Warning that mortgage delinquencies and foreclosures are likely to rise, with more declines in house prices, Bernanke called for active measures from both the public and private sectors to stabilize housing markets.

"This situation calls for a vigorous response," Bernanke said in a speech to the Independent Community Bankers of America, referring to government and private-sector initiatives to slow the rate of home loan failures.

"Measures to reduce preventable foreclosures could help not only stressed borrowers but also their communities and, indeed, the broader economy," he said.

U.S. government bond prices shed early losses and turned higher, while stocks extended their declines and the downtrodden dollar touched another all-time low against a basket of currencies.

Market bets of a Fed rate cut at its March 18 meeting ticked down slightly to roughly a 66 percent chance of a cut in benchmark interest rates by three-quarters of a percentage point from the current 3 percent.

Bernanke's comments come as the central bank grapples with the twin dilemmas of a slowing economy and rising inflation. U.S. economic growth slowed to a sluggish 0.6 percent at the end of 2007 and hiring declined in January. But inflation rose 4.1 percent in 2007, the largest 12-month rise since 1990.

Current housing difficulties differ from past housing market slumps because of the large number of homeowners who owe more on their loans than their homes are worth, Bernanke said. 

Stanislav Shmulevich, 24, pleaded guilty as part of a deal in which he must complete 300 hours of community service. The business student was initially charged with two counts of criminal mischief as a hate crime, a felony punishable by up to four years in prison.

"There was no hate crime here," said defense lawyer Glenn Morak. "He accepts responsibility, and he is repentant."

Detective Faisal Khan said Shmulevich told him "he committed the acts out of anger toward a group of Muslim students with whom he had a recent disagreement."

Shmulevich, the lawyer said, is no longer at Pace, which has about 14,000 students in New York City and suburban Westchester County.

A deadlocked U.S. Supreme Court upheld a lower court decision against Pfizer Inc's Warner-Lambert unit over withdrawn diabetes drug Rezulin in a ruling announced on Monday, allowing the case to go forward.

By a 4-to-4 vote, the court affirmed a federal appeals court ruling that reinstated the lawsuit against the world's biggest drugmaker by Michigan residents who said their injuries were caused by the diabetes drug.

The split occurred because the court's ninth member, Chief Justice John Roberts, took no part in the case because he owns Pfizer shares. The court's one-sentence ruling does not address the merits of the dispute.

Rezulin, first approved in 1996, was pulled from the market in 2000 after about 100 people who took the medicine needed liver transplants or died. Pfizer has fought thousands of lawsuits claiming the drugmaker failed to warn the public about the drug's toxic effects.

The high court's action clears the way for the case to proceed in federal court in New York.

At issue in the Supreme Court case was a Michigan state law that provides pharmaceutical companies immunity from such suits except when it can be proven that the manufacturer defrauded the U.S. Food and Drug Administration.

Gay rights advocates sued to overturn the ban four years ago after the court halted a monthslong same-sex wedding spree that saw thousands of couples marry at City Hall.

The justices were scheduled to hear three hours of arguments in six cases.

"I think I speak for everybody when I say that this has been a long time coming and a day that has been eagerly anticipated," said City Attorney Dennis Herrera, who is representing the city in a lawsuit supporting gay marriage.

The cases were filed after the court stopped the same-sex marriages in the winter of 2004. More than 4,000 couples exchanged vows at the direction of Mayor Gavin Newsom months before gay marriage became legal in Massachusetts, although the high court ultimately voided the unions.

In briefs submitted to the court, same-sex marriage supporters argued that California's Constitution leaves no room for denying gays and lesbians the right to wed.

They say that while the state is one of a handful where gay couples are entitled to most of the same legal rights as married spouses, the institution of marriage is too important to allow for alternatives that are by definition inferior.

"We're very hopeful that California history will stay true today and we'll see the constitution vindicated for the thousands of families in California who depend on our equal place under law," said Jennifer Pizer, a lawyer with the Lambda Legal Defense and Education Fund who is representing gay couples.

The state and same-sex marriage opponents, however, maintain that limiting marriage to members of the opposite sex is reasonable — not only to uphold tradition but because California voters approved a ballot initiative eight years ago bolstering the gay-marriage ban that was in place at the time. To overturn that law, they say, would abrogate the rights of all Californians.

Jim Clark, who was the former governor's chief of staff, agreed to plead guilty to a single count of conspiracy fraud in a filing in U.S. District Court in Anchorage. He was scheduled to enter his plea at an arraignment hearing on Tuesday.

Clark admitted to taking $68,550 in illegal contributions from the state's largest oil-services company, VECO Corp, for Murkowski's failed 2006 reelection bid in exchange for working on VECO's behalf to secure an industry-friendly version of tax legislation, according to the plea agreement.

He is the first official from the Murkowski administration to be charged in a federal criminal investigation that has so far resulted in convictions of three former state lawmakers, the indictment of a fourth and guilty pleas from two top VECO executives and one former lobbyist.

Murkowski, who was also a former U.S. senator, was soundly defeated in the 2006 Republican primary by Sarah Palin, Alaska's current governor who ran as an anti-corruption reformer.

Clark and VECO conspired to hide the illegal contributions "in a manner so that the public would be deceived and the payments would not be disclosed, as required by law," according to charging documents.

The federal investigation centers around a revision of an oil-tax law that passed the state legislature in 2006 at Murkowski's urging. Bill Allen and Rick Smith, two former VECO executives, pleaded guilty to bribing state lawmakers for a pro-industry version of the bill and other favorable actions.

