WASHINGTON – Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday.

Medicare already is paying out more money than it receives, something that happened for the first time last year. And Social Security will be by 2016, a year sooner than had been projected, the trustees’ annual report said.

Unless changes in Social Security are enacted, the retirement fund will be depleted in 2037, four years sooner than projected last year. The Medicare trust fund is in even worse shape. It is projected to become insolvent in 2017, two years earlier than expected.

More immediately, the trustees do not expect Social Security recipients to get cost-of-living increases in 2010 or 2011, something that hasn’t happened since automatic adjustments were adopted in 1975. The Social Security Administration will set next year’s cost-of-living adjustment in October, based on inflation over the previous year.

“We should neither be casual nor hysterical about the revised insolvency dates,” Social Security Commissioner Michael Astrue said. “The Social Security system will weather this recession. However, the sooner we get on with the task of reforming the system, the easier it will be to make the tough choices.”

The recession is hurting both funds, which are financed by payroll taxes. The U.S. has lost 5.7 million jobs since the recession began, meaning fewer payroll taxes are flowing into the funds. At the same time, aging baby boomers and rising health care costs are adding to expenditures.

The trust funds – which exist in paper form in a filing cabinet in Parkersburg, W.Va. – are bonds that are backed by the government’s “full faith and credit” but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

Treasury Secretary Timothy Geithner, the head of the trustees group, said reducing health care costs is the key to saving Medicare.

“The most effective entitlement reform measure will be a major health reform that helps bring down the growth rate of national health care spending,” Geithner said.

The number of companies that have frozen their traditional pension plans has accelerated sharply this year, a trend that will likely continue as companies wrestle with declining profits and poor investment returns.

At least 16 companies have announced plans to freeze their pensions so far this year, vs. 18 for all of 2008. Last week, Wells Fargo told its employees that their pension plans will stop accruing benefits July 1.

When a pension is frozen, employees get to keep the benefits they’ve already earned, but the company usually won’t contribute any more money. Older employees are particularly hard hit because they have less time to make up for the loss, says Nancy Hwa, spokeswoman for the Pension Rights Center.

Severe investment losses in 2008 shrank the assets of the nation’s largest pension plans to 79 percent of projected liabilities, down from 109 percent at the end of 2007, according to an analysis by Watson Wyatt. Companies, already hurting in the weak economy, have to increase contributions to make up the difference, and are facing stricter federal requirements about funding the plans.

More companies will freeze their pension plans unless Congress temporarily relaxes the funding requirements, says Dena Battle, director of tax policy for the National Association of Manufacturers. “When your funding obligations triple and you don’t have the cash to deal with that and you don’t get relief from Congress, you have to make hard choices,” she says.

Pension-rights advocates and some lawmakers support giving relief only to companies that agree not to freeze their plans.

“Congress will be hesitant to provide pension fund relief without assurance that employers would protect benefits of rank-and-file employees and not divert funding relief to other uses,” such as corporate bonuses, says Sandra Salstrom, a spokeswoman for Rep. Earl Pomeroy, D-N.D., who is drafting a pension relief bill.

Battle says many plan sponsors would reject relief on those terms. The employer-sponsored retirement system, “has always been voluntary,” she says. “We work very hard to preserve that.”

The nation’s rough roads are leading to higher driving costs for American motorists – $400 on average, and $750 for drivers in urban areas, according to a new report released Friday morning.

A third of major U.S. interstates and major highways are in poor or mediocre condition, but it’s a particular problem in urban areas with populations of 250,000 or more, said the report by the American Association of State Highway and Transportation Officials and the road advocacy group TRIP.

“The American people are paying for rough roads multiple times,” said Michigan Department of Transportation Director Kirk Steudle. “Rough roads lead to diminished safety, higher vehicle operating costs, and more expensive road repairs.”

Among the report’s other findings:

In many urban areas nationwide, 30 percent to 60 percent of roads are in poor shape.

Nationwide, 72 percent of federal interstate highways are in good shape, but that could decline quickly because the roads are aging and carrying more traffic.

Frank Moretti, director of policy and research for TRIP, said President Obama’s federal stimulus program to spend billions to upgrade the nation’s highways is a “helpful down payment” but additional investment will be necessary to ensure better roads that are capable of handling higher traffic volumes.

Timing is everything. Hit the Web site at the right time, and you get tickets to Bruce Springsteen and the E Street Band. Two seconds too late, and you’re watching Bill and the Ankle Biters.

As far as we can tell – you never know what will happen next – the Standard & Poor’s 500-stock index bottomed on March 9. It’s up 34.1 percent since. You may feel you missed a chance to get the biggest bargains.

And you did. But you can still find plenty of bargains. The easiest to find are in closed-end mutual funds.

A closed-end fund is the earliest form of mutual fund and, frankly, they’re relics of a bygone era. They have a structure that was first developed in the 1920s, and has long since been improved upon.

Like all mutual funds, closed-end funds are a professionally managed portfolio of stocks or bonds. And like exchange traded funds, you can buy and sell shares of closed-ends on the stock exchanges.

But unlike all other types of funds, closed-end funds issue a fixed number of shares. New closed-end funds raise money through an initial public offering and use that money to buy and sell stocks and bonds. In this sense, a closed-end fund is a bit like any company that’s listed on the stock exchanges. One way to think of a closed-end fund is as a corporation whose business is buying and selling stocks.

