Venezuela Announces Currency Devaluation

CARACAS, Venezuela (AP) — Venezuela's government announced Friday that is devaluing the country's currency, a change expected to push up prices in the heavily import-reliant economy.

Officials said the fixed exchange rate is changing from 4.30 bolivars to the dollar to 6.30 bolivars to the dollar.

The devaluation had been widely expected by analysts in recent months. It was the first devaluation to be announced by President Hugo Chavez's government since 2010.

Planning and Finance Minister Jorge Giordani said the new rate takes effect immediately, though the old rate would still be allowed for some transactions that already were approved by the state currency agency.

Venezuela's government has had strict currency exchange controls since 2003 and maintains a fixed, government-set exchange rate.

Under the currency controls, people and businesses must apply to a government currency agency to receive dollars at the official rate to import goods, pay for travel or cover other obligations.

While those controls have restricted the amounts of dollars available at the official rate, an illegal black market has also flourished and the value of the bolivar has recently been eroding. In black market trading, dollars have recently been selling for more than four times the official exchange rate of 4.30 bolivars to the dollar.

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At War Blog: U.S. and Allies Conduct Drills in Persian Gulf, a Signal to Iran

Deterring Iran is a delicate balance of diplomacy, sanctions and military muscle-flexing, all intended to send a strong signal – without proving so provocative that the region is pushed toward war. One piece of the effort – halting the proliferation of illicit weapons – got a practice run in the Persian Gulf this week.

Although the exercise did not explicitly name an adversary, geography certainly pointed to Iran, as well as to militants of Al Qaeda still operating in the region. The exercise, which ended Thursday, included a headquarters simulation to test the policy-making and coordination among the American military and two dozen nations that joined, as well as an extensive component of military drills at sea, in the air and on land.

Pentagon officials do not hide the fact that halting suspected smugglers, and boarding their vessels and inspecting them, is in some ways easier than knitting together a coalition of countries to operate under the decade-old Proliferation Security Initiative.

While there may be quiet agreement that Iran is a threat to regional stability, many nations – especially Iran’s neighbors – want to avoid any appearance of belligerence that might make relations even worse. In fact, several of the countries in this week’s exercise declined to officially confirm their participation.

That alliance cohesion problem is not new. When the Proliferation Security Initiative was begun by the administration of President George W. Bush, South Korea initially refused to join, for fear of angering North Korea. The government in Seoul eventually reversed the decision, and South Korea is among the nonproliferation program’s current members, a number that has expanded to 102 nations from the original 11.

Separate from this current multinational exercise, American and Yemeni officials disclosed last week that a joint operation had interdicted a boat carrying a large load of explosives and weapons, including shoulder-launched antiaircraft weapons. Intelligence indicated that the shipment came from Iran and was destined for Houthi insurgent militants inside Yemen.

Even before the proliferation exercise ended this week, the American military’s Central Command announced the scheduling of another exercise to practice mine countermeasures and maritime security in waters of the Middle East. Those skills would be necessary if Iran tried to close the Strait of Hormuz. More than 20 nations will participate in the exercise, set to begin in May.

But budget difficulties in Washington may make sustaining a large American military presence in the region more difficult. The Pentagon announced this week that, temporarily at least, there would be only one aircraft carrier strike group on patrol in the region, down from the usual two. The reason: the Defense Department needs to save money.

Related Coverage:

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Television Review: ‘Silicon Valley,’ on ‘American Experience’ on PBS

“Silicon Valley” is a deceptively grand title for the new “American Experience” documentary Tuesday night on PBS. “Fairchild Semiconductor” would be more accurate. It could even be called “Robert Noyce” or, with a musical score and some dance numbers, “Noyce!”

But the film’s modest goals work in its favor. “Silicon Valley” takes one piece of the sprawling story of the electronics industry in Northern California and tells it with admirable clarity and detail. Stopping well short of the valley’s modern era — the action ends in the early 1970s, with the invention of the microprocessor — it’s rewarding as both history and nostalgia.

The documentary actually touches on several cycles of wistfulness. Nostalgia for the preindustrial Santa Clara Valley of orchards and farm stands, which has been heavy for more than three decades now, is indulged with grainy shots of apricots being picked and young men in letter sweaters and khaki pants walking past the History Corner of the Stanford quad. (Like many films about Silicon Valley, this one also cheats by including San Francisco vistas and cable cars.)

