DealBook: On Wall St., Renewed Optimism for Deals

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Before Europe’s debt crisis flared anew last summer, rattling markets and choking off a revival in mergers and acquisitions, huge corporate cash piles and cheap debt had fostered hopes that deal-making would recover strongly last year.

In the first half of 2011, the dollar volume of announced mergers worldwide neared its highest levels since the financial crisis. But that momentum proved fragile as deal volume tumbled 19 percent, to about $1.1 trillion, in the second half of 2011, compared with the same period the year before, according to Thomson Reuters data.

Now, with stock and credit markets steadier, deal makers are growing confident that 2012 will be better for business. Not only do they point to cheap financing and the large amounts of cash on corporate balance sheets, but they say that companies that have already cut costs may decide that they need to make acquisitions to drive growth in the face of a tepid economy.

“The dialogue has gotten back on track,” said Steven Baronoff, chairman of global mergers and acquisitions at Bank of America Merrill Lynch. “If Europe doesn’t go off the rails, you’ll see a return to long-term positive factors.”

According to a recent study by Ernst & Young, 36 percent of companies plan to pursue an acquisition this year.

“We’re optimistic that the need and desire for growth will overcome the volatility headwinds, but that’s where the battle will be waged,” said Jim Woolery, J. P. Morgan’s co-head of North America mergers and acquisitions.

And there is pent-up demand among buyout shops. After a long stretch of tempered activity, many private equity firms are still feeling the pressure to deploy capital or engineer exits.

Still, companies that explore potential deals will most likely tread cautiously. For one, it remains unclear whether European leaders have done enough to ensure that the financial system remains stable on the Continent. And in the United States, 2012 is a presidential election year. With the White House at stake, companies in businesses like finance and health care may not pursue transactions until the outlook for regulation in those industries is clearer.

Many bankers expect to see notable deal activity in energy, industrials, retail, health care and technology. The energy and health care industries produced some of the largest transactions of 2011, like Express Scripts’ $34.3 billion purchase of Medco Health Solutions, Duke Energy’s $25.9 billion takeover of Progress Energy and Kinder Morgan’s $36.2 billion deal for the El Paso Corporation.

The outlook for mergers and acquisitions worldwide varies sharply by region, bankers say. The Americas, where deal volume rose 14.7 percent in 2011, will remain a bright spot, according to Mr. Baronoff of Bank of America Merrill Lynch.

Opinion is more divided over Europe, however. While economic and market woes will lead to some bargains and opportunities, deal-making may still be largely stifled by the persistent sovereign debt crisis.

“Europe is still a mess,” said David A. DeNunzio, vice chairman of Credit Suisse’s mergers and acquisitions group. “People thought there would be more divestiture activity as companies try to get more liquid, but that hasn’t happened yet.”

The disparities among regional economies is expected to fuel more cross-border transactions in 2012. While it is not a new trend for United States businesses to seek growth in emerging markets, bankers are starting to see a reverse in deal flow. After a string of strong quarters, cash-rich corporations in markets like Brazil and China are now bargain-hunting for established brands in developed markets.

“We weren’t having these conversations even three years ago,” said Mr. DeNunzio, who expects an increase of 10 to 15 percent in cross-border transactions.

“Many companies in China and Brazil see this as a once-in-a-lifetime opportunity to acquire world-scale brands at pretty attractive prices,” he said.

At the same time, companies are paying more attention to potential regulatory hurdles, whether their transaction plans are cross-border or domestic. The biggest setback in mergers and acquisitions of 2011 was AT&T’s aborted $39 billion purchase of T-Mobile USA from Deutsche Telekom, which met opposition from the Obama administration.

A deal announced early in 2011, the merger of NYSE Euronext and Deutsche B?rse, remains in regulatory limbo as European authorities seek additional concessions.

Though signs point to a stronger mergers and acquisitions market, there is at least one class of deals not ready for a comeback: the highly leveraged buyout.

In 2011, the private equity titans pursued more modest-size transactions, compared with the go-go years of 2005 to 2007.

