Microsoft Battles Google by Hiring Political Brawler Mark Penn


SEATTLE — Mark Penn made a name for himself in Washington by bulldozing enemies of the Clintons. Now he spends his days trying to do the same to Google, on behalf of its archrival Microsoft.


Since Mr. Penn was put in charge of “strategic and special projects” at Microsoft in August, much of his job has involved efforts to trip up Google, which Microsoft has failed to dislodge from its perch atop the lucrative Internet search market.


Drawing on his background in polling, data crunching and campaigning, Mr. Penn created a holiday commercial that has been running during Monday Night Football and other shows, in which Microsoft criticizes Google for polluting the quality of its shopping search results with advertisements. “Don’t get scroogled,” it warns. His other projects include a blind taste test, Coke-versus-Pepsi style, of search results from Google and Microsoft’s Bing.


The campaigns by Mr. Penn, 58, a longtime political operative known for his brusque personality and scorched-earth tactics, are part of a broader effort at Microsoft to give its marketing the nimbleness of a political campaign, where a candidate can turn an opponent’s gaffe into a damaging commercial within hours. They are also a sign of the company’s mounting frustration with Google after losing billions of dollars a year on its search efforts, while losing ground to Google in the browser and smartphones markets and other areas.


Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft.


But Microsoft, based in Redmond, Wash., has realized that it cannot rely only on regulators to scrutinize Google — which is where Mr. Penn comes in. He is increasing the urgency of Microsoft’s efforts and focusing on their more public side.


In an interview, Mr. Penn said companies underestimated the importance of policy issues like privacy to consumers, as opposed to politicians and regulators. “It’s not about whether they can get them through Washington,” he said. “It’s whether they can get them through Main Street.”


Jill Hazelbaker, a Google spokeswoman, declined to comment on Microsoft’s actions specifically, but said that while Google also employed lobbyists and marketers, “our focus is on Google and the positive impact our industry has on society, not the competition.”


In Washington, Mr. Penn is a lightning rod. He developed a relationship with the Clintons as a pollster during President Bill Clinton’s 1996 re-election campaign, when he helped identify the value of “soccer moms” and other niche voter groups.


As chief strategist for Hillary Clinton’s unsuccessful 2008 campaign for president, he conceived the “3 a.m.” commercial that raised doubts about whether Barack Obama, then a senator, was ready for the Oval Office. Mr. Penn argued in an essay he wrote for Time magazine in May that “negative ads are, by and large, good for our democracy.”


But his approach has ended up souring many of his professional relationships. He left Mrs. Clinton’s campaign after an uproar about his consulting work for the government of Colombia, which was seeking the passage of a trade treaty with the United States that Mrs. Clinton, then a senator, opposed.


“Google should be prepared for everything but the kitchen sink thrown at them,” said a former colleague who worked closely with Mr. Penn in politics and spoke on condition of anonymity. “Actually, they should be prepared for the kitchen sink to be thrown at them, too.”


Hiring Mr. Penn demonstrates how seriously Microsoft is taking this fight, said Michael A. Cusumano, a business professor at M.I.T. who co-wrote a book about Microsoft’s browser war.


“They’re pulling out all the stops to do whatever they can to halt Google’s advance, just as their competition did to them,” Professor Cusumano said. “I suppose that if Microsoft can actually put a doubt in people’s mind that Google isn’t unbiased and has become some kind of evil empire, they might very well get results.”


Nick Wingfield reported from Seattle and Claire Cain Miller from San Francisco.



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Shooting Reported at Connecticut Elementary School


Shannon Hicks/The Newtown Bee


State police led children from the Sandy Hook Elementary School in Newtown, Conn., after a shooting was reported there.







Multiple fatalities have been reported at a shooting at an elementary school in Newtown, Conn., about 65 miles northeast of New York City. One law enforcement offcial said preliminary reports suggested there could be as many as 20 fatalities.









