Wall Street Modestly Higher

Wall Street opened higher on Wednesday after Alcoa got the earnings season under way with better-than-expected revenue and an encouraging outlook for the year.

The Standard & Poor’s 500-stock index rose 0.5 percent in morning trading, the Dow Jones industrial average added 0.6 percent and the Nasdaq composite index was up 0.6 percent. European shares were moderately higher in afternoon trading.

Alcoa said it expected global demand for aluminum would continue to grow in 2013, though the company kept a cautious tone as worries lingered over a looming budget confrontation in Washington. Shares of Alcoa, the largest aluminum producer in the United States, were 0.2 percent higher.

Still, investors were wary about the outcome of the fourth-quarter earnings season. Profits were expected to beat the previous quarter’s lackluster results, but analysts’ estimates were down sharply from where they were in October. Earnings were expected to grow by 2.7 percent, according to Thomson Reuters data.

Equities have pulled back over the last two sessions from last week’s rally, which was spurred by a deal in Washington that averted automatic spending cuts and across-the-board tax increases.

“With the euphoria of the fiscal cliff deal wearing off, the market is looking for the next positive theme and the hope is that earnings season can fill that need,” said Andre Bakhos, director of market analytics at Lek Securities in New York. “With expectations muted, any semblance of decent numbers could provide a robust upside potential.”

Constellation Brands, whose labels include Robert Mondavi and Ravenswood wines, rose 0.4 percent after it reported higher profit.

On the downside, Apollo Group slid more than 9 percent after it reported lower student sign-ups for the third straight quarter and cut its operating profit forecast for 2013.

Dish Network late Tuesday announced a bid for Clearwire that trumped Sprint Nextel’s $2.2 billion offer, setting the stage for a battle over the wireless service provider. Clearwire was up 7.5 percent, while Sprint lost 1.8 percent.

Seagate Technology, the maker of computer hard drives, rose 4.5 percent after it raised its second-quarter revenue forecast.

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India Ink: In Maharashtra, Fight Over Restaurant Bill Erupts into Riot

What started out as a skirmish over a restaurant bill escalated into riots that left five people dead from police gunfire and injured over 200 in Dhule, a city about 350 kilometers northeast of Mumbai.

“It all happened within a span of about 30 minutes,” said Mohan Pawar, the additional superintendent of police for Dhule, who was among those injured in the weekend violence.

Mr. Pawar said by telephone that the incident began on Sunday after a group of four men between the ages of 20 and 25 refused to pay their bill at a restaurant in Dhule’s Machhi Bazaar Chowk (Fish Market Square). The young men began to argue with their waiter, and then the argument quickly turned serious as the restaurant owner and others in the area got involved.

Mr. Pawar said the violence was fueled by religious tensions, as the owner of the restaurant was Hindu while the four customers were Muslim. According to local media reports, the police are looking at the inflammatory content of speeches made by a few Muslim politicians in October that might have inflamed the rioters.

Dhule is normally a peaceful city but has some history of communal violence. In October 2008, riots between the Hindu and Muslim communities shook the city for several days.

Mr. Pawar said that the four men had left restaurant but returned with a crowd from their neighborhood. In the meantime, the restaurant owner had also gathered a crowd, Mr. Pawar said, and within 20 minutes a mob had gathered. Stones were pelted, houses and shops were burned, and motorcycles, bicycles and hand-drawn carts were destroyed.

Two police officers at the nearby station arrived at the scene, but they were unable to curb the violence, Mr. Pawar said.

The riots then spread in the Machhibazar, Palabazar and Madhapura areas of the city. The police sent two platoons of the riot control police, along with a larger police force. Rioters heaved stoned, bricks, acid and soda water bottles at the police officers, according to a statement from the chief minister of Maharashtra, Prithviraj Chavan.

The police tried to use batons and tear gas to control the crowd and then resorted to opening fire on the rioters, killing five. Four died on Sunday while one succumbed to injuries on Tuesday, said Mr. Pawar.

The injured include 11 police officials, 102 police officers and 100 civilians, according to Mr. Chavan’s statement. The district superintendent of police was among those injured. On Tuesday, Mr. Chavan asked Ahmad Javed, the Maharashtra additional director general of police, to visit Dhule.

The city has been under curfew since 4 p.m. on Sunday, but Mr. Pawar said the curfew was likely to be lifted on Wednesday.

Mr. Chavan has asked the additional district magistrate to investigate the riots and submit a report within two months. He has also said that the government will pay for the treatment of the injured and bear the funeral expenses of those killed by the police.

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'Bama bashes Notre Dame 42-14 in BCS title game

MIAMI GARDENS, Fla. (AP) — Barely taking time to celebrate their latest national championship, Nick Saban and the Alabama Crimson Tide are ready to get back to work.

That's how they make it look so easy.

In what must be an increasingly frustrating scene for the rest of college football, another season ended with Saban and his players frolicking in the middle of a confetti-strewn field. Eddie Lacy ran all over Notre Dame, AJ McCarron turned in another dazzling performance through the air, and the Tide defense shut down the Fighting Irish until it was no longer in doubt.