Blackstone’s largest acquisition last year was the software maker Emdeon for $3 billion. Kohlberg Kravis Roberts’s biggest deal was even smaller, a $2.4 billion buyout of Capsugel. According to deal makers, buyout shops are still shopping, but banks are less willing to finance huge leveraged buyouts and boardrooms are hesitant to take on the risk. In the aftermath of the financial crisis, boardrooms are still worried that their companies will be left in the lurch if another Lehmanesque event happens.

“Boards used to say, ‘Yeah, go to lunch with L.B.O. firms when they call.’ Now they say, ‘No, you don’t have to do that,’ ” Mr. DeNunzio of Credit Suisse said. “Corporate directors have long memories.”

In 2011, the number of private equity deals announced was roughly flat, but the dollar volume fell 19 percent to $138.1 billion, according to a December report by Ernst & Young.

“And as much as we and our brethren walk with a lot of swagger, the reality is, these institutions and their risk managers need to shed risk-weighted assets, and that makes these types of transactions more difficult,” Mr. DeNunzio said.

Nevertheless, deal makers have been encouraged by the evidence that investors look favorably on mergers and acquisitions as a growth strategy.

In the first six months of 2011, several acquirers recorded healthy gains in their stock prices on the day that deals were announced.

Notably, even Valeant Pharmaceuticals — which began a $5.7 billion hostile bid for the drug maker Cephalon in March — soared 10 percent on its announcement, a rare feat for a hostile buyer.

Over all, the global volume of mergers and acquisitions rose 7.6 percent last year, to $2.54 trillion, from 2010, according to Thomson Reuters.

“We have fragile momentum,” J. P. Morgan’s Mr. Woolery said. “We believe the market will reward prudent acquisitions; the market wants this capital deployed to achieve growth.”

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Inside Asia: Currencies in Asia Won't Settle Down Soon

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SINGAPORE — The roller coaster ride for Asian currencies, which saw only the yen and the renminbi post significant gains for the year against the dollar, is set to continue in 2012.

While Japan actively sought to stem the yen’s rise — drawing U.S. criticism last week — China intervened to ensure that the renminbi ended the year at a new high. Each currency appreciated about 5 percent in 2011 against the dollar.

The opposite approaches illustrate a dilemma facing Asian policy makers as they try to smooth out foreign exchange rate volatility, which shows no sign of abating in the new year. If the currency is too strong, exports get more expensive. Too weak, and imported inflation spikes and domestic buying power fades.

Singapore and South Korea provide two examples of how inflation can stay surprisingly high, even as declining global demand curbs exports and saps growth. Both the Singapore dollar and the won slipped against the greenback in 2011.

For Japan, which has been battling deflationary forces for two decades, rising prices would be a welcome change. Three times in 2011, Tokyo intervened in the currency market to try to weaken the yen, once with the help of Group of 7 nations after the March earthquake and tsunami, and twice unilaterally.

It was the solo moves that drew Washington’s ire. The Treasury Department pointed out in its Dec. 27 report to Congress on world currencies that the United States “did not support these interventions” and said Japan would be better served by taking steps to increase the dynamism of its domestic economy.

“The United States is saying, ‘Our recovery is dependent on the dollar not becoming too strong,”’ said Yukon Huang, an economist at the Carnegie Endowment for International Peace in Washington. “It’s worried that there will be a global move for people to depreciate” their currencies, he added.

The twice-a-year currency report was mandated by Congress in 1988, when the trade imbalance with Japan was the main concern. More recently, such imbalances have become a source of friction with China.

Even the critique of Japan in the latest report may have been intended as a message for Beijing.

“The criticism is accurate, but it’s 20 years old and resuscitated as cover,” said Derek Scissors, a research fellow at the Heritage Foundation, a conservative research institute in Washington. “It’s so they don’t appear to be picking on China.”

If the U.S. Treasury determines that a country is manipulating its currency to gain a trade advantage, it can call in the International Monetary Fund to press for a realignment.