What makes a closed-end fund peculiar is that its share price often doesn’t reflect the value of its holdings.

Let’s consider the Cohen & Steers Worldwide Realty fund, which trades under the ticker RWF. As of Wednesday, the assets in the fund’s portfolio, minus expenses, were worth $4.48 a share. But the fund’s shares sold that day for $3.38 – a 32.5 percent discount, in closed-end parlance. If the fund were liquidated that day, brand-new shareholders would get an instant profit of $1.10 a share.

Most closed-end funds sell at a discount, which has mystified academics for years. One theory is that closed-end funds don’t liquidate very often. And if they were to sell all their holdings at once, they would have to do so at fire-sale prices.

But basically, closed-end funds sell at a discount because the fund’s share price reflects what investors think of the fund’s prospects, not its current value. Shareholders would be right to have a low opinion of Cohen & Steers Worldwide Realty fund. Its shares have plunged 76.9 percent in the previous 12 months, including reinvested dividends, according to Morningstar, the Chicago investment trackers.

Investors are often mistaken, though. As witness to this, a few funds sell for a premium – that is, for more than the value of their holdings. Pimco High Income, for example, sold at $8.59 a share Wednesday, even though the securities in its portfolio were valued at $4.74 a share, an 81.2 percent premium.

As you may have guessed, it’s better to buy at a discount, not a premium. As proof, we looked at the entire universe of closed-end funds and ranked them by their premium or discount five years ago. We then created four groups – group one had the highest premium. Group four had the biggest discounts, and groups two and three were in the middle.

Group one sold for an average premium of 10.9 percent. The funds, which were a mix of stock and bond funds, lost an average 19.6 percent over five years. Group four, the cheapest funds, sold for an average discount of 8.3 percent. Average return: -4.1 percent.

Buying at a steep discount is no guarantee of profits. The Boulder Total Return fund sold for a 15.6 percent discount five years ago, and has since plunged 39 percent. Nevertheless, the universe of deeply discounted closed-end funds is a good place to start hunting for bargains. The Latin America Discovery fund, which sold for a 16.7 percent discount five years ago, has soared 123 percent.

Cecilia Gondor, editor of The Investor’s Guide to Closed-End Funds, says that closed-end fund discounts are still huge, compared with their historical averages. The average discount is about 4 percent; it’s 8 percent now. She favors closed-end municipal bond funds, which currently sport average tax-free yields of 6.4 percent.

Many closed-end muni funds use borrowed money to augment their yields, and that increases risks, too. Be sure to check that before you buy.

For the daring, closed-end real estate funds might be a good place to start. The Cohen & Steers management team is one of the best in its field. For technology buffs, Gabelli Global Multimedia Trust (GGT) is selling at a 25.4 percent discount.

You can find a great deal of information on closed-end funds, including premiums and discounts, at www.closed-endfunds.com, as well as www.morningstar.com. Choose your picks carefully. If you buy a closed-end fund at a discount, you may not have time on your side. But you will have price – and that’s a big advantage.

For the next six months, a new inflation-adjusted Savings Bond will provide exactly the same investment return as the space beneath your mattress.

Treasury announced last week that inflation-adjusted Savings Bonds purchased from May through October will earn 0 percent for the first six months they’re held. This is the first time I Bond returns have fallen to zero since Treasury started issuing them in 1998, says Daniel Pederson, author of “Savings Bonds: When to Hold, When to Fold, and Everything In-Between.”

Consider this the downside of $2 gasoline. The I Bond consists of two components: a fixed rate that stays the same for the life of the bond and an inflation rate that’s adjusted every six months. The inflation component for I Bonds issued from May through October is based on the change in the consumer price index from September through March.

Primarily because of sharp declines in the cost of energy, consumer prices fell at an annual rate of 5.56 percent from September 2008 through March 2009. The decline in the inflation rate will vaporize the 0.10 percent fixed rate for I Bonds issued from May through October. The drop will also wipe out the interest on older I Bonds with much higher fixed rates, says Tom Adams, author of Savings Bond Advisor. The 0 percent interest rate will affect “every I Bond that’s ever been issued,” he says.

The only good news is that I Bond owners won’t lose any money. Under the Treasury formula, the earnings rate on I Bonds will never fall below zero. If you already own I Bonds, you won’t earn any money during the relevant six-month period, but you won’t lose any of your principal.

This may come as small consolation to I Bond owners who are facing six months of oblivion. But before you ditch your I Bonds, there are a couple of factors to consider:

- When your inflation-adjusted rate will reset. The inflation component of your I Bond is adjusted every six months, depending on when you purchased your bond. If you own an I Bond that was purchased in April, for example, your rate won’t drop to zero until October, Adams says. Until then, the bond will continue to earn an inflation-adjusted rate of 4.92 percent, plus the fixed rate that was in effect when you purchased your I Bond. Sell now, and you’ll give up five months of above-average interest.

- The fixed rate for your I Bonds. If you purchased an I Bond in 1998 through 2001, you should hold on to it, even during this fallow period, Pederson says. Those bonds carry fixed rates of 3 percent or more for the life of the bond.