The result was a 42-14 blowout in the BCS title game Monday night, not only making Alabama a back-to-back champion, but a full-fledged dynasty with three crowns in four years.

This one was especially satisfying to Saban.

"People talk about how the most difficult thing is to win your first championship," he said. "Really, the most difficult one to win is the next one, because there's always a feeling of entitlement."

Rest assured, that feeling won't last long in Tuscaloosa.

While Saban insisted he was "happy as hell" and "has never been prouder of a group of young men," it was hard to tell. He was already talking about reporting to the office Wednesday morning and getting started on next season.

"One of these days, when I'm sitting on the side of the hill watching the stream go by, I'll probably figure it out even more," Saban said. "But what about next year's team? You've got to think about that, too."

So, in short order, he'll be talking with underclassmen about entering the NFL draft, making sure everyone goes back to class on schedule, and getting started on that next depth chart.

"The Process," as he calls it, never stops.

"We're going to enjoy it for 24 hours or so," Saban said.

No. 2 Alabama quieted the top-ranked Irish on the very first drive — so much for waking up the echoes — and could've started the celebration at halftime, heading to the locker room with a commanding 28-0 lead.

The Tide (13-1) pushed it out to 35-0 midway through the third quarter on the third of McCarron's four touchdown passes, a 34-yarder to Amari Cooper with a defender nowhere in sight.

At that point, Alabama was on a 69-0 blitz in national title games, having scored the last 13 points in its 2010 triumph over Texas and blanked LSU 21-0 for last year's BCS crown.

When Everett Golson finally scored for Notre Dame (12-1) with about 4 minutes remaining in the third, it snapped a scoreless stretch of nearly two full games — 108 minutes and 7 seconds — by the Tide.

"It was just a complete game by the offense, defense and special teams," said Alabama linebacker C.J. Mosley, the defensive MVP with eight tackles, one of them behind the line.

Despite the dazzling numbers by McCarron — 20 of 28 for 264 yards — he was denied a second straight offensive MVP award in the title game. That went to Lacy, who finished with 140 yards rushing on 20 carries and scored two TDs. Not a bad finish for the junior, who surely helped his status in the NFL draft should he decide to turn pro.

Lacy also was MVP of the Southeastern Conference championship game, rushing for a career-best 181 yards in the thrilling victory over Georgia that gave Alabama a chance to repeat as champion.

The Tide will have some big holes to fill, no matter who decides to leave school early, with offensive tackle D.J. Fluker and cornerback Dee Milliner also pondering their draft prospects. There's not a lot of seniors on the roster, but All-America linemen Barrett Jones and Chance Warmack and safety Robert Lester are among those who definitely won't be back.

But Alabama had some huge holes to fill a year ago, too, with five players drafted in the first 35 picks.

That worked out just fine.

The Crimson Tide wrapped up its ninth Associated Press national title, breaking a tie with Notre Dame for the most by any school and gaining a measure of redemption for a bitter loss to the Irish almost four decades ago: the epic 1973 Sugar Bowl in which Ara Parseghian's team edged Bear Bryant's powerhouse 24-23.

"The process is ongoing," said Saban, tightlipped as ever and showing little emotion after the fourth BCS national title of his coaching career. "We have a 24-hour rule around here. We enjoy everything for 24 hours."

Notre Dame went from unranked in the preseason to the top spot in the rankings by the end of the regular season, winning two games in overtime and three other times by seven points or less.

But the long wait for a championship — the Irish haven't finished No. 1 since 1988 — will have to wait at least one more year.

"They just did what Alabama does," moaned Manti Te'o, Notre Dame's star linebacker and Heisman Trophy finalist, trying to digest an embarrassing loss in his final college game.

Golson will be back.

He completed his first season as the starter by going 21 of 36 for 270 yards, with a touchdown and an interception. But the young quarterback got no help from the running game, which was held to 32 yards — 170 below its season average.

"We've got to get physically stronger, continue close the gap there," said Brian Kelly, the Irish's third-year coach. "Just overall, we need to see what it looks like. Our guys clearly know what it looks like now — a championship football team. That's back-to-back national champions. That's what it looks like. That's what you measure yourself against there. It's pretty clear across the board what we have to do."

Kelly vowed this was only beginning, insisting the bar has been raised in South Bend no matter what the outcome.

"We made incredible strides to get to this point," he said. "Now it's pretty clear what we've got to do to get over the top."

Alabama is already there but still longing for more, not content even after the second-biggest rout of the BCS era that began in 1999. The only title game that was more of a blowout was USC's 55-19 victory over Oklahoma in the 2005 Orange Bowl, a title that was later vacated because of NCAA violations.

You could almost hear television sets around the country flipping to other channels as Alabama poured it on, a hugely anticipated matchup between two of the nation's most storied programs reduced to a laugher when the Tide scored on its first three possessions.

"We're going for it next year again," said offensive tackle Cyrus Kouandijo, only a sophomore and already the owner of two rings. "And again. And again. And again. I love to win. That's why I came here."