Michelle Mcloughlin/Reuters

Children waited outside Sandy Hook Elementary School after a shooting on Friday in Newtown, Conn.






One state official said that an adult gunman was believed to be dead in the shooting at Sandy Hook Elementary School in Newtown. The gunman was in possession of at least two firearms, the official said.


Meredith Artley, the managing editor of CNN.com, has a friend who works at the school. “She volunteers with the school as well,” Artley said on CNNr.


The woman was in close vicinity to the shooting, which happened in the hallway, according to Ms. Artley. “She described it as a ‘Pop, pop, pop,''’ Ms Artley added. “She said three people went out into the hall and only one person came back, the vice principal, she said, who was shot in the leg or the foot, who came crawling back. She cowered under the table and called 911. She never saw the shooting. There must have been a hundred rounds.'’


Danbury Hospital said it was treating three patients from the shooting scene, according to its Facebook page. The hospital, which is not far from the elementary school, said it was on lockdown.


Gov. Dannel P. Malloy arrived at the scene of the shooting on Friday afternoon.


The school, located among wooded hills and suburban tracts in Fairfield County, 12 miles east of Danbury, serves kindergarten through fourth grade. The school has about 700 students.


According to a local newspaper, The Newtown Bee, shortly after 9:30 a.m. on Friday, one child was carried from the school by a police officer, apparently seriously wounded, and other children were escorted from the school by the state police. A photograph published by The Bee showed children outside the school visibly upset.


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Apple falls on lower shipment forecasts, muted China debut


(Reuters) - Apple Inc shares fell 3.9 percent on Friday after the iPhone 5 debuted in China to a cool reception and two analysts cut shipment forecasts.


Jefferies analyst Peter Misek trimmed his iPhone shipment estimates for the Jan-March quarter, saying that the technology company had started cutting orders to suppliers to balance excess inventory.


Shares of Apple suppliers Jabil Circuit Inc, Qualcomm Inc, Skyworks Solutions Inc, TriQuint Semiconductor Inc, Avago Technologies Ltd, and Cirrus Logic Inc also fell in early trading.


Apple shares have lost a quarter of their value since they hit a life high of $705.07 on September 21, as it faces increasing competition from phones using Google Inc's Android operating system.


Misek cut his first-quarter iPhone sales estimate to 48 million from 52 million and gross margin expectations for the company by 2 percentage points to 40 percent.


UBS Investment Research cut its price target on Apple stock to $700 from $780 on lower expected iPhone and iPad shipments for the March quarter.


The brokerage said it was modeling more conservative growth for the world's biggest technology company after making supply chain checks that revealed that fewer iPhones were being built.


"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," UBS analyst Steven Milunovich wrote in a note to clients.


Apple launched the iPhone 5 in China on Friday, a move widely expected to bring the Cupertino-based company some respite from a recent slide in market share in China, but early reports indicated that demand may not be as great as expected.


"The iPhone 5 China launch has been surprisingly muted but (we) are unsure how much weather (snow) or the required pre-ordering (to prevent riots) are factors," Misek said.


Apple shares fell as low as $508.50 in morning trading on the Nasdaq on Friday.


(Editing by Supriya Kurane)



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From 'Sherlock' to 'Star Trek' for Cumberbatch


LONDON (AP) — Benedict Cumberbatch has had a busy 24 hours.


The British actor was nominated for a Golden Globe, chased by the paparazzi in London and unveiled the first nine minutes of the new "Star Trek" movie Friday.


At a special IMAX presentation of the footage in London, Cumberbatch's menacing character John Harrison was introduced at the beginning of the much-anticipated "Star Trek Into Darkness."


The sequel kicks off at a fast pace, with Captain Kirk's trademark quips, a volcano erupting and Spock in grave danger during a mission to save a planet.


Cumberbatch was not allowed to reveal much about the plot, but the 36-year-old did admit that he auditioned for the role of Harrison — who he describes as "a phenomenal one-man weapon of mass destruction" — on an iPhone in his friend's kitchen.