Former state Senate President Ben Stevens, son of powerful U.S. Senator Ted Stevens, received much of that bribe money, Allen and Smith testified in court last year.

The stock gained $3.80, or 8.3 percent, to $49.47 in midday trading. The shares have traded between $45.41 and $58.38 over the last 52 weeks, and are off 14 percent since the start of the year.

The patent dispute stretches back to 2005, when Barr asked the Food and Drug Administration to approve a generic version of Berlex and Schering AG's Yasmin. The companies then sued Barr. Germany-based Bayer AG bought Schering in 2006, becoming Bayer Schering Pharma AG, and inherited the ongoing lawsuit.

The Yasmin patent loss is part of a wider movement by generic drug developers to chip away at lucrative patents before they expire. Yasmin had sales of about $570 million in 2007. Other large generic drug companies, including Teva Pharmaceutical Industries Ltd. and Mylan Inc. are embroiled in their own Paragraph IV, or patent challenges, with big pharma.

Bayer has not yet said whether it will appeal the U.S. District Court for the District of New Jersey's ruling, which holds that the patent is invalid because it is obvious. However, the company has said it continues to retain exclusive distribution rights in the U.S. until March 2009.

Barr did not include sales of generic Yasmin in its 2008 guidance and stands to benefit as it will likely launch a generic version of in 2008, several analysts said.

"Despite a likely appeal, we believe that upon final approval, Barr will risk a launch to bolster a 2008 earnings outlook that was lackluster without patent wins," said Citi Investment Research analyst Andrew Swanson, reaffirming a "Hold" rating and upgrading his price target to $57 from $55.

He said Barr would face only a low risk of losing an appeal, citing prior case law, and added the decision could even effect the patent for Bayer's birth-control pill Yaz, which is a low-dose version of Yasmin.

Cowen and Co. analyst Ken Cacciatore reaffirmed a "Neutral" for Barr and said generic Yasmin sales could add between $80 million and $100 million to revenue in 2008 and then between $110 million and $140 million in 2009

"Given the lack of likely meaningful additional competition due to the difficult nature in manufacturing oral contraceptives, we believe that generic Yasmin should remain fairly stable for the following years thereafter," he said, in a note to investors.

Meanwhile, Goldman Sachs analyst Randall Stanicky and Banc of America analyst Frank H. Pinkerton reaffirmed "Buy" ratings for Barr.

The name of the Bryan Cave law firm has come up in pretrial legal battles in the criminal case against politically connected entrepreneur Antoin "Tony" Rezko.

In a footnote to a motion last week seeking to exclude some government evidence against Rezko, his defense lawyers disclosed for first time that prosecutors have alleged that Rezko paid a $1.5 million bribe to Iraq's former electricity minister to obtain a contract in that country. The alleged bribe was paid from an escrow account held by Bryan Cave, prosecutors said.

Rezko's lawyers said that every aspect of the bribe claim is "demonstrably false."

The bribe allegation is unrelated to the federal influence-peddling and fraud charges against Rezko, whose trial began Monday with jury selection. Its disclosure shows the scope of Rezko's relationship with lawyers who have represented his real estate and restaurant businesses in civil matters.

Another law firm, Freeborn & Peters, was identified by prosecutors last month for its involvement in a $3.5 million overseas wire transfer to Rezko and his associates. The government did not suggest anything illegal on the law firm's part, but evidence of the wire transfer led a federal judge to revoke Rezko's bail in January.

Another one of Rezko's lawyers, Gene Murphy, was a partner in Bryan Cave's Chicago office from April 2004 to August 2005. When Murphy left Bryan Cave, the firm stopped representing Rezko, said Jeffrey Morof, the head of Bryan Cave's Chicago office.

Murphy, who has started his own law firm, said the claim that an alleged bribe came from a Bryan Cave account is "absolutely baseless." He declined further comment on Rezko, other than adding that he no longer represents him.

Morof also denied that the firm had any involvement in an alleged transfer of funds to the former electricity minister.

The bribe allegation came up in a private hearing held in the judge's chambers, according to Rezko's lawyers. A spokesman for the U.S. attorney's office declined to comment.

Blogger unmasked: A vocal critic of some patent lawsuits who blogged anonymously under the pseudonym "Patent Troll Tracker" has revealed himself after being pressured by one of his frequent targets. The blogger is Rick Frenkel, an intellectual-property lawyer at Cisco Systems.

He recently disclosed on his blog that he faced an e-mail threat of being named. In his blog, he tracked lawsuits by companies that acquired patents solely to sue for infringement. Chicago lawyer Raymond Niro represents a number of these entities that have come to be known by the derogatory term of patent trolls.

Niro, tired of being criticized anonymously in the blog, had recently offered a $10,000 bounty for anyone who unmasked the blogger. Niro said no one has stepped forward to claim the reward.

On the move: Assistant U.S. Atty. Daniel Rubinstein has joined Greenberg & Traurig's Chicago office as a shareholder, the firm's equivalent of partner. He worked in the U.S. attorney's office in Chicago for four years, primarily in the complex fraud section. ... Sonnenschein Nath & Rosenthal hired Brian Lambert as its chief marketing officer. He most recently was at Wachovia Corp., where he was head of business development in the treasury services division. ... Jennifer Nijman, a former president of the Chicago Bar Association, has left Winston & Strawn to start her own firm with Susan Franzetti, a solo practitioner who previously worked at Sonnenschein. Their practice will focus on representing businesses in environmental matters.