Some U.S. lawmakers, businesses and unions want Washington to label China a manipulator, but the Treasury declined to do so yet again in its latest report. It did, however, mention China twice as many times as it referred to Japan.

While there may be politics at play in the currency report, a closer look at trading in the renminbi suggests Beijing may have earned its reprieve this time.

The United States has long argued that a stronger renminbi is in China’s best interest because it can help ease inflationary pressures and lift domestic spending power.

The Chinese central bank keeps the currency on a tight leash by setting a daily trading midpoint and then allowing a move of only half a percent on either side.

In the first half of December, the renminbi traded at the bottom of the set range nearly every day, partly because of demand for dollars but also because of increasing fears that the Chinese economy would falter as export demand slowed and the housing market declined.

The People’s Bank of China intervened Dec. 16 and again last Friday to prop up the renminbi, traders said. That left the renminbi up 4.7 percent against the dollar in 2011, even though China’s exports had cooled over the previous six months and will probably slow even more in 2012.

The renminbi’s performance makes it more difficult for the United States to claim China is intentionally weakening its currency to gain a trade advantage.

“The argument gets weaker when China is moving toward a smaller trade surplus,” said Mr. Huang of the Carnegie Institute, who is a former World Bank country director for China.

Why would China favor a stronger currency now? It helps defuse political tension with the United States and discourage traders from assuming that the renminbi is a safe one-way bet, and it can also neutralize imported inflation.

China’s annual inflation rate has dropped dramatically since it hit a three-year peak of 6.5 percent in July, but it is still above the government’s goal of 4 percent.

With oil trading around $100 per barrel even though the world economy looks shaky, it would not take much of a shock to push the oil price back up to the $115 it reached in May, which threatened to choke off the global recovery.

This complicates currency policy across Asia. Aside from the renminbi and yen, most Asian currencies weakened in 2011. South Korea, Indonesia and India stepped in to try to cap currency volatility, but countries across the region seemed content to allow a gradual decline.

That may change in 2012. In Singapore, considered a regional bellwether because the city-state is so closely tied to the global economy, annual inflation spiked unexpectedly to 5.7 percent in November. Trade-dependent Singapore uses the exchange rate as its primary monetary policy tool, and has slowed the pace of appreciation to try to support growth. But that leaves it vulnerable to imported inflation.

In South Korea, a measure of factory activity fell to its lowest level in nearly three years in December, figures released Monday showed, yet the country’s inflation rate came in above the central bank’s goal. The Bank of Korea said last week that fighting inflation would remain the top policy priority in 2012. That suggests Seoul may rethink the wisdom of letting the won weaken.

“We believe the government’s tolerance for a weak won is waning,” Wai Ho Leong, an economist at Barclays, wrote in a note to clients Friday.

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Gotham: At Wall Street Protests, Clash of Reporting and Policing

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Any officer who “unreasonably interferes” with reporters or blocks photographers will be subject to disciplinary actions.

These are fine words. Of course, his words followed on the heels of a few days in mid-November when the police arrested, punched, kicked and used metal barriers to ram reporters and photographers covering the Occupy Wall Street protests.

And recent events suggest that the commissioner should speak more loudly. Ryan Devereaux, a reporter, serves as Exhibit 1A that all is not well.

On Dec. 17, Mr. Devereaux covered a demonstration at Duarte Square on Canal Street for “Democracy Now!,” a news program carried on 1,000 stations. Ragamuffin demonstrators surged and the police pushed back. A linebacker-size officer grabbed the collar of Mr. Devereaux, who wore an ID identifying him as a reporter. The cop jammed a fist into his throat, turning Mr. Devereaux into a de facto battering ram to push back protesters.

“I yelled, ‘I’m a journalist!’ and he kept shoving his fist and yelling to his men, ‘Push, boys!’?”

Eventually, with curses and threats to arrest Mr. Devereaux, the officer relaxed his grip.