Fans wanting to see the footage can catch it in front of selected IMAX 3D screenings worldwide of "The Hobbit," beginning Friday.


"Star Trek Into Darkness," directed by J.J. Abrams, opens next May.


___


The Associated Press spoke to the "Sherlock" star Friday after the presentation.


AP: "How did it feel coming here and seeing your face so big on that screen?"


BENEDICT CUMBERBATCH: "I always get incredibly nervous, especially on an empty stomach having only had a macchiato. It makes your heart beat a lot faster and I don't like it. I look away when it's me, I don't like being my own audience. It's very weird. ... You probably saw my nostril hairs, counted how many pores I've got on my nose and which one of my teeth is wonky. "


AP: "It's obviously in the great tradition of having an English baddie."


CUMBERBATCH: "I'm following in the very hallowed footsteps of (Jeremy) Irons, (Alan) Rickman and Tom Hiddleston, my great friend in this summer's "Avengers." There are a few of us who have done it before, it stretches back as old as time. They get excited about these actors with theatre training who can do stuff. It's hugely flattering but you're not going to see me do a whole raft of villains after this."


AP: "Congratulations on the Golden Globe nomination (best actor in a miniseries for "Sherlock"). Did you celebrate?"


CUMBERBATCH: "I went out with my niece, who is my PA (personal assistant) Emily, and we got papped (followed by paparazzi) to the point that I couldn't actually see and I had to put my head down and just blink a couple of times. I was trying to get in the car with her and so immediately they presume, 'ah, beautiful blonde.' Poor girl, she's never experienced that before — I've never experienced that — like 15 of them hanging off the bonnet of the car."


AP: "Surely it's only going to get worse after this "Star Trek" film?"


CUMBERBATCH: "I hope not. I don't court it. I think you have to be in certain places at certain times. Of course, promoting a film you're out in the public and I'm proud to do that for the work I've done. But I'm quite a private person at heart."


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Life Expectancy Rises Around World, Study Finds





A sharp decline in deaths from malnutrition and infectious diseases like measles and tuberculosis has caused a shift in global mortality patterns over the past 20 years, according to a report published on Thursday, with far more of the world’s population now living into old age and dying from diseases mostly associated with rich countries, like cancer and heart disease.







Tony Karumba/Agence France-Presse — Getty Images

Children in Nairobi, Kenya. Sub-Saharan Africa lagged in mortality gains, compared with Latin America, Asia and North Africa.






The shift reflects improvements in sanitation, medical services and access to food throughout the developing world, as well as the success of broad public health efforts like vaccine programs. The results are striking: infant mortality declined by more than half from 1990 to 2010, and malnutrition, the No. 1 risk factor for death and years of life lost in 1990, has fallen to No. 8.


At the same time, chronic diseases like cancer now account for about two out of every three deaths worldwide, up from just over half in 1990. Eight million people died of cancer in 2010, 38 percent more than in 1990. Diabetes claimed 1.3 million lives in 2010, double the number in 1990.


“The growth of these rich-country diseases, like heart disease, stroke, cancer and diabetes, is in a strange way good news,” said Ezekiel Emanuel, chairman of the department of medical ethics and health policy at the University of Pennsylvania. “It shows that many parts of the globe have largely overcome infectious and communicable diseases as a pervasive threat, and that people on average are living longer.”


In 2010, 43 percent of deaths in the world occurred at age 70 and older, compared with 33 percent of deaths in 1990, the report said. And fewer child deaths have brought up the mean age of death, which in Brazil and Paraguay jumped to 63 in 2010, up from 30 in 1970, the report said. The measure, an average of all deaths in a given year, is different from life expectancy, and is lower when large numbers of children die.