After that stage setting, the film gets to its central story: how in 1957 eight young men, led by a visionary physicist and engineer, Mr. Noyce, took the revolutionary step of leaving their company to form a start-up called Fairchild Semiconductor and in the process created Silicon Valley. Interviews with an array of industry veterans, including two of the three surviving defectors, outline how Fairchild and the companies it spawned both developed the technologies and established the business and financial cultures that would eventually produce behemoths like Apple and Google.

This is dramatic social and scientific history, revealing, among other things, how the semiconductor industry grew to serve the military and the space program long before the rise of the personal computer. But, again, the film’s visceral appeal has much to do with period detail: neatly groomed engineers wearing suits and ties, even on the production floor or at the bar of Walker’s Wagon Wheel in Mountain View; rows of women in smocks and hairnets assembling transistors. (The gender lines are inviolate in these early-’60s photos, and the men are almost invariably white.)

One startling image shows a handwritten list of the many corporations that declined to bankroll the eight pioneers before Fairchild Camera and Instrument said yes. If any of them had possessed more foresight, the silicon chip might have belonged to National Cash Register, Motorola, Philco, BorgWarner, Chrysler, General Mills or United Shoe.

Even with its relatively narrow focus, “Silicon Valley” is highly compressed, and people familiar with the industry may have complaints: that the infighting that made Fairchild Semiconductor’s reign short-lived isn’t fully explored, or that Intel, the chip giant later founded by Mr. Noyce and Gordon Moore, should receive more attention.

Any quibbling aside, though, the film is a captivating look at recent history that already feels ancient, when high technology involved inventing and building things rather than writing code and selling clicks.

American Experience

Silicon Valley

On PBS stations on Tuesday night (check local listings).

Produced by Film Posse for “American Experience.” Directed and edited by Randall MacLowry; written by Mr. MacLowry and Michelle Ferrari, based on a story by Mr. MacLowry; Mr. MacLowry and Tracy Heather Strain, producers; Mark Samels, executive producer for “American Experience”; Michael Murphy, narrator.

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Well: The 'Monday Morning' Medical Screaming Match

I did not think I would ever see another “morbidity and mortality” conference in which senior doctors publicly attacked their younger colleagues for making medical errors. These types of heated meetings were commonplace when I was a medical student but have largely been abandoned.

Yet here they were again on “Monday Mornings,” a new medical drama on the TNT network, based on a novel by Dr. Sanjay Gupta, CNN’s chief medical correspondent and one of the executive producers of the show. Such screaming matches may make for good television, but it is useful to review why new strategies have emerged for dealing with medical mistakes.

So-called M&M conferences emerged in the early 20th century as a way for physicians to review cases that had either surprising outcomes or had somehow gone wrong. Although the format varied among institutions and departments, surgery M&Ms were especially known for their confrontations, as more experienced surgeons often browbeat younger doctors into admitting their errors and promising to never make them again.

Such conferences were generally closed door — that is, attended only by physicians. Errors were a private matter not to be shared with other hospital staff, let alone patients and families.

But in the late 1970s, a sociology graduate student named Charles L. Bosk gained access to the surgery department at the University of Chicago. His resultant 1979 book, “Forgive and Remember,” was one of the earliest public discussions of how the medical profession addressed its mistakes.

Dr. Bosk developed a helpful terminology. Technical and judgment errors by surgeons could be forgiven, but only if they were remembered and subsequently prevented by those who committed them. Normative errors, which called into question the moral character of the culprit, were unacceptable and potentially jeopardized careers.

Although Dr. Bosk’s book was more observational than proscriptive, his depiction of M&M conferences was disturbing. I remember attending a urology M&M as a medical student in which several senior physicians berated a very well-meaning and competent intern for a perceived mistake. The intern seemed to take it very well, but my fellow students and I were shaken by the event, asking how such hostility could be conducive to learning.

There were lots of angry accusations in the surgical M&Ms in the pilot episode of “Monday Mornings.” In one case, a senior doctor excoriated a colleague who had given Tylenol to a woman with hip pain who turned out to have cancer. “You allowed metastatic cancer to run amok for four months!” he screamed.

If this was what Dr. Bosk would have called a judgment error, the next case raised moral issues. A neurosurgeon had operated on a boy’s brain tumor without doing a complete family history, which would have revealed a disorder of blood clotting. The boy bled to death on the operating table. “The boy died,” announced the head surgeon, “because of a doctor’s arrogance.”

In one respect, it is good to see that the doctors in charge were so concerned. But as the study of medical errors expanded in the 1990s, researchers found that the likelihood of being blamed led physicians to conceal their errors. Meanwhile, although doctors who attended such conferences might indeed not make the exact same mistakes that had been discussed, it was far from clear that M&Ms were the best way to address the larger problem of medical errors, which, according to a 1999 study, killed close to 100,000 Americans annually.