You don’t have to take his word. An Associated Press photograph shows this uniformed fellow grinding a meat-hook fist into the larynx of Mr. Devereaux, who is about 5 feet 5 inches. A video, easily found online, shows an officer blocking a photographer for The New York Times at the World Financial Center, jumping to put his face in front of the camera as demonstrators are arrested in the background.

And three nights ago, at a New Year’s Eve demonstration at Zuccotti Park, a captain began pushing Colin Moynihan, a reporter covering the protest for The Times. After the reporter asked the captain to stop, another officer threatened to yank away his police press pass. “That’s a boss; you do what a boss tells you,” the officer said, adding a little later, “You got that credential you’re wearing from us, and we can take it away from you.”

Reporting and policing can be high-adrenaline jobs. . But the decade-long trajectory in New York is toward expanded police power. Officers routinely infiltrate groups engaged in lawful dissent, spy on churches and mosques, and often toss demonstrators and reporters around with impunity.

When this is challenged, the police commissioner and the mayor often shrug it off and fight court orders. The mayor even argued that to let the press watch the police retake Zuccotti Park would be to violate the privacy of protesters. “It wouldn’t be fair,” he said.

As arguments go, this is perversely counterintuitive. But the mayor’s words reflect, as State Senator Eric Adams, the civil liberties lawyer Norman Siegel and two others wrote in a recent letter to the commissioner, a misunderstanding of long-established patrol guide procedures. The regulations are clear:

“The media will be given access as close to the activity as possible, with a clear line of sight and within hearing range of the incident.”

Precisely the opposite occurred on Nov. 15, when police officers herded reporters into a pen out of sight and sound of Zuccotti Park.

The next day, the protesters moved north and briefly occupied a lot owned by Trinity Church. As the police closed in on demonstrators, they also handcuffed and arrested Associated Press and Daily News reporters. Mayoral press representatives stoutly insisted that the police acted properly. “It is impossible to say the reporters were not breaking the law,” a spokesman wrote to me.

Let me venture into the world of the impossible then. The police patrolmen’s guide is explicit. “Members of the media,” it states, “will not be arrested for criminal trespass unless an owner expressly indicates ... that the press is not to be permitted.”

I checked with the landlord, Trinity Church. They’d made no such call. Paul J. Browne, a deputy police commissioner, agreed. That is why, he noted in an e-mail, “The reporter arrests at Duarte were voided.”

Senator Adams retired as a police captain. He loved the blue and all it implied, and acknowledges he was not above cursing the laws that restrained him.

“Who wouldn’t like unlimited power?” he said.

That is precisely why the past decade worries him so. “If the police and the mayor won’t follow their own rules, whose rules will they follow?” he says. “And very few people ask any questions.”

New York, Mr. Adams says, “is leading the way in not wanting to know where it’s going.”

E-mail: powellm@nytimes.com

Twitter: @powellnyt

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Advertising: To Promote Brisk Tea, Pepsi Enlists the Aid of Yoda

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This week, the company is introducing new product packaging and a new mobile game app — featuring Yoda and Darth Maul, characters from the film, originally released in 1999 — created for Brisk’s target market, young adults, particularly males, ages 18 to 29. The initiatives will be the focus of the largest multimedia advertising and marketing campaign that PepsiCo has ever waged for Brisk.

PepsiCo has bottled and marketed Brisk, a Lipton ready-to-drink tea brand, through a joint venture with Unilever, owner of Lipton, since 1991. It has also worked with Lucasfilm to promote the “Star Wars” franchise since 1997.

The new campaign is the brainchild of Mekanism, the San Francisco-based agency PepsiCo hired in 2010 that revived Brisk’s clay-animated commercials from the mid-1990s. The original spots parodied figures like Frank Sinatra and Babe Ruth, while the new Mekanism Brisk ads have featured Eminem — in a Super Bowl XLV commercial — as well as Danny Trejo and Ozzy Osbourne.