When high gas prices led to a surge in the inflation rate last spring, some of these older I Bonds earned more than 8 percent. Even if inflation rises to a modest rate of 2 percent to 3 percent, these bonds will earn 5 percent to 6 percent, Pederson says. But if you sell, you’ll lose that fixed rate forever.

“Don’t do something knee-jerk because you see a 0 percent rate,” Pederson says. “Over the long haul, you could still have a very attractive investment.”

On the other hand, if you own some I Bonds with lower fixed rates, the six-month 0 percent rate offers an opportunity to ditch them without paying a penalty. When you buy an I Bond, you can’t redeem it for a year, and if you sell in less than five years, you’ll forfeit the last three months of interest. But if your interest rate for those last three months is zero, cashing out early won’t cost you anything.

While the recession has kept prices in check, many analysts believe large-scale government borrowing will eventually ignite inflation, which would increase the I Bond’s return. But even if you agree that inflation is a looming threat, it’s probably not a good idea to buy I Bonds now, Pederson says, because of the low fixed rate.

The 0.10 percent fixed rate Treasury is offering for I Bonds purchased in May through October means you’ll earn only a hair above the inflation rate on any I Bond purchased from now through Oct. 31. If you believe I Bonds are a good long-term investment, Pederson says, “There’s no risk to waiting until Nov. 1 and seeing if they do better with the fixed rate.”

In addition to the I Bond, Treasury offers an EE Bond that pays a fixed rate for the life of the bond. Treasury said last week that EE Bonds issued from May through October will pay a rate of 0.7 percent, down from an already measly rate of 1.3 percent for EE Bonds issued from November through April. Even in this low-rate environment, Adams says, “It’s just really hard to come up with an argument for investing in EE Bonds.”

———

CONSERVATIVE PAYS LITTLE

I Bonds purchased from May through October will earn a 0 percent interest rate. Yields on other conservative investments:

1-year CD: 1.28 percent

5-year CD: 2.24 percent

Money market account: 1.34 percent

6-month T-bill: 0.30 percent

2-year T-note: 0.94 percent

Sources: Bankrate.com, Bloomberg News

NEW YORK – A pay-to-play scandal that began in New York, but is now expanding rapidly into other states, broadened again Thursday as authorities brought criminal charges against an executive at a Dallas firm that advises some of the country’s biggest public pension funds.

Saul Meyer, the 38-year-old managing partner of Aldus Equity Partners, was arraigned in Manhattan on charges that he violated state business law.

Prosecutors said he paid $300,000 in kickbacks to an aide to the state’s former comptroller in exchange for a state retirement fund investment deal worth $175 million.

Court papers said that while seeking an additional $200 million from the fund, Meyer also curried favor with pension officials by arranging for the comptroller’s son to get $250,000 in fees on an unrelated investment deal with a government fund in New Mexico.

Meyer is the fifth person charged in a probe led by N.Y. state Attorney General Andrew Cuomo that has raised questions about the conduct of investment companies that paid politically connected “placement agents” to help obtain pension fund business.

Cuomo’s probe has so far focused on deals struck during the tenure of former state Comptroller Alan Hevesi, but he signaled Thursday that the investigation had raised suspicions of wrongdoing in other states.

“I believe we are disclosing a national network,” Cuomo said. “This is all across the nation, and it continues today.”

He said more people and companies could face charges soon, and added that his investigators were passing information to other law enforcement agencies.

Meyer flew from Texas to New York for his arraignment, was released on $200,000 bail and flew home. His lawyer, Paul Shechtman, said his client is innocent.

“The time and the evidence will show that Saul Meyer did nothing wrong,” he said.

It is not illegal for companies to pay politically connected placement agents for help obtaining business from a government pension fund, but many states require those arrangements to be disclosed. The payments cannot be made as a cover for outright bribes.

A spokesman for Aldus had no immediate comment.

The Securities and Exchange Commission also filed court papers Thursday charging Meyer and Aldus with regulatory violations, saying the payments they made to Hevesi political aide Hank Morris amounted to “sham fees.”

That aide, Hank Morris, was previously charged in March along with the retirement fund’s chief investment officer, David Loglisci. Another Dallas businessman, Barrett Wissman, was later charged along with the former chairman of New York’s now-defunct Liberal Party.

Neither Hevesi nor his son, Daniel, who briefly worked as a placement agent while his father was in office, have been charged.

New Mexico’s State Investment Council fired Aldus as its financial adviser Wednesday.

Even if you’ve done everything you’re supposed to do to prepare for a layoff – built up an emergency fund, paid off your credit cards, set up an account on LinkedIn – losing your employer-provided health insurance could demolish your finances. Your health could suffer, too.

While many insurers offer individual policies, they’re primarily targeted at the young and healthy. Individuals who are older or have medical problems are often turned down or charged prohibitively high rates.

The economic stimulus package enacted this year seeks to address this problem by lowering the cost of continuing your former employer’s health insurance. Unfortunately, many laid-off workers are discovering that they’re ineligible for this subsidy. Others may need to take extra steps to demonstrate they’re qualified.

Under the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA, laid-off workers can continue their former employer’s health coverage for up to 18 months. In the past, participants had to pay 102 percent of the premiums, making COBRA unaffordable for most unemployed workers.