Eventually, experts recommended a “systems approach” to medical errors, similar to what had been developed by the airline industry. The idea was to look at the root causes of errors and to devise systems to prevent them. Was there a way, for example, to ensure that the woman with the hip problem would return to medical care when the Tylenol did not help? Or could operations not be allowed to occur until a complete family history was in the chart? Increasingly, hospitals have put in systems, such as preoperative checklists and computer warnings, that successfully prevent medical errors.

Another key component of the systems approach is to reduce the emphasis on blame. Even the best doctors make mistakes. Impugning them publicly — or even privately — can make them clam up. But if errors are seen as resulting from inadequate systems, physicians and other health professionals should be more willing to speak up.

Of course, the systems approach is not perfect. Studies continue to show that physicians conceal their mistakes. And elaborate systems for preventing errors can at times interfere with getting things done in the hospital.

Finally, it is important not to entirely remove the issue of responsibility. Sad to say, there still are physicians who are careless and others who are arrogant. Even if today’s M&M conferences rarely involve screaming, supervising physicians need to let such colleagues know that these types of behaviors are unacceptable.

---

Barron H. Lerner, M.D., professor of medicine at New York University Langone Medical Center, is the author, most recently, of “One for the Road: Drunk Driving Since 1900.”

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Well: The 'Monday Morning' Medical Screaming Match

I did not think I would ever see another “morbidity and mortality” conference in which senior doctors publicly attacked their younger colleagues for making medical errors. These types of heated meetings were commonplace when I was a medical student but have largely been abandoned.

Yet here they were again on “Monday Mornings,” a new medical drama on the TNT network, based on a novel by Dr. Sanjay Gupta, CNN’s chief medical correspondent and one of the executive producers of the show. Such screaming matches may make for good television, but it is useful to review why new strategies have emerged for dealing with medical mistakes.

So-called M&M conferences emerged in the early 20th century as a way for physicians to review cases that had either surprising outcomes or had somehow gone wrong. Although the format varied among institutions and departments, surgery M&Ms were especially known for their confrontations, as more experienced surgeons often browbeat younger doctors into admitting their errors and promising to never make them again.

Such conferences were generally closed door — that is, attended only by physicians. Errors were a private matter not to be shared with other hospital staff, let alone patients and families.

But in the late 1970s, a sociology graduate student named Charles L. Bosk gained access to the surgery department at the University of Chicago. His resultant 1979 book, “Forgive and Remember,” was one of the earliest public discussions of how the medical profession addressed its mistakes.

Dr. Bosk developed a helpful terminology. Technical and judgment errors by surgeons could be forgiven, but only if they were remembered and subsequently prevented by those who committed them. Normative errors, which called into question the moral character of the culprit, were unacceptable and potentially jeopardized careers.

Although Dr. Bosk’s book was more observational than proscriptive, his depiction of M&M conferences was disturbing. I remember attending a urology M&M as a medical student in which several senior physicians berated a very well-meaning and competent intern for a perceived mistake. The intern seemed to take it very well, but my fellow students and I were shaken by the event, asking how such hostility could be conducive to learning.

There were lots of angry accusations in the surgical M&Ms in the pilot episode of “Monday Mornings.” In one case, a senior doctor excoriated a colleague who had given Tylenol to a woman with hip pain who turned out to have cancer. “You allowed metastatic cancer to run amok for four months!” he screamed.

If this was what Dr. Bosk would have called a judgment error, the next case raised moral issues. A neurosurgeon had operated on a boy’s brain tumor without doing a complete family history, which would have revealed a disorder of blood clotting. The boy bled to death on the operating table. “The boy died,” announced the head surgeon, “because of a doctor’s arrogance.”

In one respect, it is good to see that the doctors in charge were so concerned. But as the study of medical errors expanded in the 1990s, researchers found that the likelihood of being blamed led physicians to conceal their errors. Meanwhile, although doctors who attended such conferences might indeed not make the exact same mistakes that had been discussed, it was far from clear that M&Ms were the best way to address the larger problem of medical errors, which, according to a 1999 study, killed close to 100,000 Americans annually.

Eventually, experts recommended a “systems approach” to medical errors, similar to what had been developed by the airline industry. The idea was to look at the root causes of errors and to devise systems to prevent them. Was there a way, for example, to ensure that the woman with the hip problem would return to medical care when the Tylenol did not help? Or could operations not be allowed to occur until a complete family history was in the chart? Increasingly, hospitals have put in systems, such as preoperative checklists and computer warnings, that successfully prevent medical errors.