Industry observers and executives involved with the campaign say Mekanism’s efforts to increase Brisk’s social media presence and sales have been successful. According to Ian Kovalik, a creative director of Mekanism, the number of Brisk’s Facebook fans has jumped to 950,000 from 10,000 in late 2010.

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Eric Fuller, brand director for Brisk, said the brand’s sales had more than doubled in the last two years, to a projected 104 million cases this year from 48 million cases in 2009. Similarly, according to data provided by Larry Finkel, director of food and beverage research for MarketResearch.com, Brisk’s dollar sales in supermarkets, drugstores and mass merchants excluding Walmart rose 12 percent, to $94.3 million, in the year ending April 17, 2011.

That rate of growth far exceeded the rate of dollar sales growth of PepsiCo’s other Lipton ready-to-drink tea brands, Lipton, Lipton Diet, Lipton PureLeaf and Tazo.

Brisk’s rate of dollar sales growth also exceeded that of rival brands Arizona, up 3.5 percent, and Snapple, up 6.2 percent. During this period, Arizona Beverage Company brands generated 30.8 percent of all ready-to-drink tea dollar sales, PepsiCo 29.9 percent and the Dr Pepper Snapple Group 17.2 percent, Mr. Finkel said.

The 3-D release of “Phantom Menace” is slated for Feb. 10, and the “Star Wars” campaign is aimed at continuing Mekanism’s success in increasing Brisk’s social media presence and sales. PepsiCo’s initiatives will include the introduction, starting Tuesday, of special “Star Wars” packaging and promotions at retailers.

Among these are a one-liter, limited-edition bottle of raspberry iced tea with a Darth Maul label; codes under caps of one-liter bottles of Brisk’s 12 teas and juice drinks, which will help buyers play the “Star Wars” mobile game; and a new one-gallon jug, in four flavors, for home consumption.

On Wednesday, a new Brisksaber mobile game app — developed by Flying Wisdom Studios of San Francisco — will be introduced in the Android and Apple marketplace; players will be able to unlock new game characters, vehicles and weapons by redeeming bottle cap codes. The app will be promoted on Facebook and Hulu, and through Tapjoy, an app ad network, beginning Jan. 9.

On Jan. 15, 15- and 30-second TV spots will start running, initially on Fox Broadcasting’s Sunday night “Animation Domination” programming, and subsequently on network and cable stations like Adult Swim, Comedy Central, MTV, Spike and Syfy.

The 30-second spot shows Yoda and Darth Maul beginning to fight. Darth Maul’s light saber malfunctions many times before he falls into a Brisk vending machine. Although he is reinvigorated when he drinks the iced tea, just as he again tries to attack Yoda, the vending machine squashes him. Yoda says, “Too old for this I’m getting,” while the voice-over proclaims, “That’s Brisk, baby,” a tagline introduced in Brisk’s original animation spots.

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More than 500 movie theaters in 15 states will run the TV spots for two months starting Friday; similar radio ads will run starting Jan. 23 on stations in New York and Southern California. Brisk also will hold sampling events across the country from late January through mid-March.

Mr. Fuller said Brisk’s 2012 advertising and marketing budget would be in the “low double digits” of millions of dollars, the most PepsiCo had ever spent to promote the brand. He also said 75 percent of this spending would occur in the first quarter of the year.

According to the research firm Kantar Media, PepsiCo’s annual advertising expenditures for Brisk never exceeded $670,000 in 2007, 2008 and 2010, and totaled $4.7 million in the first nine months of last year. It said PepsiCo did no advertising for Brisk in 2009.

Industry observers and experts differed about the prospects of the PepsiCo campaign.

Noting that recently rising commodity prices had led to higher prices for ready-to-drink teas and subsequent softening of sales growth, Michael Bellas, chairman and chief executive of Beverage Marketing, a consulting company, called Brisk the “dominant value brand” in the ready-to-drink tea category.

“Consumers are more worried about spending and looking for value. My gut feeling is the new 128-ounce packaging and gaming should put Brisk right where it wants to be,” he said.