But while developing countries made big strides the United States stagnated. American women registered the smallest gains in life expectancy of all high-income countries’ female populations between 1990 and 2010. American women gained just under two years of life, compared with women in Cyprus, who lived 2.3 years longer and Canadian women who gained 2.4 years. The slow increase caused American women to fall to 36th place in the report’s global ranking of life expectancy, down from 22nd in 1990. Life expectancy for American women was 80.5 in 2010, up from 78.6 in 1990.


“It’s alarming just how little progress there has been for women in the United States,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation, a health research organization financed by the Bill and Melinda Gates Foundation at the University of Washington that coordinated the report. Rising rates of obesity among American women and the legacy of smoking, a habit women formed later than men, are among the factors contributing to the stagnation, he said. American men gained in life expectancy, to 75.9 years from 71.7 in 1990.


Health experts from more than 300 institutions contributed to the report, which provided estimates of disease and mortality for populations in more than 180 countries. It was published in The Lancet, a British medical journal.


The World Health Organization issued a statement on Thursday saying that some of the estimates in the report differed substantially from those done by United Nations agencies, though others were similar. All comprehensive estimates of global mortality rely heavily on statistical modeling because only 34 countries — representing about 15 percent of the world’s population — produce quality cause-of-death data.


Sub-Saharan Africa was an exception to the trend. Infectious diseases, childhood illnesses and maternity-related causes of death still account for about 70 percent of the region’s disease burden, a measure of years of life lost due to premature death and to time lived in less than full health. In contrast, they account for just one-third in South Asia, and less than a fifth in all other regions. Sub-Saharan Africa also lagged in mortality gains, with the average age of death rising by fewer than 10 years from 1970 to 2010, compared with a more than 25-year increase in Latin America, Asia and North Africa.


Globally, AIDS was an exception to the shift of deaths from infectious to noncommunicable diseases. The epidemic is believed to have peaked, but still results in 1.5 million deaths each year.


Over all, the change means people are living longer, but it also raises troubling questions. Behavior affects people’s risks of developing cancer, heart disease and diabetes, and public health experts say it is far harder to get people to change their ways than to administer a vaccine that protects children from an infectious disease like measles.


“Adult mortality is a much harder task for the public health systems in the world,” said Colin Mathers, a senior scientist at the World Health Organization.


Tobacco use is a rising threat, especially in developing countries, and is responsible for almost six million deaths a year globally. Illnesses like diabetes are also spreading fast.


Donald G. McNeil Jr. contributed reporting.



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At Federal Halfway House in Brooklyn, a Dubious Operator


Todd Heisler/The New York Times


Some residents of a halfway house, left, run by Community First Services on Gold Street say it offers little more than meals and a bed, not counseling and job-search help.







Seeking an operator for a major halfway house in Brooklyn, the federal government awarded a $29 million contract to a nonprofit group with a promising name, Community First Services, and impressive credentials.





Unlocked


An investigation into New Jersey’s halfway houses.




On its Web site and in its bids for contracts, Community First promoted its extensive experience doing work for government agencies, including New York City’s Department of Juvenile Justice and the federal Department of Health and Human Services.


Community First hailed the vision of its founder, Jack A. Brown III, whom it portrayed as a veteran of gulf war combat with deep expertise in air-defense artillery. And the group declared that, as its name suggested, it had consulted closely with leading community organizations about setting up the federal halfway house in Brooklyn.


But none of these claims are true, an investigation by The New York Times showed.


The Brooklyn facility is supposed to be a pillar in an expanding system of federal halfway houses, which are intended to help inmates after they are released from federal prison by arranging for counseling, drug treatment and jobs.


But the contract has instead illustrated how the federal government, like New Jersey and some other states, has faced considerable difficulties regulating these places, even as it entrusts more and more inmates to them.


Today, a year after the contract went into effect, the 161-bed halfway house run by Community First Services has already had three addresses in Brooklyn.


Even though the federal government is paying Community First Services $98 a day for each inmate, one of the three locations was in the basement of a rundown hotel crammed between a junkyard and a homeless shelter. Inmates entering and leaving the building on work-release programs had to run a gantlet of drug dealers on the street.