The stimulus package subsidizes 65 percent of COBRA premiums for up to nine months for individuals who were laid off between Sept. 1, 2008, and the end of this year. With the subsidy, the average family will pay $377 a month or $140 for an individual, according to the Kaiser Family Foundation.

That’s still more than most employees pay for insurance while they’re working. But if you’re eligible for the subsidy, you should try to take advantage of it, says Ron Pollack, executive director of Families USA, a health care advocacy group.

Signing up for COBRA will allow you to continue the same coverage you had when you were working, even if you or anyone in your family has medical problems. In addition, it will preserve your ability to get insurance in the future, even if you have a pre-existing medical condition.

Reasons you may be ineligible for the COBRA subsidy:

- Your former employer has gone out of business or terminated its group coverage. These companies are no longer covered by COBRA, says Michael Langan, principal at Towers Perrin, a human resources consultant.

- You lost your job because of gross misconduct or left voluntarily.

However, recently issued guidelines from the IRS “take a very liberal position” on what constitutes involuntary termination, Langan says. For example, if you’re unemployed because your employer closed your branch, that counts as an involuntary termination, Langan says, even if your company offered you a job in another part of the country.

Similarly, employees who accepted a buyout because their employer said the offer would be followed by layoffs qualify for the subsidy, he says.

The Labor Department has an appeals process for unemployed workers who were denied the subsidy. For more information, go to www.dol.gov/cobra.

Mini COBRA laws

Some individuals who worked for small companies may also be ineligible for the subsidy. The federal law applies only to companies with 20 or more workers.

More than 39 states and Washington, D.C., have enacted “mini COBRA” laws that require small companies that provided health insurance to allow former employees to extend their coverage. Jobless workers who are covered by a state mini COBRA law could qualify for the subsidy.

But if you worked for a small company and are out of work, there are a couple of things you should keep in mind. First, mini COBRA laws – and the subsidy – apply only to workers who had group coverage in the first place. Most companies with fewer than 20 workers don’t provide health insurance, Langan says.

In addition, not all state mini COBRA laws are as comprehensive as the federal law.

Some states require companies only to provide extended coverage for three months. Others don’t give individuals who declined to enroll in COBRA when they were laid off a second chance to sign up. The federal law gives such individuals 60 days to re-enroll.

Several states are considering legislation to adopt or expand mini COBRA laws. For more information, contact your state’s insurance department. The National Association of Insurance Commissioners provides links to state insurance department websites at www.naic.org.

The 2008 stock market plunge has inspired jokes, bumper stickers and offhand quips to the following effect: My 401(k) is now a 201(k).

Behind the gallows humor is an uncomfortable truth: The bear market, as of March, wiped out an estimated $2 trillion in value from 401(k)s and individual retirement accounts.

The losses have reset retirement expectations for many older workers and exposed the dangers of a retirement-savings system that has shifted responsibility and risk onto the workers themselves.

In 1980, 60 percent of private-sector workers were covered by a defined-benefit pension plan, while 17 percent were offered a 401(k) – then a new investment vehicle that allowed workers to stash away income tax-free, often supplemented by matching funds from the employer.

By 2006, those numbers were reversed: Now only 10 percent of workers have a defined-benefit plan, while 65 percent are offered a 401(k). The number of workers who were offered both types of plans stayed flat.

The rising share of workers with 401(k)s means that individuals need to make decisions about how to invest a big chunk of their retirement savings. Advocates say that’s not always a good thing.

“People are not ready to take care of themselves, quite honestly,” said Jean Setzfand, director of financial security for AARP, the 40 million-member advocacy group for Americans over age 50.

For those close to or already in retirement who have seen their accounts decimated, there may be no option but to work longer or rejoin the work force. But everyone who manages a retirement account can benefit by following a few pieces of advice.

Keep contributing

The temptations to cut 401(k) contributions can be myriad. Workers are weary from market losses. Financial pressures on families are mounting, making the extra income a tantalizing target. Some companies have stopped providing matching funds.

But those who cut off the flow of funds to their retirement accounts miss the opportunity to buy into the market at a discount.

“The biggest mistake is not continuing to contribute,” said Carol Arnott, a certified financial planner with Greenville Financial Group. “When the market is in such a decline, it’s a great place for us to be buying in with our long-term money.”

Don’t jump around

Another temptation is to move 401(k) money away from battered stock funds to safer investments like money market funds. Doing so locks in losses from the bear market and ruins the chance of benefiting from the rebound.

It’s simply impossible to time the market, Arnott said. Another mistake she sees is investors who jump in and out of investment funds based on their performance in the previous year.

“It’s like barreling down I-95 and looking in the rearview mirror,” Arnott said. “You are destined to crash.”

And for those who want to cash out a 401(k) when leaving a job, beware – it will cost you 20 percent of the account’s value in federal taxes, and 10 percent in early withdrawal penalties.

Watch asset allocation

It’s not smart to hop from fund to fund – but inertia can also be dangerous. Workers need to rebalance their retirement accounts as they age to adjust risk levels and find the proper mix of equity and fixed-income investments.

“When you leave people to their own devices, a large percentage of people close to retirement ended up betting way too heavily on equities,” said Jack VanDerhei, research director at the Employee Benefits Research Institute.