However, Irma Zandl, a New York-based market researcher who specializes in Generation X and Y consumers and has advised PepsiCo in the past, said the new ads “executionally felt very formulaic.”

“They felt like every other 30-second spot with a superhero,” Ms. Zandl added. “I didn’t feel, ‘Wow, I’ve got to post them on Facebook because they’re so fresh.’ The question is, will young guys think this is so amazing and fabulous? Young consumers are so much savvier and have set the bar so much higher because they see so much.”

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Workers Locked Out at Caterpillar Locomotive Plant in Canada

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The action came after the employees in London, Ontario, rejected a contract proposed by Electro-Motive Canada. The Canadian Auto Workers union said the proposal would cut wages in half, substantially reduce benefits and end the current pension plan.

“It’s not really a proposal, it’s an ultimatum,” said Tim Carrie, president of the union local that represents the factory’s workers. “This is an attack on middle-class jobs.”

On a Web site with updates about the dispute, Electro-Motive, which Caterpillar acquired in 2010, said the lockout would remain in effect “until a ratified contract is in place.”

The company said the union’s decision not to strike constituted “acceptance of the new wages and benefits as represented in EMC’s final offer.” The company said it was “hopeful of a speedy ratification allowing union members to return to work.”

But some of the union’s executive members have suggested that Caterpillar’s contract demands were intended to provoke a shutdown of the Canadian factory as a prelude to moving all production to the United States.

Caterpillar has a long history of tough labor negotiations and bitter labor disputes. In 1995, workers at the company’s unionized operations in the United States returned to work after declaring a 17-month strike a failure. In 2009, workers took executives at Caterpillar France hostage during a dispute over the restructuring of operations in Grenoble.

Electro-Motive is the second-largest maker of locomotives in North America, after General Electric, and for most of its history was a unit of General Motors. While the parent company, Electro-Motive Diesel, is based in LaGrange, Ill., its only assembly plant in recent years has been the Canadian operation.

But last October, Progress Rail, Caterpillar’s rail operations holding company, opened a new locomotive assembly plant in Muncie, Ind.

The Canadian Auto Workers say that wages and benefits are substantially lower at the new American factory.

The union has suggested that, in addition to reducing labor costs, the company may also want to end Canadian production to avoid potential problems with “Buy American” provisions of United States government procurement rules. While the United States government has said that Canada is exempt from any such measures, labor leaders say that has not always been the case in practice.

The purchase of Electro-Motive Canada was reviewed by the Canadian government under the nation’s foreign investment laws. The union has asked the government to release what conditions, if any, were attached to the subsequent approval. The Canadian government recently settled a dispute with United States Steel under those laws after the company shut down a Canadian steel maker shortly after acquiring it.

“When a foreign company comes in and purchases an existing facility, there has to be a benefit to Canadians,” said Mr. Carrie, the union executive. “Americans coming in and trying to slash wages in half is not a benefit to Canadians.”

Industry Canada, the government department that handles investment reviews, was closed for the New Year holiday on Monday and did not respond to requests for comment.

Anne Marie Quinn, a spokeswoman for Electro-Motive Canada, declined to answer questions about the company’s contract demands, its long-term production plans or any commitments made to the Canadian government.

The company’s Web site about the labor dispute, though, said that the cost of wages and benefits for its workers in Illinois, who are represented by the United Automobile Workers, is about half that for the London plant.

The site says that the now-expired contract at the Canadian factory “also has?antiquated work rules that make the London operation inefficient.”

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Fair Game: 2011, a Year of Me-Firsts in Business — Fair Game

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Some of this stuff we already knew. Like the fact that banks love the perks that come with being too big to fail. They will lobby shamelessly to hang on to their riskiest businesses and stay perilously large. No surprise, really. A heads-we-win, tails-the-taxpayers-lose model has a lot going for it, at least for executives atop these institutions.

Here’s another lesson we didn’t need to relearn: Penalties levied on corporate miscreants, and the legal bills they rack up defending themselves, never come out of their own pockets. Insurance policies and shareholders wind up paying. Another win for the me-firsters.