At its present location, a neighbor has noticed suspicious activity, saying she had twice seen people smuggling packages into the building by lowering ropes from the second floor to the sidewalk.


Inside the halfway house, inmates often have little to do and receive few services, according to interviews with defense lawyers and five inmates.


Some of them pass the time playing cards, ordering takeout food and watching videos, including pornographic ones. At night, they talk on cellphones, which are supposed to be banned; drink alcohol hidden in water bottles; and smoke synthetic marijuana, called K2, the five inmates said.


They also flee. In Community First’s first year running the Brooklyn halfway house, the number of escapes nearly doubled, to 27, when compared with the previous year, federal statistics show.


Lawyers and social workers at the Federal Defenders of New York, a nonprofit legal group that provides lawyers to federal inmates, said services were so threadbare that they tried to keep their clients away from the Brooklyn halfway house when possible.


Vivianne Guevara, a senior official at Federal Defenders, said the halfway house was “a big hindrance” in integrating inmates back into society.


“I don’t think it really promotes healing or rehabilitation,” she said. “It’s not a supportive environment.”


Mr. Brown, chief executive of Community First, is a politically connected entrepreneur with a checkered history in the halfway-house industry. He used to supervise the Brooklyn halfway house when it was operated by a private company. He set up Community First in 2005 while still working for the company, then used the nonprofit group to bid successfully against the company for the halfway-house contract, according to interviews and public records.


The interviews and records show that over the years, Mr. Brown, 44, has left a trail of exaggerated claims and self-dealing. He was also a key figure in one of the biggest lobbying scandals in Albany in the past decade.


Community First paid Mr. Brown a $241,900 salary in 2010, according to its most recent disclosure records to the Internal Revenue Service. The group also employs his brother and sister.


In an interview, Mr. Brown defended the halfway house, saying it had turned around inmates’ lives.


“We’re new, but what makes us different, in my opinion, is that we operate understanding that the community is first; I mean, it’s in our name,” Mr. Brown said. “We always keep in the front of our minds that these clients are eventually going to transition back to some neighborhood within New York City, and we want to make sure that they have the greatest possible chance to succeed.”


Sheelagh McNeill contributed reporting.



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Jury says Apple iPhone violated three patents, damages unclear


(Reuters) - A U.S. jury on Thursday found that Apple's iPhone infringed three patents owned by holding company MobileMedia Ideas, though damages have not yet been determined.


The verdict was delivered after a week-long trial in Delaware federal court, said Larry Horn, chief executive of MobileMedia. An Apple spokeswoman declined to comment.


The three patents, which cover features like camera phone technology, were acquired from Nokia and Sony Corp in 2010, Horn said. Those two companies hold a minority interest in MobileMedia, he said.


Representatives for Nokia and Sony could not immediately be reached for comment.


The trial only concerned liability, and a damages proceeding has not yet been scheduled, Horn said. MobileMedia also has litigation pending against HTC Corp and Research in Motion Ltd.


"Our goal is really to license these patents broadly to the market," Horn said.


In court filings, Apple has asked a judge to rule that MobileMedia's patents are invalid as a matter of law, and that there is no "legally sufficient" basis to find MobileMedia has proven infringement.


The case in U.S. District Court, District of Delaware is MobileMedia Ideas LLC vs. Apple Inc, 10-258.


(Reporting By Dan Levine in San Francisco; editing by Andrew Hay)



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Documents: Prisoner plotted to kill Justin Bieber


LAS CRUCES, N.M. (AP) — An imprisoned man whose infatuation with Justin Bieber included a tattoo of the pop star on his leg has told investigators in New Mexico he hatched a plot to kill him.


Court documents in a New Mexico district court say Dana Martin told investigators he persuaded a man he met in prison and the man's nephew to kill Bieber, Bieber's bodyguard and two others not connected to the pop star.