One answer to the problem of asset allocation is target-date, or lifecycle funds, where fund managers choose an investment mix based on an individual’s expected retirement date, although the management of these funds has recently come under increased scrutiny.

Reconsider expectations

Younger workers have the benefit of having many more years to return their retirement accounts to health. For those closer to retirement, big 401(k) losses may require fundamental adjustments in their plans.

One strategy is to extend the time frame in which workers plan to tap their 401(k)s. For some, that may mean postponing retirement, or even finding a job in retirement to keep some income flowing.

“Stay in the work force as long as you can,” advised AARP’s Setzfand. “Only time can help resolve this matter.”

NEW YORK – First-quarter earnings at Qwest Communications International Inc. rose 37 percent, as the phone company was helped by cost-cutting and strong results from its business services unit.

Denver-based Qwest said Wednesday its net income was $206 million, or 12 cents per share, for the first three months of the year. That rose from $150 million, or 8 cents per share, a year ago.

Revenue fell 7 percent from a year ago to $3.2 billion, as consumers continued to cancel landline service. Qwest has also stopped selling wireless service under its own brand. Excluding that change, revenue fell 5 percent from a year ago. Qwest is now reselling Verizon Wireless service, which doesn’t add to its revenue in the same way.

Thomson Reuters says analysts had been expecting earnings of 8 cents per share on $3.2 billion in revenue.

Qwest shares rose 26 cents, or 7.3 percent, to $3.83 in premarket trading after the release of the results.

Cost-cutting at the company has mainly been in the form of job cuts: Qwest has slashed 10 percent of its work force since last year, ending the quarter with 32,800 employees.

Qwest’s local-phone service business, which serves Arizona and parts of 13 other states, had revenue of $1.3 billion, a decline of 11 percent from a year ago. It added 42,000 broadband customers but lost 259,000 phone lines.

Business services were the bright spot for the company, despite a challenging market because of the economy. Revenue rose 3 percent to $1 billion.

Qwest’s long-haul business, which carries calls and Internet traffic across the country, saw its revenue decline 11 percent to $752 million, partly due to lower prices.

Qwest said it was sticking to its 2009 projections, still expecting earnings before interest, taxes, depreciation and amortization to be $4.2 billion to $4.4 billion this year. It made the same projection three months ago.

HARTFORD, Conn. – Waste Management Inc., the nation’s largest garbage collector, said Wednesday its first-quarter profit fell 36 percent as the recession hurt prices of recycled goods and lowered the amount of trash picked up.

The Houston-based company said in February it expected a weak first quarter. With building activity down sharply, construction companies are carting off less trash from work sites. And as people shop and eat out less, restaurants and small businesses are generating less garbage, requiring fewer trash pickups. Meanwhile, declining markets for recycled materials hit Waste Management particularly hard.

Waste Management posted net income of $155 million, or 31 cents per share, down from $241 million, or 48 cents, in the first quarter of 2008.

For the quarter ended March 31, revenue fell to $2.81 billion compared with $3.27 billion for the same period in 2008.

Excluding charges for restructuring and dropping the use of SAP software, earnings would have been 42 cents per share, edging passed analysts’ average expectations of 41 cents per share.

Shares rose 53 cents, or 1.96 percent, to $27.51 in early trading Wednesday.

Less than 5 percent of the $456 million decrease in revenue was from solid waste collection and disposal, the company said. The rest was due to the recycling business, fuel and energy and non-operational items including foreign currency translation and one fewer work day during the first quarter.

Waste Management CEO David P. Steiner said deterioration in the market for recycled paper, newsprint, metals and other materials lowered Waste Management’s profit by 9 cents per share in the quarter.

The company expects a negative year-over-year impact from recycling operations of 15 cents to 20 cents per share for 2009, most of which is expected to be in the first half, Steiner said.

The price of recycled materials began falling last year after reaching record highs along with the strong economy. But the market tanked almost in lockstep with the recession as consumer demand for autos, appliances and new homes dropped, pushing down demand among steel and pulp mills’ for scrap, paper and other recyclables.

Volumes are still down from last year, but domestic markets are growing slowly and export demand has started to return, a spokeswoman for Waste Management said. Fiber — everything from fine office paper to newsprint to cardboard — and plastics are gradually rising in price and volume.

Aluminum and steel prices remain low, she said.

WM Recycle America, a subsidiary of Waste Management, handles more than 5.5 million tons of recyclables each year in its 109 plants, the company says.

In addition, Waste Management reported that a key measure of its business — revenue from trash volumes — fell 8.1 percent in the quarter. However, adjusting for the effect of one less work day, the decline was 7.4 percent, steeper than the 5.9 percent drop in the fourth quarter of 2008.

CHARLOTTE, N.C. – Bank of America Corp. Chairman and CEO Ken Lewis faced angry shareholders at the bank’s annual meeting Wednesday, and defended his company’s acquisition of Merrill Lynch & Co. — a deal that has many investors calling for Lewis’ dismissal.

The meeting at a theater near BofA’s Charlotte headquarters began late because so many attendees — including bank employees — were still streaming in at the 10 a.m. EDT scheduled start time. Security was tight and, as expected, there were protesters against Lewis outside the building.

