decisions.

Senate Foreign Relations Committee Chairman John Kerry, tipped to be President Barack Obama's pick to replace Clinton when she steps down next month, chaired the session and led the call for increased funding.

"We need to make certain that we are not penny wise and pound foolish when it comes to supporting America's vital interest overseas," Kerry, a Massachusetts Democrat, said.

SECURITY SPENDING EYED

Clinton, unable to appear at the hearing due to illness, has already asked for $1.4 billion in funds for the 2013 fiscal year to be re-allocated to improve security at U.S. diplomatic missions, a State Department fact sheet said.

The State Department is also expected to request $2.3 billion per year for the next 10 years to further this work.

Some Republican lawmakers challenged the call for more money.

"If the State Department intends to blame its long string of failures on inadequate funding, then perhaps it should take a closer look at the money that is being lavished on global climate change, culinary diplomacy programs and other favored projects," House Foreign Affairs Committee chairwoman Ileana Ros-Lehtinen, said at an afternoon hearing.

But the panel's top Democrat, Representative Howard Berman, said the diplomatic security budget was cut so often it "created a culture at the State Department that is more preoccupied with saving money than with achieving its security goals."

Deputy Secretary of State Thomas Nides said the department had formed a task force to implement 29 specific recommendations in the panel's report and sent security assessment teams to 19 U.S. missions in 13 countries.

The department, in cooperation with the Pentagon, intends to send 35 additional Marine detachments, or about 225 uniformed personnel, to beef up security at medium- and high-threat posts and to boost staffing of its own Bureau of Diplomatic Security by about 5 percent, or 150 additional agents, Nides said.

"Implementation of each and every recommendation will be under way by the time the next secretary of state takes office," Nides said.

The State Department said Bill Miller, a diplomatic security special agent since 1987 who has served in Egypt and Iraq, was appointed deputy assistant secretary of state for high-threat posts - a new position in the Bureau of Diplomatic Security.

The job will focus on U.S. posts in Afghanistan, Azerbaijan, Egypt, Indonesia, Iraq, Jordan, Kenya, Libya, Mauritania, Nigeria, Pakistan, Somalia, South Sudan, Sudan, Syria, Tunisia and Yemen, the State Department said.

The Benghazi incident could tarnish Clinton's four-year tenure as secretary of state but the report does not fault her specifically.

Burns said to his knowledge the security requests from diplomats in Libya "did not get as far as Secretary Clinton."

White House spokesman Jay Carney said Obama endorsed the recommendations of the Benghazi report and expects them to be fully implemented.

"Immediately, accountability has been brought to bear with regard to four individuals who are very senior," he said.

'SCLEROTIC' DEPARTMENT

Republican Senator Bob Corker, an outspoken critic of the Obama administration's response to Benghazi, said the panel report revealed a "sclerotic" State Department that has failed to make good use of the resources already at its disposal.

"We have no idea whether the State Department is using its money wisely or not," he said.

Nides said the department still was coming to terms with widespread changes across the Middle East and defended the department's overall track record.

"We get this right about 99 percent of the time. We would like to be at 100 percent without question," he said.

Republicans have focused much of their firepower on U.S. Ambassador to the United Nations Susan Rice, who appeared on TV talk shows after the attack and suggested it was the result of a spontaneous protest rather than a planned attack.

The report concluded there was no such protest and Rice, who had been widely seen as Obama's top pick to succeed Clinton, withdrew her name from consideration last week.

U.S. officials say the assault, which occurred on the anniversary of the September 11, 2001, attacks on New York and Washington, was the work of Islamist extremists and have pledged to bring those responsible to justice.

Burns said the attack highlighted the need to take a broader look at security rather than focus on "specific and credible" threats, which officials insist were absent in Benghazi.

"What happened in Benghazi was clearly a terrorist attack," Burns said. "We did not do a good enough job, as the report highlights, in trying to connect the dots."

(Additional reporting by Tabassum Zakaria and Mark Felsenthal; Editing by Bill Trott and Todd Eastham)

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n">(Reuters) - The Investment Company Institute on Thursday issued the following money market mutual fund assets report:

"Total money market mutual fund assets decreased by $1.38 billion to $2.562 trillion for the week ended Wednesday, October 10, the Investment Company Institute reported today. Taxable government funds decreased by $3.89 billion, taxable non-government funds increased by $4.64 billion, and tax-exempt funds decreased by $2.13 billion.

Retail: Assets of retail money market funds decreased by $2.90 billion to $886.96 billion. Taxable government money market fund assets in the retail category decreased by $190 million to $186.11 billion, taxable non-government money market fund assets decreased by $1.84 billion to $512.00 billion, and tax-exempt fund assets decreased by $860 million to $188.84 billion.

Institutional: Assets of institutional money market funds increased by $1.52 billion to $1.675 trillion. Among institutional funds, taxable government money market fund assets decreased by $3.70 billion to $670.47 billion, taxable non-government money market fund assets increased by $6.49 billion to $924.21 billion, and tax-exempt fund assets decreased by $1.27 billion to $80.78 billion.

ICI reports money market fund assets to the Federal Reserve each week. Revisions are due to data adjustments, reclassifications, and changes in the number of funds reporting. Weekly money market assets for the last 20 weeks are available on the ICI website."