He told investigators that Mark Staake and Tanner Ruane headed east, planning to be near a Bieber concert scheduled in New York City. They missed a turn and crossed into Canada from Vermont. Staake was arrested on an outstanding warrant. Ruane was arrested later.


The two men face multiple charges stemming for the alleged plot.


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World’s Population Living Longer, New Report Suggests


A sharp decline in deaths from malnutrition and diseases like measles and tuberculosis has caused a shift in global mortality patterns over the past 20 years, according to a new report, with far more of the world’s population now living into old age and dying from diseases more associated with rich countries, like cancer and heart disease.


The shift reflects improvements in sanitation, medical services and access to food throughout the developing world, as well as the success of broad public health efforts like vaccine programs. The results are dramatic: infant mortality has declined by more than half between 1990 and 2010, and malnutrition, the No. 1 risk factor for death and years of life lost in 1990, has fallen to No. 8.


At the same time, chronic diseases like cancer now account for about two out of every three deaths worldwide, up from just over half in 1990. Eight million people died of cancer in 2010, 38 percent more than in 1990. Diabetes claimed 1.3 million lives in 2010, double the number in 1990.


But while developing countries made big strides – the average age of death in Brazil and Paraguay, for example, jumped to 63 in 2010, up from 28 in 1970 – the United States stagnated. American women registered the smallest gains in life expectancy of all high-income countries between 1990 and 2010. The two years of life they gained was less than Cyprus, where women gained 2.3 years of life and Canada, where women gained 2.4 years. The slow increase caused American women to fall to 36th place in the report’s global ranking of life expectancy, down from 22nd in 1990.


“It’s alarming just how little progress there has been for women in the United States,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation, a health research organizationfinanced by the Bill and Melinda Gates Foundation at the University of Washington that coordinated the report. Rising rates of obesity among American women and the legacy of smoking, a habit women in this country formed later than men, are among the factors contributing to the stagnation, he said.


The World Health Organization issued a statement Thursday saying that some of the estimates in the report differ substantially from those done by United Nations agencies, though others are similar. All comprehensive estimates of global mortality rely heavily on statistical modeling because only 34 countries – representing about 15 percent of the world’s population – produce quality cause-of-death data.


Health experts from more than 300 institutions contributed to the report, which measured disease and mortality for populations in more than 180 countries. It was published Thursday in the Lancet, a British health publication.


The one exception to the trend was sub-Saharan Africa, where infectious diseases, childhood illnesses and maternal causes of death still account for about 70 percent of all illness. In contrast, they account for just one-third in South Asia, and less than a fifth in all other regions. Sub-Saharan Africa also lagged in mortality gains, with the average age of death there rising by fewer than 10 years from 1970 to 2010, compared to a more than 25-year increase in Latin America, Asia and North Africa.


The change means that people are living longer, an outcome that public health experts praised. But it also raises troubling questions. Behavior affects people’s risks of developing noncommunicable diseases like cancer, heart disease and diabetes, and public health experts say it is far harder to get people to change their ways than to administer a vaccine that protects children from an infectious disease like measles.


“Adult mortality is a much harder task for the public health systems in the world,” said Colin Mathers, a senior scientist at the World Health Organization in Geneva. “It’s not something that medical services can address as easily.”


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E.U. Leaders Hail Accord on Banking Supervision







BRUSSELS — European Union leaders on Thursday hailed an agreement to place banks in the euro area under a single supervisor, calling it a concrete measure to maintain the viability of the currency as well as a step toward a broader economic union.




The deal’s importance “cannot be appreciated highly enough,” Chancellor Angela Merkel told the Bundestag, the lower house of the German Parliament.


“Europe and the euro area are providing proof that they are able to meet the challenges they face,” François Hollande, the French president, said in a statement.


In another sign of renewed efforts to shore up the euro, finance ministers and international officials approved the release of further aid to Greece, including long-delayed payments and other aid totaling nearly €50 billion, or $65 billion, that is crucial for the government to avoid defaulting on its debts.