Another key component of the systems approach is to reduce the emphasis on blame. Even the best doctors make mistakes. Impugning them publicly — or even privately — can make them clam up. But if errors are seen as resulting from inadequate systems, physicians and other health professionals should be more willing to speak up.

Of course, the systems approach is not perfect. Studies continue to show that physicians conceal their mistakes. And elaborate systems for preventing errors can at times interfere with getting things done in the hospital.

Finally, it is important not to entirely remove the issue of responsibility. Sad to say, there still are physicians who are careless and others who are arrogant. Even if today’s M&M conferences rarely involve screaming, supervising physicians need to let such colleagues know that these types of behaviors are unacceptable.

---

Barron H. Lerner, M.D., professor of medicine at New York University Langone Medical Center, is the author, most recently, of “One for the Road: Drunk Driving Since 1900.”

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DealBook: Ackman to Herbalife: You're Not the Girl Scouts

William A. Ackman is not letting his adversary compare itself to the Girl Scouts.

Mr. Ackman, head of the hedge fund Pershing Square Capital Management, issued a fresh challenge on Thursday to Herbalife, the nutritional supplements company that he is betting against.

In a document posted online, Pershing Square takes aim at Herbalife’s disclosures about its business model. The company, which Mr. Ackman has accused of being an abusive pyramid scheme, sells its products through a network of independent distributors, who turn around and sell to customers or consume the products themselves.

Seeming to leave no statement by Herbalife unchallenged, the hedge fund manager even addressed a comment by Michael Johnson, the chief executive, who compared his company’s model to that of the Girl Scouts.

“When Girl Scouts sell cookies, do 11 levels of ‘upline’ Girl Scouts receive sales commissions? Do the top 1 percent of Girl Scouts receive 88 percent of the award badges?” Pershing Square asks in the document released on Thursday. “How many former Girl Scouts have sued the Girl Scouts’ organization and accused it of running a pyramid scheme?”

Mr. Ackman was responding to a presentation by Herbalife last month — which itself was a rebuttal to Mr. Ackman’s opening salvo.

In the weeks since, the debate over the company has turned into a high-stakes drama on Wall Street, drawing in prominent investors and even leading to an bitter argument on live television.

In previous responses, Herbalife has cited its long history of sales growth and its compensation plan, which it says focuses on product sales, not recruitment.

“Herbalife is a financially strong and successful global nutrition company, having created meaningful value for shareholders, significant opportunities for distributors and positively impacted the lives and health of consumers since our founding in 1980, ” Barbara Henderson, a spokeswoman for the company said in a statement. She said Pershing Square was motivated by its “reckless” short position.

Mr. Ackman, however, is still pressing the company for more of a response.

“Herbalife management has repeatedly stated its commitment to total transparency,” he said in a statement. “In response to this invitation, we have prepared a substantial number of detailed questions.”

The initial questions center on whether distributors make their money primarily from retail sales outside the network or from recruiting other distributors. Citing a statement by the Federal Trade Commission, Pershing Square suggests that that distinction is important in determining whether the company is a fraud.

“What proof can the company provide that bona fide retail sales (defined as sales to non-distributors) at sufficient profits occur such that Herbalife’s distributors obtain their monetary benefits primarily from sales to independent, third-party retail customers rather than from recruiting rewards?” Pershing Square asks.

Over its 40-page document, the hedge fund challenges various aspects of Herbalife’s presentation in January and poses many pointed questions.

For instance, Pershing Square asks Herbalife to release more details about a report by Lieberman Research Worldwide, which used an Internet survey to conclude that the majority of Herbalife’s sales went to people outside the distributor network.

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The Lede: Video of Protests Across Tunisia After an Opposition Leader Is Gunned Down

Video of a protest outside the interior ministry in Tunis on Wednesday from the blog Nawaat.

As my colleagues Monica Marks and Kareem Fahim report, there were protests across Tunisia on Wednesday following the assassination of Chokri Belaid, a leader of the secular opposition.

Video shot by activist bloggers for the independent Tunisian site Nawaat showed protesters rallying outside the interior ministry on the tree-lined Avenue Habib Bourguiba in Tunis early in the day, and then being chased from the street by police officers who fired tear gas into the crowd and beat demonstrators.

Video from the Tunisian blog Nawaat of police officers attacking protesters in Tunis on Wednesday.

After the avenue was cleared, witnesses reported that a small crowd accompanied the ambulance carrying Mr. Belaid’s body down the same street.