NOTE: ICI's Web site is www.ici.org

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LONDON | Tue Oct 9, 2012 8:23am EDT

LONDON (Reuters) - A global supervisory body for securities has published its final recommendations for new rules for the $4.7 trillion money market fund sector despite opposition from its U.S. member.

The recommendations were called for by leaders of the world's top economies (G20) a year ago as part of efforts to crack down on "shadow banks" that also include hedge funds, special investment vehicles and repurchase agreements.

The International Organization of Securities Commissions (IOSCO) said the recommendations - which the body's regulatory members such as Britain's Financial Services Authority will apply locally - cover valuations, liquidity management, use of ratings and disclosures to investors.

"Although money market funds, which provide a significant source of credit and liquidity, did not cause the crisis, their performance during the 2007/08 financial turmoil highlighted their potential to spread or even amplify a crisis," IOSCO said in a statement.

Some regulators worry that as traditional banks become more heavily regulated, risky credit activities will shift to shadow banks which are currently less regulated.

IOSCO's 15 recommendations supplement reforms already introduced in the United States and Europe in 2010. It will review within two years how they are being applied.

The industry says money market funds are safe and don't need more rules.

Most of the commissioners from the U.S. Securities and Exchange Commission (SEC), an IOSCO member, opposed the publication of the global watchdog's recommendations.

In August, the SEC commissioners blocked U.S. proposals to introduce more rules for the money market funds sector on top of those already implemented in the United States in 2010.

IOSCO said that apart from U.S. opposition, there were no other objections to it publishing the recommendations on Tuesday.

The watchdog's members, who also include Bafin of Germany and Japan's Financial Services Agency, regulate more than 95 percent of the world's securities markets and are required to implement agreed rules.

(Reporting by Huw Jones; Editing by Laurence Fletcher and David Holmes)

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BOSTON | Fri Sep 28, 2012 5:40pm EDT

BOSTON (Reuters) - Federated Investors Inc Chief Executive Christopher Donahue, who has fought increased regulation of money market funds, said on Friday he would support a limited reform proposal.

Donahue, whose Pittsburgh-based firm is one of the largest sponsors of money funds, said in an interview that he would back allowing funds to limit customer withdrawals in times of stress, a practice the industry calls "voluntary gates."

"That would work," he said. "It would be enhancing the resilience of the funds."

Forcing funds to adopt other reforms such as a floating net asset value would still be unacceptable, however, he said.

Donahue's comments come as federal regulators this week renewed their efforts to strengthen regulation of the $2.5 trillion money fund industry following the financial crisis, when dozens came under stress amid rapid withdrawals.

The revived talk of regulation hit Federated's share price, which dropped 5.4 percent this week, more than double the decline of competitors like BlackRock and Franklin Resources.

One member of the U.S. Securities and Exchange Commission, Daniel Gallagher, who had opposed a prior reform effort in August, said on Friday he hoped his agency would consider a fresh approach, even as the new U.S. risk council is exploring ways to also tighten regulations on the industry. Gallagher's openness to an alternative proposal may greatly increase the chances for new rules.

SEC Chairman Mary Schapiro and others have called for reforms that include requiring the funds to hold capital against potential future losses or move away from the traditional $1 per share fixed net asset value.

The changes proposed by Schapiro, a Democrat, faced strong industry opposition from Federated and other firms. Ultimately, Schapiro could not garner enough support from Gallagher and fellow Republican Commissioner Troy Paredes and Democrat Luis Aguilar last month.

Gallagher and Paredes have described optional withdrawal limits like those favored by Donahue as a way that money fund boards could avoid rapid and destabilizing withdrawals. Under a 2010 rule change, such limits could only be imposed if the fund was closed and put into liquidation.

Donahue said his firm has backed "voluntary gates" in the past, and that the device helped preserve capital at a $12 billion fund run by Putnam Investments before it was taken over by Federated at the peak of the crisis.

(Editing by Leslie Gevirtz)

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LONDON | Fri Jul 27, 2012 12:21pm EDT

LONDON (Reuters) - Auctioneer Christie's should return the sum of 1.5 million pounds ($2.4 million) paid by a wealthy Russian art collector for a painting that was probably fake, a High Court judge ruled on Friday.

Mr Justice Newey concluded that the painting, "Odalisque," which shows a nude woman asleep on a bed, was probably not painted by Boris Kustodiev, a Russian artist who has been compared with English painter L.S. Lowry.

The judge ruled that Christie's had not been negligent, but should return the money paid for the work to Avrora Fine Arts Investment, a firm run by Russian businessman Viktor Vekselberg, the Press Association reported.

"It follows that Avrora is entitled to cancel its purchase of the painting and recover the money it paid," the judge said.

Kustodiev, who lived from 1878 to 1927, was much better known in Russia than outside, the judge said, adding one art expert had suggested Kustodiev was "to the Russians what Lawrence Stephen Lowry is to the English in terms of affection in which he is held".

Vekselberg's company bought the painting at a Christie's auction in London in 2005.

The work had been described in the sale catalogue as "one of the best examples of Kustodiev's idea of the provincial merchant class", and displayed the inscription "B. Kustodiev - 1919".

But Avrora took legal action against Christie's when an art dealer expressed doubts that the painting was genuine.

An expert called by Christie's thought the painting was authentic, although "not one of Kustodiev's best works".

Christie's lawyers insisted that Odalisque was authentic and the auction house could not be blamed if the painting was no masterpiece.

(Reporting by Alice Baghdjian; editing by Steve Addison)

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