Although big investors including California’s employee pension fund have called for shareholders to oust Lewis and his fellow directors at the meeting, the CEO was greeted by applause as he took the stage. In prepared remarks, he defended the company’s acquisition of Merrill and another troubled company, mortgage lender Countrywide Financial Corp.

Lewis said the companies are providing “the positive counterbalance to our traditional banking businesses, which at this point of the business cycle are under much more stress from rising credit losses.”

“Countrywide and Merrill Lynch are two of the most important reasons Bank of America is the most profitable financial services company in the United States so far this year,” Lewis said. “Today, I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated.”

The banking giant and Lewis have been under intense scrutiny because Bank of America is one of the biggest recipients of government support and because losses at Merrill turned out to be much higher than anyone expected.

Shareholders who have been calling for Lewis to resign or be dismissed as chairman and CEO are also irate over the precipitous drop in the company’s stock price. Bank of America has fallen 42 percent since the beginning of the year, closing Tuesday at $8.15. But shares fell as low as $2.53 in late February.

In his remarks Wednesday, Lewis said, “I know the Merrill deal has played a role in the decline of our stock price. But I do not believe it is solely responsible for its decline.” He said every major commercial bank in the country is under pressure.

A number of investment groups have campaigned for other shareholders to vote against the re-election of Lewis and other board members at the meeting. However, it is possible that at the meeting or at some point in the near future Lewis might lose his title as chairman while remaining CEO — a change that has been made at other troubled companies.

Bank executives likely knew how the vote was going ahead of the meeting, but preliminary results weren’t being released. The bank’s proxy statement shows shareholders are voting on 11 different proposals, including one regarding limits on executive compensation — a controversial topic for banks that received government funds.

Bank of America’s board has said it supports Lewis.

On his way into the meeting, shareholder John Moore, of Charlotte, said, “I think now is the time for Mr. Lewis to resign. We thank him and the board for their service.” Moore said he owns 18,000 shares in the bank.

On Tuesday, the California Public Employees’ Retirement System said it would vote against re-electing all 18 Bank of America board members, including Lewis. CalPERS, the largest U.S. public pension fund, holds about one-third of 1 percent the bank’s outstanding shares.

Bank of America has received $45 billion in government aid as part of the Troubled Asset Relief Program, and additional guarantees backing hundreds of billions more in risky investments after it took over Merrill Lynch in January.

On Tuesday, two people familiar with the matter said the Bank of America and Citigroup Inc. will need to raise more capital if they can’t convince regulators that “stress test” results were mistaken. Results of the tests, which are designed to determine if the banks can weather more economic turmoil, are expected to be released next week. BofA and Citi are preparing their appeals of the government’s assessment, said the people, who spoke on condition of anonymity because everyone involved in the process has been ordered not to discuss it

The government helped orchestrate the acquisition of Merrill Lynch over the same weekend in September that another investment bank, Lehman Brothers, collapsed, setting off one of the most intense periods of the financial crisis.

Bank of America completed its purchase of Merrill Lynch on Jan. 1. Since then, Bank of America has been under pressure from shareholders about the deal, especially as Merrill Lynch reported a more than $15 billion fourth-quarter loss just weeks after the deal was completed.

Daimler AG has agreed to surrender its ownership stake in Chrysler LLC and forgive repayment of a $1.5 billion loan, while Cerberus Capital Management dropped charges that Daimler hid the depth of Chrysler’s problems prior to the 2007 sale.

Daimler also will make three annual $200 million payments into Chrysler’s pension plans, beginning this year. An existing pension guaranty by Daimler of $1 billion to the U.S. Pension Benefit Guaranty Corp. will be reduced to $200 million.

Last September, Cerberus began talks with Daimler over the private equity fund’s possible purchase of Daimler’s stake in Chrysler. Those talks broke down after Cerberus accused Daimler of painting a rosier picture of Chrysler’s condition than financial reports warranted.

Meanwhile, Chrysler’s UAW workers are voting on a proposed agreement that could reduce the chance the company will file bankruptcy, which factory-level leaders unanimously recommended for approval Monday night. The company and union extended until May 25 a deadline for a buyout offer.

Some of Chrysler’s 26,000 hourly U.S. workers have already accepted the buyout, but neither the company nor the UAW would say how many.

Those who accepted, but want to withdraw their acceptance until May 25, had to notify their plant’s human resources department by Monday, according to a letter from General Holiefield, vice president of the UAW’s Chrysler department.

“I apologize for not being able to provide this information sooner,” Holiefield said.

Everyone who has accepted the offer will be entitled to any future improvements in the offer that may be negotiated between the UAW and Chrysler and Fiat.

The buyout provides a taxable lump sum of $75,000 and a $25,000 voucher for a new Chrysler vehicle for those under 55 with at least one year of seniority. Those between 55 and 62 with at least 10 years of service can retire with full pension benefits.

NEW YORK – Could your finances survive a stress test? If you’re unsure, it might be time to play a game of Wall Street regulator at home.

The idea behind the Obama administration’s “stress tests” is to gauge whether the nation’s 19 largest banks are financially sound. Regulators are expected to put firms into three groups: those that are healthy, those that need more money and those at risk of failure.