L’avenue vidée par une violente charge policière avant l’arrivée du cortège funéraire

— Maher Tekaya (@MaherTekaya) 6 Feb 13

Les ACAB font tout pour disperser les gens autour de l’ambulance http://t.co/l6ye72HC

— Selim (@Selim_) 6 Feb 13

L’ambulance #ripbelaid http://t.co/r2dsc15p

— Selim (@Selim_) 6 Feb 13

Retour a l’avenue, l’ambulance est la, grande émotion.. http://t.co/k5zxR8Nb

— Amira Yahyaoui (@Mira404) 6 Feb 13

As news of the assassination spread, there were protests in other cities and reports of attacks on the offices of Ennahda, the ruling Islamist party. Mr. Belaid had criticized Ennahda’s leaders for failing to condemn violent attacks on his party’s activists by young Islamists, in a television appearance shortly before his death, the French radio station Europe 1 reported.

Agence France-Presse video showed protesters marching in Sidi Bouzid, the town where the Tunisian revolt began.

More video of the demonstration in Tunis, and a clip of protesters occupying the headquarters of Ennahda in the city of Sfax, was posted online by Jadal, a Tunisian news site set up by the Institute for Peace and War Reporting.

Video from the Tunisian news site Jadal, said to show protesters occupying the offices of the ruling party in Sfax on Wednesday.

A demonstration outside the office of Ennahda in the coastal city of Mahdia was caught on video by a Nawaat blogger.

manifestation ce matin devant le siège d’Ennahdha a #Mahdia #chokribelaid http://t.co/0B3Vp7eK

— Nawaat ~ Tunisia (@nawaat) 6 Feb 13

Before the demonstration at the interior ministry was attacked by the police, activists in the crowd posted updates on the protest on Twitter.

En ce moment à l’avenue. Venez nombreux! http://t.co/8JEZiIat

— Maher Tekaya (@MaherTekaya) 6 Feb 13

“La révolution continue, la mort de Chokri est une leçon pour tous” crit un manifestant http://t.co/Y7cwHEOA

— Selim (@Selim_) 6 Feb 13

Vidéo tremblotante où on voit à la fin qu’ils sont prêts à gazer http://t.co/2MtxaGAW

— Amira Yahyaoui (@Mira404) 6 Feb 13

Among the chants, witnesses reported, were calls for the resignation of the interior minister, Ali Larayedh, a leader of Ennahda who is a former dissident.

“larayedh resignation” is their request http://t.co/HYkBj1nv

— myriam ben ghazi (@myriambenghazi) 6 Feb 13

Mr. Larayedh called the assassination of Mr. Belaid a “terrorist act” and “a blow to the democratic transition experience in Tunisia,” the state news agency reported.

One member of the crowd was Amira Yahyaoui, the president of the rights organization Al Bawsala, who suggested that Tunisians had waited long enough for an overhaul of the country’s notoriously brutal police force. After Mr. Balaid’s death, she wrote, it was “necessary to go inside the interior ministry and clear out the incompetents and, worse, the facilitators” who had allowed such acts of political violence to take place.

Aujourd’hui il faut entrer a l’intérieur de ministère de l’intérieur et en dégager les incompétents, pire, les facilitateurs. #ChokriBelaid

— Amira Yahyaoui (@Mira404) 6 Feb 13

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Bits Blog: Most Facebook Users Have Taken a Break From the Site, Survey Finds

Facebook is the most popular social network in America — roughly two-thirds of adults in the country use it on a regular basis.

But that doesn’t mean they don’t get sick of it.

A new survey by the Pew Research Center‘s Internet and American Life Project, conducted in December, found that 61 percent of current Facebook users admitted that they had voluntarily taken breaks from the site, for as many as several weeks at a time.

The main reasons for their social media sabbaticals were not having enough time to dedicate to pruning their profiles, an overall decrease in their interest in the site, and the general sentiment that Facebook was a major waste of time.

About 4 percent cited privacy and security concerns as contributing to their departure. Although those users eventually resumed their regular activity, another 20 percent of Facebook users admitted to deleting their accounts.

Of course, even as some Facebook users pull back on their daily consumption of the service, the vast majority — 92 percent — of all social network users still maintain a profile on the site. But while more than half said that the site was just as important to them as it was a year ago, only 12 percent said the site’s significance increased over the last year — indicating the makings of a much larger social media burnout across the site.