“The sacrifices of the Greek people have not been in vain,” Prime Minister Antonis Samaras said, referring to stringent austerity measures Greece had adopted in order to obtain the aid.


“Today is not only a new day for Greece, it is indeed a new day for Europe,” Mr. Samaras said in Brussels ahead of a two-day summit meeting of European leaders.


The agreement on new banking supervision would put between 100 and 200 major banks under the direct oversight of the European Central Bank, leaving thousands of smaller institutions to be overseen primarily by national regulators.


But E.U. finance ministers, who reached a deal after meeting for 14 hours late Wednesday and early Thursday, insisted that the E.C.B. would be able to take over supervision of any bank in the euro area at any time.


Mario Draghi, the president of the central bank, said the agreement “marks an important step towards a stable economic and monetary union, and toward further European integration.”


Mr. Draghi added that governments and the European Commission still had to work on the details of the supervision mechanism, which is to be fully operational by March 2014.


The system must also be approved by the European Parliament and national legislatures before it goes into effect.


The new system is intended to strengthen oversight of a sector that, under the supervision of national regulators, failed to prevent banks from accumulating so much debt that they put at risk the finances of euro zone states including Ireland and Spain, in turn threatening the future of the currency.


The agreement on banking supervision was expected to act as a springboard for European leaders to discuss later on Thursday steps leading to a broader banking union. Such measures would include a unified system, and perhaps shared resources, to ensure failing banks are closed in an orderly fashion. This would be followed, in time, by measures intended to reinforce economic and monetary union, including, possibly, the creation of a fund that could be used to shore up the economies of vulnerable members of the euro zone.


To win France’s agreement on the new banking supervisor, finance ministers agreed that only banks holding more than €30 billion in assets, or assets greater than 20 percent of their country’s gross domestic product, would be directly regulated by the E.C.B. Previously, France and the European Commission had asked that all 6,000 banks in the euro area should be closely regulated by the central bank.


Germany, facing pressure from a powerful domestic banking lobby trying to shield many small savings banks from closer scrutiny, had sought a reduced remit for the E.C.B. In the end, Germany agreed to allow the central bank to step in and take over supervision of any bank in the euro area at its discretion.


The Germans also had concerns that the central bank could be tempted to alter its decisions on monetary policy to make its supervisory job easier. As a compromise, Germany agreed that member states would be given greater scope than originally foreseen to challenge central bank decisions.


“We succeeded in securing Germany’s key demands,” Ms. Merkel said in Berlin. There would be a “clear separation” between the central bank’s responsibility for monetary policy and for oversight, she added.


Britain, which is not a member of the euro zone, had sought assurances that the new banking supervisor would not have influence over British banks operating abroad or banks operating in the City of London.


Britain agreed to a formula that should free it and other E.U. members outside the euro zone from most, but probably not all, rule-making by the E.C.B. These countries will also be able to challenge E.C.B. decisions on cross-border banking.


“The safeguards we have secured protect Britain’s interests and the integrity of the European single market,” said the chancellor of the Exchequer, George Osborne. “It shows that when Britain takes a tough stance but based on strong principle, Britain can win the argument and protect our interests.”


For countries including Spain and Ireland, the supervisor is a prerequisite for a new European bailout fund to provide aid directly to their troubled banks. That would allow those governments to avoid weighing down their national balance sheets with yet more debt..


But any direct recapitalization of banks is only likely to go ahead during 2014, once the supervisor is fully operating, and well after a German general election in October 2013. Still to be clarified is whether the aid could go to banks that have already run into trouble, or whether it would be used only to help lenders that falter in the future.


Providing direct support to banks is a sensitive matter for German taxpayers, who have grown weary of footing most of the bill for the euro zone’s bailouts.


Melissa Eddy contributed reporting from Berlin and Niki Kitsantonis from Athens.


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