For the purpose of your home experiment, let’s assume a scenario where you’re laid off, have a medical emergency or need major repairs on your car or home. Could you make ends meet? If so, for how long?

“The ideal situation is that you prepare when you still have time,” said Karin Maloney Stifler, a certified financial planner with True Wealth Advisors in Hudson, Ohio.

The rule of thumb is that you should maintain an emergency fund of three to six months of living expenses. But emergency funds are often an ideal rather than a reality. And with the ranks of unemployed in March being out of work for an average of 5 months, chances are you’d have to dig deeper.

To gauge your ability to pull through a financial calamity, work through the four steps below. For each, rate your strength on the topic from 1 to 5. Give yourself a 1 if that aspect of your finances couldn’t provide any help in an emergency; give yourself a 3 if you feel the area could use some work; and rate yourself a 5 if you feel entirely comfortable with that part of your financial plan.

If you score less than 3 on more than one area, it might be time to start fortifying your financial plan.

• STEP 1: CHECK THE ACCESSIBILITY OF YOUR RESERVES

In an emergency, how quickly would you be able to get to your cash? How much money do you have available, including certificates of deposit, emergency funds and retirement accounts?

Keep in mind that getting a loan will only get harder if you’re laid off. So if you currently fear losing your job, tweak your strategy accordingly. That means thinking twice before locking up money in long-term CDs or retirement funds.

“You want to focus on preserving your money rather than growing it,” Stifler said.

If your money is already locked up, factor in any penalties you’d have to pay to get it out.

With CDs that last two to 18 months, for instance, penalties of three months’ interest are common, according to Bankrate.com. So if you put $10,000 in a 1-year CD with a 2 percent rate and wanted to withdraw money after five months, you’d forfeit around $50.

For future reference, remember that one way to avoid problems with tying up your savings is to set up a “ladder” of CDs with staggered maturities.

As for counting on retirement accounts, think again. You can’t borrow from your 401(k) once you’ve been laid off. And there are only limited circumstances where you can take a hardship withdrawal. Plus, taking a distribution before you’re 59 1/2 means paying a 10 percent penalty — that’s in addition to the income taxes on the withdrawal.

Your best bet is a Roth IRA, if you have one. This lets you take out any money you contributed without penalty since it’s after-tax money. To take out any earnings before you’re 59 1/2, however, you’ll need to pay a 10 percent penalty.

• STEP 2: DETERMINE WHERE YOU CAN SLASH EXPENSES

Examine your spending and weigh every expense, no matter how trivial. This exercise will help create an emergency budget you could trigger in a dire situation.

“Think of things you don’t think are significant. An extra $10 or $20 for cable or phone service or Netflix can all add up to $100 or more a month,” said William Driscoll, a certified financial planner and president of Driscoll Financial in Plymouth, Mass.

Ask everyone in your household to bring ideas. Your spouse might agree to stop buying lunch at work. Your teenage daughter might limit her text messages each month. You might cut back on movies and books.

You’ll probably discover a slew of cuts worth making immediately. Other cuts can be saved for when the stress arises.

• STEP 3: ASSESS INCOME SOURCES

On top of spending less, you need to figure out ways to supplement your income if your finances come under pressure.

For instance, don’t expect to get by on unemployment checks alone. The figures vary depending on the state you live in, but benefits on average are 50 percent of your wages, with a cap on how much you can get. In California, for instance, the weekly cap is $450.

If you’re married, ask if your spouse could take on additional overtime. While you’re at it, be sure that you’re keeping each other posted about job security. The last thing either of you need is to be surprised.

Check in with human resources, too. You need to know what short-term and long-term disability benefits you can count on in a medical emergency. How long do benefits last and how much money can you expect?

Another source of cash might be right under your nose. Look around the house. Is there a room you could rent out? How about items you could sell? Make a list of everything you think could sell and estimate how much each item is reasonably worth.

“In an emergency situation, you have to take stock of whatever you have and use it,” Driscoll said.

• STEP 4: EVALUATE YOUR SUPPORT NETWORK

When planning for an emergency, friends and family might be your first thought. But they should be tapped as a last resort, Stifler said.

Many people are struggling right now, and it’s unfair in any scenario to expect someone else to support you.

That said, there may be very close family members you feel comfortable talking to about a loan in a true emergency. If so, be clear on how much they could afford, and under what terms.

“You have to be ready for the possibility that a family member might say no,” Stifler said.

If you’re not comfortable broaching the topic, don’t count on their help as a sure bet.

WASHINGTON – President Barack Obama is pushing to rein in costs for millions of Americans who use credit cards, an appeal to consumers as many struggle to pay their bills.

But the banking industry is warning that Obama’s push for legislation could backfire, restricting lenders and making less credit available to Americans during the economic crisis.

Obama was meeting with leaders of the credit-card industry Thursday, a session the White House said would be an “open and productive conversation.”

“The president believes new rules of the road for the credit card industry are needed,” Obama senior adviser Valerie Jarrett said ahead of the president’s planned session at the White House with executives from the nation’s top credit-card companies.

Obama and some congressional leaders are particularly focused on what they consider to be abusive and deceptive practices that squeeze people into paying much higher fees or interest rates than anticipated. Both the House and Senate are considering a credit card “bill of rights” to limit the ability of credit-card companies to raise interest rates on existing balances and to require greater disclosure.