The survey teases out other interesting insights, including the finding that young users are spending less time overall on the site. The report found that 42 percent of Facebook users from the ages of 18 to 29 said that the average time they spent on the site in a typical day had decreased in the last year. A much smaller portion, 23 percent, of older Facebook users, those over 50, reported a drop in Facebook usage over the same period.

Facebook’s biggest challenge revolves around figuring out how to continue to profit from its rich reservoir of one billion users — and a large part of that involves keeping them entertained and returning to the site on a regular basis. Most recently, the company introduced a tool called Graph Search, a research tool that promises to help its users find answers on everything from travel recommendations to potential jobs and even love connections.

Lee Rainie, the director of the Pew Research Center’s Internet & American Life Project, which conducted the survey, described the results as a kind of “social reckoning.”

“These data show that people are trying to make new calibrations in their life to accommodate new social tools,” said Mr. Rainie, in an e-mail. Facebook users are beginning to ask themselves, ” ‘What are my friends doing and thinking and how much does that matter to me?,’ ” he said. “They are adding up the pluses and minuses on a kind of networking balance sheet and they are trying to figure out how much they get out of connectivity vs. how much they put into it.”

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DealBook: R.B.S. to Pay $612 Million Over Rate Rigging

LONDON – The Royal Bank of Scotland on Wednesday struck a combined $612 million settlement with American and British authorities over accusations that it manipulated interest rates, the latest case to emerge from a broad international investigation.

In an embarrassing blow to the bank, its Japanese subsidiary also pleaded guilty to criminal wrongdoing in its settlement with the Justice Department. The R.B.S. subsidiary, a hub of rate-rigging activity, agreed to a single count of felony wire fraud to resolve the case.

The settlement reflects the Justice Department’s renewed vigor for punishing banks ensnared in the rate manipulation case. In December, a Japanese subsidiary of UBS pleaded guilty to felony wire fraud as part of a larger settlement, representing the first unit of a big bank to agree to criminal charges in more than a decade.

As authorities built the R.B.S. case, they seized on a series of incriminating yet colorful e-mails that highlighted an effort to influence the rate-setting process, a plot that spanned multiple currencies and countries from 2006 to 2010. One senior trader expressed disbelief at reaping lucrative profits from the scheme, saying “it’s just amazing” how rate “fixing can make you that much money,” according to the government’s complaint. Another trader, after pressuring a colleague to submit a certain rate, offered a reward of sorts: “I would come over there and make love to you.”

In a statement on Wednesday, the American regulator leading the case slammed the bank for manipulating benchmarks like the London Interbank Offered Rate, or Libor. The regulator, the Commodity Futures Trading Commission, noted that R.B.S. employees “aided and abetted” UBS and other firms in the rate-rigging scheme and continued to run afoul of the law, though more covertly, even after learning of a federal investigation.

“The public is deprived of an honest benchmark interest rate when a group of traders sits around a desk for years falsely spinning their bank’s Libor submissions, trying to manufacture winning trades. That’s what happened at R.B.S.,” David Meister, the enforcement director of the commission, said in the statement.

Libor Explained

The settlement represents the latest setback for Royal Bank of Scotland, which has struggled to shake the legacy of the 2008 financial crisis. The British firm already has put aside $2.7 billion to compensate customers who were inappropriately sold loan insurance over recent years. On Jan. 31, British regulators also called on the bank and other local rivals to review the sale of interest-rate hedging products after more than 90 percent of a sample were found to have been sold improperly.

The broader rate-rigging case has centered on how much the Royal Bank of Scotland and a dozen other banks, including Citigroup and HSBC, charge each other for loans. Such benchmarks, including Libor, help determine the borrowing costs for trillions of dollars in financial products like corporate loans, mortgages and credit cards.

But the Royal Bank of Scotland, like many of its competitors, corrupted the process. Government complaints filed over the last year outlined a scheme in which banks reported false rates to lift trading profits and deflect concerns about their health during the crisis.

Authorities filed the first Libor case in June, extracting a $450 million settlement with the British bank Barclays. In December, UBS agreed to a record $1.5 billion settlement with European regulators, the Justice Department and the American regulator that opened the case, the Commodity Futures Trading Commission. The Justice Department’s criminal division, which secured the guilty plea from the bank’s Japanese unit, also filed criminal charges against two former UBS traders.

Some of the world’s largest financial institutions remain caught in the cross hairs of the case. Deutsche Bank has set aside an undisclosed amount to cover potential penalties.

While foreign banks have received the brunt of the scrutiny to date, an American institution could be among the next to settle. Citigroup and JPMorgan Chase are under investigation.