And what if you run a company so far into the ground that the federal government has to take it over? Not to worry: the taxpayers may even pay your legal bills. Consider Fannie Mae and Freddie Mac. Since the two companies collapsed into conservatorship in 2008, taxpayers have advanced about $73 million to pay the legal bills of former executives who are fighting fraud suits and investigations dating back to 2005.

Isn’t America great?

Another unfortunate lesson we keep learning over and over is that policy makers always put off tough decisions for another day. Kicking the can down the road is so much more fun and profitable, especially for politicians worried about re-election.

But last year also provided some truly illuminating moments. A favorite was the pronouncement that if Greece were to default on its debts, it wouldn’t really count as a default at all. That determination meant that investors who had bought insurance against a possible default would be out of luck. Their policies wouldn’t pay off as expected.

Who ginned up this nondefault default? A secret committee of bankers who call the shots in the world of credit default swaps. These people happen to work for big banks that probably sold the insurance and, as a result, would be on the losing end if a Greek default were actually called a default.

It sure is good to run the Wall Street branch of the Ministry of Truth.

Another eye-opener came courtesy of the folks at MF Global, the trading house and derivatives dealer overseen by Jon S. Corzine, the former New Jersey senator and governor and former chief executive of Goldman Sachs. Investors were shocked to learn that MF Global, a supposedly legitimate brokerage firm, was so lax about its affairs that hundreds of millions of customer dollars simply vanished. Months after MF Global failed, an army of investigators is still searching for the missing money.

Washington politicians can usually be relied upon to educate the citizenry — again and again. Last year was no exception. One telling moment came late in the year, when Democrats and Republicans agreed to extend an existing payroll tax cut for two months. Helping to defray the cost was $36 billion generated through an increase in mortgage guarantee fees charged by Fannie Mae and Freddie Mac.

That $36 billion will come out of borrowers’ hides, of course. But using Fannie and Freddie as a money spigot sent a powerful message: Never mind that losses at these mortgage giants have cost taxpayers $150 billion so far. Or that many Americans would prefer these toxic twins to go out of business sooner rather than later. As long as Fannie and Freddie are viewed as piggy banks, there is little chance that Congress will dissolve them. It looks as if these taxpayer-owned zombies, which did so much damage to our economy, are poised to live on and on.

Finally, it was in 2011 that the ugliest paradox of the financial crisis became clearer. That is, some of the very people our government had pushed to embrace the American dream of homeownership — minority groups, lower-income borrowers, immigrants and others previously shut out of the market — were the very people hurt the most by the foreclosure mess. Washington’s push to increase homeownership opened the door for companies to sell poisonous and tricky loans that have now imperiled many of the most vulnerable.

This became painfully evident in a discrimination suit filed by the Justice Department against Countrywide, once the country’s largest mortgage lender. The suit, filed in December, was based on investigators’ findings that more than 200,000 minority borrowers had been charged higher fees and rates by Countrywide than white borrowers of similar financial standing.

The Justice Department also said that Countrywide steered more than 10,000 minority borrowers into high-cost subprime mortgages even as white borrowers received standard, lower-cost loans. The company’s systems, investigators said, allowed loan officers and mortgage brokers to change the terms of mortgages without complying with fair-lending rules.

Bank of America, which bought Countrywide in 2008, agreed to pay $335 million to settle the suit. The events cited in the lawsuit occurred before its purchase of Countrywide.

But the facts assembled by the Justice Department certainly shed new light on Countrywide’s boasts of eliminating barriers to minority homeownership. Its House America program, which committed $600 billion in loans for low-income borrowers in 2003, won plaudits for Angelo R. Mozilo, Countrywide’s co-founder.

The next year, Mr. Mozilo was named Housing Person of the Year by the National Housing Council Conference. “We commend his leadership,” said G. Allan Kingston, the group’s chairman at the time, adding that it “led to the company becoming one of the top lenders to African-Americans and Hispanics, a direct result of his clear understanding that we must do more to ensure affordable homeownership opportunities throughout the nation.”