At issue is how to protect consumers, particularly in a severe economic downturn, while not imposing the kind of rules that could make it harder for banks to offer credit or that put credit out of reach for many borrowers. Industry advocates are wary of those consequences and hopeful Obama will listen.

Kenneth Clayton, senior vice president for card policy at the Americans Bankers Association, said the concern is that new legislation may make economic matters even worse by shrinking lenders’ ability, resulting in “less credit available to vast numbers of Americans” at just the wrong time.

The Federal Reserve has already ordered new rules, to take effect in July 2010, that are designed to enforce a host of new consumer protections.

On Thursday, Sen. Chuck Schumer, D-N.Y., a member of the Finance Committee, and Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, wrote a letter asking the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration to use their emergency powers and put next year’s planned rules in place immediately.

“Congress is working on legislation to strengthen these rules and provide additional protections for consumers,” the senators wrote. “As Congress works to pass this legislation, and before your rules become effective, issuers continue to operate using unfair and deceptive acts and practices.”

Almost 80 percent of American households have credit cards. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008, according to CreditCard.com, an online marketplace designed to link consumers and card issuers.

The White House says Obama is aware of the importance that credit cards hold in many families, particularly as a last option during hard times.

White House economic adviser Larry Summers said over the weekend that the administration wants to curb pitches that addict people to plastic.

“Individuals are going to have to save more. That’s why savings incentives are so important,” he said. “That’s why we need to do things to stop the marketing of credit in ways that addicts people to it and so that our households are again saving and families are again preparing to send their kids to college.”

NEW YORK — Wells Fargo & Co. on Wednesday reported a record first-quarter profit in line with its forecast, easily beating the average analyst estimate.

Despite the record results, Wells Fargo, like many major banks, continues to report higher credit costs.

Still, investors found the report satisfactory and sent the stock up more than 6 percent in morning trading.

Wells Fargo is among a number of the largest U.S. banks, including Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., that have reported better-than-expected profits. Morgan Stanley, however, posted a quarterly loss on Wednesday that exceeded Wall Street’s estimates, due in part to weakening commercial real estate investments.

Like the others, Wells Fargo attributed much of its profit growth to a surge in mortgage revenue, thanks in no small part to historically low interest rates.

Wells Fargo originated $101 billion of mortgage loans during the quarter — the highest level since 2003. This included $83 billion in applications in the month of March alone. What’s more, the bank added 5,000 employees in its mortgage unit to handle the influx of activity — in sharp contrast with many of its peers that have been cutting thousands of jobs to save expenses.

Analysts have warned that the increase in mortgage banking activity is likely not sustainable over a long period of time.

Chief Financial Officer Howard Atkins told the Associated Press that the bank had $100 billion of unclosed mortgage applications in the pipeline at the end of the first quarter — signaling that the momentum will continue at least into the second quarter.

The bank’s results prove Wells Fargo continues to navigate the financial crisis much better than many of its peers, analysts said.

“Certainly Wells Fargo isn’t immune to the challenging environment, and they are impacted by the weakening economy and higher credit losses,” said Tom Kersting, a financial services analyst at Edward Jones. “But they have shown that their discipline has resulted in better loan quality and that has shown through in this quarter.”

Wells Fargo also gave investors a positive update on the status of Wachovia’s troubled loan portfolio: no more losses on the most troubled loans are expected so long as credit conditions don’t materially worsen.

Wells Fargo bought Charlotte, N.C.-based Wachovia last fall at the height of the credit crisis and many investors have been worried that the bank’s deteriorating mortgage portfolio could prove more problematic than originally estimated.

When Wells Fargo bought Wachovia, it split its loan portfolio up into two categories: high-risk, or impaired, and low-risk.

Wells Fargo took a massive $37.2 billion writedown on the high-risk portion of Wachovia’s loan portfolio in the fourth quarter, which saddled the bank with a loss of $2.83 billion. Essentially, the bank removed from its balance sheet the entire estimated amount of losses on the riskiest loans at year end.

What remains is the portion of loans considered low risk, which have much lower loss content, Wells said. During the first quarter, losses on these loans totaled $371 million.

Legacy Wells Fargo chargeoffs, or loans written off as unpaid, were $2.89 billion, or 2.82 percent of average loans, up slightly from $2.8 billion, or 2.69 percent, in the fourth quarter. Nonperforming assets, or loans past due, totaled $12.61 billion, or 1.5 percent of total loans.

Wells Fargo earned $2.38 billion, or 56 cents per share, in the January-March period. This compares with $2 billion, or 60 cents per share, a year earlier.

The decrease in the 2009 earnings-per-share figure from a year ago was due to an increase in average common shares outstanding.

Before paying preferred dividends, the company earned $3.05 billion. Revenue for the quarter totaled $21 billion.

The report gave investors few surprises, as results were in line with the bank’s most recent forecast. Wells Fargo had dazzled investors earlier this month when it said it would report a record first-quarter profit of $3 billion, much more than analysts had been expecting. That sent its shares soaring 31.7 percent.

Analysts, on average, had predicted a profit of 23 cents per share on revenue of $19 billion. Since the announcement, the average analyst estimate increased to 41 cents per share.