In the $612 million Royal Bank of Scotland case, authorities levied the second-largest fine in the multiyear investigation into rate manipulation.

The fine included a $325 million penalty from the trading commission and a £87.5 million ($137 million) sanction from the Financial Services Authority, the British regulator, marking one of the largest financial penalties ever from British authorities. The Justice Department, for its part, imposed a $150 million fine as part of a deferred-prosecution agreement with R.B.S. In addition to wire fraud, the Justice Department cited the bank for its role in a “price-fixing conspiracy” that violated anti-trust laws.

R.B.S., based in Edinburgh, had aimed to avert the guilty plea for its Japanese subsidiary. But the Justice Department’s criminal division declined to back down, and the bank had little leverage to push back. If it had balked at a plea deal, the Justice Department could have moved to indict the subsidiary.

“Like with Barclays and UBS, the settlement with R.B.S. is much more than a slap on the wrist,” said Bart Chilton, a member of the trading commission who is critical of soft fines on big banks.

In the wake of the settlement, Royal Bank of Scotland is shaking up its management team as it moves to repair its bruised image. John Hourican, the firm’s investment banking chief, resigned on Wednesday, and agreed to forgo some of his past and current compensation totaling around $14.1 million. While Mr. Hourican was not implicated in the scandal, senior executives said he was taking blame for wrongdoing in his division.

“John is the right senior person to take responsibility for this,” the bank’s chairman, Philip Hampton, told reporters on Wednesday.

Royal Bank of Scotland, in which the government holds an 82 percent stake after providing a $73 billion bailout in 2008, also plans to claw back bonuses and other long-term compensation totaling $471 million to help pay for the rate-rigging penalty. The bank will will primarily use the figure to pay the fines from U.S. authorities, while penalties from the British regulator will be recycled back to the British government.

At a press conference in central London on Wednesday, Stephen Hester, the bank’s chief executive, condemned the illegal behavior of some of the firm’s employees, but acknowledged that Royal Bank of Scotland did not monitor its Libor submissions closely enough to catch the wrongdoing.

Mr. Hester, who has led the bank through a series of scandals and has been dogged by politicians’ demands for reductions in bonuses, admitted that the rate-rigging episode had placed the bank under a lot of strain.

“It is one of the most difficult moments over the entire period,” he said.

Mr. Hester, a former chief executive of the property developer British Land, has focused on paring back the bank’s operations. The C.E.O. has cut more than 30,000 job cuts since 2008, attempted to spin-off of the mergers and acquisitions unit and cut the size of its balance sheet by £600 billion since 2009. Mr. Hester also waved his $1.5 million bonus for 2011 after coming under pressure from British politicians.

In the Libor case, the wrongdoing at R.B.S. occurred on smaller scale than at other banks. The breach, authorities say, was limited to Libor submitters and traders who sought to bolster their bottom line. By comparison, top executives at Barclays knew the bank was lowballing its Libor rates to assuage concerns about its high borrowing costs.

R.B.S., which admitted that 21 of its employees altered the firm’s Libor submissions for financial gain on hundreds of occasions, either disciplined or fired most of the employees. The rest left before they were implicated. In the UBS case, the trading commission cited more than 2,000 instances of illegal acts involving dozens of employees.

Still, the government complaints against R.B.S. portray a permissive culture that allowed rate-rigging to persist for some four years.

The bank’s own records captured the scheme in striking detail, revealing how traders pressured other employees to submit certain Libor figures. Submitters and traders sat in earshot of each other on a trading desk in London, forming what authorities termed a “cozy ring.”

The bank eventually separated the employees, forcing them to communicate over e-mail and phone. A flurry of instant messages ensued, some more vulgar than others.

A trader noted in September 2009 that his requests for rates moved up and down, “like a whores drawers.” Another employee acknowledged that the Libor rate-setting process is “a cartel now.”

To get their way with employees who submitted Libor rates, traders promised “love” and affection. Others merely offered steak and sushi. One trader resorted to begging, invoking a plea of “pretty please.”

The collusion was not limited to inside Royal Bank of Scotland.

Between 2008 and 2009, the bank’s traders cooperated with other banks, including the Swiss financial giant UBS, and brokerage firms to manipulate Libor, according to regulatory filings. To ensure rate submissions at other banks benefited their own trading positions, some of Royal Bank of Scotland’s staff paid brokers more than a combined $300,000 in kickbacks over the time period to influence traders at other firms on their behalf.

When authorities started investigating, the traders adapted their tactics. One employee noted that federal authorities “are all over us.”