As I said: live and learn.

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On the Road: Owners Argue Merits of Firearms on Airplanes - On the Road

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AT a big gun show here a couple of weeks ago, J. D. Schechter was busy signing up new members for the Arizona Citizens Defense League.

“We apply pressure on our hired hands in the state legislature in Phoenix to expand the rights of Arizonans to carry guns,” explained the elaborately mustachioed Mr. Schechter, who was wearing a park ranger-style hat and a khaki uniform. Next to his table in the sprawling exhibition hall, hundreds of people browsed through booths that offered a vast array of handguns, rifles and shotguns, hunting knives and survival gear, military memorabilia — and handmade jewelry.

Lately, I’ve been thinking more about firearms after strong reaction I had to a recent column about travelers who were stopped at airport security checkpoints for trying to carry guns onboard planes. I even heard from a few readers who believe that the relaxation of so-called right-to-carry gun laws in many states ought to expand federally to allow responsible, legal permit-holders to carry firearms on airplanes.

No one I know believes this will actually happen. On the other hand, statistics show that more and more people are carrying guns to airports. As I noted in the column, the Transportation Security Administration director, John S. Pistole, said recently that screeners now find on average four or five guns each day in carry-on bags. Eighteen months ago, the T.S.A. was finding only about two guns a day.

Consider the week of Dec. 19 through Dec. 25, a period when the T.S.A. found 31 guns in carry-on bags, many of them loaded, with a round in their chambers.

Meanwhile, gun sales are booming. The F.B.I. says that the number of criminal background-check applications for purchases of guns set a record in December for the second consecutive month.

The subject of guns is complex and emotional. Just this past week, several fatal shootings made the news, including an off-duty federal agent who was killed on Long Island while trying to stop a robbery and a park ranger in Washington killed in Mount Rainier National Park while making a routine traffic stop.

And, I’m well aware of the irony of writing about a gun show in Tucson, where one year ago this Sunday, a gunman opened fire during a political event outside a supermarket, killing six and wounding 13 others, including my own congresswoman, Gabrielle Giffords. The next big gun show scheduled for Tucson, incidentally, is this weekend, at the Pima County Fairgrounds.

But let’s simply address the subject of firearms and air travel. As a tiny percentage of overall travelers, most of the people carrying guns to airports do not have terrorist intentions.

Ron Paul, a Republican presidential candidate, suggested in a statement last year that prohibiting legal gun owners from carrying weapons on airplanes had “set the stage for 9/11.” Others point to reports of federal “red team” security inspectors routinely finding in random tests that firearms readily get through security checkpoints undetected.

“Look at how many guns already get through,” said Kurt Amesbury, a director of a gun owners group called Keep and Bear Arms. Mr. Amesbury was one of the activists who objected to my column about more guns turning up at airport checkpoints. (Guns can be legally transported in checked bags after a passenger declares them.)

Mr. Amesbury and some other gun rights supporters I spoke with say they believe that airline security can be enhanced if more passengers were armed. I don’t agree, but their positions deserve to be understood.

In essence, they say that gun owners with appropriate licenses should be able to carry weapons after making themselves known to security officials and the captain. Federal air marshals on board would also know which passengers are armed. “I present my permit and say that I’m carrying,” Mr. Amesbury said. “Why wouldn’t that work?”

Of course, there are other implications, including dangerous felons circumventing permit procedures and legally carrying weapons.

Still, I’m happy to say that even as I was being denounced on gun rights Web sites as participating in a “jihad” against the Second Amendment, at least some agreement was achieved on the subject of “knuckleheads,” which is how I referred to those who claim they simply forgot they had a gun in their bags. Some supporters of gun rights who objected generally to the column did agree that a right to carry arms probably also includes a responsibility to remember where your gun is.

Asked about this at the gun show, Mr. Schechter handed me a Citizens Defense League refrigerator magnet and pointed to rule No. 5, which stated: “Always maintain control of your defensive tools.”

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