The concerns prompted a more covert approach. In September 2010, after the trading commission ordered an internal investigation at R.B.S., a derivatives trader urged a colleague who requested a higher Libor rate to send “no emails anymore.”

Two months later, a Libor submitter rebuffed an instant message request to manipulate rates. But then, the submitter spoke with the trader via telephone, explaining “we’re not allowed to have those conversations” over instant message.

Their call was recorded. The employees laughed, according to a transcript, and the submitter reassured the trader that he would fulfill the request: “Leave it with me, and uh, it won’t be a problem.”

The lobbying paid off. When employees submitted bogus rates, government authorities said, Libor was altered.

Lanny Breuer, the head of the Justice Department’s criminal division, called the actions a “stunning abuse of trust.”

He also warned of coming actions against other big banks. “Our message is clear: no financial institution is above the law.”

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The Lede Blog: North Korean Propaganda Video Uses 'Call of Duty' and 'We Are the World' to Imagine a Brighter World, Without Manhattan

Last Updated, 3:52 p.m. |UpdateWhen aliens strike, the climate goes berserk, the Russians invade, an asteroid threatens the Earth, New York City is often the first place to be destroyed. Hollywood has long used the city’s skyline to demonstrate what destruction looks like in action movies and video games. It seems as if North Korea, in seeking to show how an assault on America would play out, also has Manhattan squarely in its cross hairs.

A new propaganda video, posted Sunday on a Web site and a YouTube channel that serve as outlets for North Korean state media, shows a computer-animated representation of Lower Manhattan in flames as bombs rain down.

A video posted on a North Korean YouTube channel this week features images of Manhattan in flames.

As a blogger for Kotaku reports, the attack on Manhattan is lifted straight from the video game “Call of Duty: Modern Warfare 3,” and unfolds as a sweeping instrumental version of “We Are the World” plays in the background.

The copy of the video on YouTube was removed on Tuesday afternoon, after a copyright complaint from Activision, the video-game maker.

The cartoonish propaganda clip is one of a slew of recent videos that have been released by North Korea to promote the country’s missile program. Although the video might make some observers laugh, the tension over North Korea’s nuclear ambitions and missile program is deadly serious.

The United Nations Security Council voted on Jan. 22 to tighten sanctions against North Korea as punishment for a Dec. 12 rocket launch. In response, the North vowed to expand its nuclear program “both quantitatively and qualitatively” and conduct a third nuclear test at a “higher level.”

As our colleagues David Sanger and William Broad reported after December’s successful missile launch by North Korea, there is no evidence that the country currently has technology that can threaten the continental United States – much less New York.

Administration officials said that while the launching was successful — and advanced the North’s missile program — it was hardly a threat to the United States, despite a warning by Robert M. Gates in 2011, when he was secretary of defense, that the North would have a missile capable of reaching the United States by 2016.

The video begins with an image of a man in blue pajamas sleeping. He recounts a dream in words that appear on the screen. “I had a dream last night, a dream of soaring into space on board our Unha-9 rocket,” the man says.

Unha, Korean for galaxy, is the name of the North Korean rocket series. The latest one, launched in December, was the Unha-3. So the dreamer is imagining a future, more advanced version of the rocket. After first showing footage of a real rocket launch, the video shifts to animation.

“Our Kwangmyongsong-21 spacecraft got separated from the rocket and traveled through space,” he says.

Once again, the dream appears to show the advances North Korea hopes to make in the years to come. In December, the satellite launched by the North was rocket number 3. By the time the series reaches 21 in the man’s dream, the rocket looks like the American space shuttle. The animation at that point shows the spacecraft circling the globe in search of its target, the music from “We are the World” building as it moves closer to the United States.

“I see stars and the green Earth. I also see a unified Korea.” These words appear on screen as the video moves from animation back to real footage of people waving flags, in particular, a “Korea-is-one” flag. The video shows a unified, not divided, Korean Peninsula in blue, a symbol of Korean reunification.

Then the video shows an overhead image of New York draped in the American flag. “Meanwhile, I see black smoke rising somewhere in America,” the dreaming man says. “It appears that the headquarters of evil, which has had a habit of using force and unilateralism and committing wars of aggression, is going up in flames it itself has ignited.”

At this point in the video, the computer-animated scene copied from “Call of Duty” show Lower Manhattan in flames.

“Just imagine riding in a Korean spaceship. One day, my dream will come true,” the narrator says. “No matter how hard the imperialists try to isolate and stifle us, they will not stop our people’s path toward our final victory of achieving a unified, strong and prosperous Korea.”

Robert Mackey contributed reporting.

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