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Follow Paul Newberry on Twitter at www.twitter.com/pnewberry1963

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Recipes for Health: Baked Ziti or Penne Rigata With Cauliflower — Recipes for Health

Andrew Scrivani for The New York Times

You can add vegetables to just about any baked macaroni dish. Cauliflower works very well in this one, inspired by another Sicilian cauliflower dish in Clifford A. Wright’s “Cucinia Paradiso.”

1 medium cauliflower, about 2 pounds, leaves and stem trimmed

Salt to taste

Pinch of saffron threads

2 tablespoons extra virgin olive oil

2 garlic cloves, minced

3 anchovy fillets, rinsed and chopped

1 14-ounce can chopped tomatoes, with juice

Freshly ground pepper

2 tablespoons chopped flat leaf parsley

3/4 pound ziti or penne rigata

2 ounces pecorino or Parmesan, grated (1/2 cup)

1. Bring a large pot of water to a boil and salt generously. Add the cauliflower and boil gently until the florets are tender but the middle resists when poked with a skewer or knife, about 10 minutes. Using slotted spoons or tongs (or a pasta insert) remove the cauliflower from the water, transfer to a bowl of cold water and drain. Cover the pot and turn off the heat. You will cook the pasta in the cauliflower water. Cut the florets from the core of the cauliflower and cut them into small florets or crumble coarsely using a fork or your hands.

2. Meanwhile, place the saffron in a small bowl and add 3 tablespoons warm water. Let steep for 10 to 15 minutes.

3. Heat 1 tablespoon of the olive oil over medium heat in a large, heavy skillet and add the garlic. Cook, stirring, until it smells fragrant, about 30 seconds to a minute, and add the anchovies and tomatoes. Season to taste with salt (remembering that the anchovies will contribute a lot of salt) and freshly ground pepper. Turn the heat down to medium-low and cook, stirring often, until the tomatoes have cooked down and smell fragrant, about 10 minutes. Stir in the cauliflower, saffron with its soaking water, and parsley, cover and simmer for another 5 minutes. Remove from the heat. Taste and adjust seasonings.

4. Bring the cauliflower water to a boil and add the pasta. Cook until just al dente, a few minutes less than you would cook it to serve. It will soften further when it bakes. Drain and transfer to a bowl.

5. Heat the oven to 375 degrees. Oil a 2-quart baking dish. Toss the pasta with half the cauliflower mixture and half the cheese and spoon into the baking dish. Combine the remaining cauliflower mixture and remaining cheese and spoon over the pasta. Drizzle on the remaining tablespoon of oil. Place in the oven and bake for 20 to 25 minutes, until bubbling. Serve hot.

Yield: Serves 6

Advance preparation: You can make the cauliflower preparation through Step 3 a day ahead of time and refrigerate. Reheat and proceed with the recipe. The macaroni can be assembled several hours before baking.

Nutritional information per serving: 343 calories; 9 grams fat; 3 grams saturated fat; 1 gram polyunsaturated fat; 3 grams monounsaturated fat; 11 milligrams cholesterol; 51 grams carbohydrates; 4 grams dietary fiber; 285 milligrams sodium (does not include salt to taste); 14 grams protein

Martha Rose Shulman is the author of “The Very Best of Recipes for Health.”

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Chinese Businessman Pleads Guilty in Stolen Software Case

WILMINGTON, Delaware (Reuters) - In a case U.S. officials say is the first of its kind, a Chinese businessman pleaded guilty Monday to selling stolen American software used in defense, space technology and engineering - programs prosecutors said held a retail value of more than $100 million.

The sophisticated software was stolen from an estimated 200 American manufacturers and sold to 325 black market buyers in 61 countries from 2008 to 2011, prosecutors said in court filings. U.S. buyers in 28 states included a NASA engineer and the chief scientist for a defense and law-enforcement contractor, prosecutors said.

Corporate victims in the case included Microsoft, Oracle, Rockwell Automation,, Agilent Technologies, Siemens, Delcam, Altera Corp and SAP, a government spokesman said.

U.S. officials and the Chinese man's lawyer, Mingli Chen, said the case was the first in which a businessman involved in pirating industrial software was lured from China by undercover agents and arrested.

The businessman, Xiang Li, of Chengdu, China, was arrested in June 2011, during an undercover sting by U.S. Department of Homeland Security agents on the Pacific island of Saipan, an American territory near Guam.

Video from the undercover meeting in Saipan, filed as evidence in court, is expected to be made public during a press conference Tuesday by John Morton, director of U.S. Immigration and Customs Enforcement, and Charles M. Oberly III, the U.S. Attorney for Delaware.

Li, 36, originally charged in a 46-count indictment, pleaded guilty late Monday to single counts of conspiracy to commit criminal copyright violations and wire fraud.

"I want to tell the court that what I did was wrong and illegal and I want to say I'm sorry," Li told U.S. District Judge Leonard P. Stark during a 90-minute hearing in federal court. The Chinese citizen spoke through a translator.

In a court filing, prosecutors David Hall and Edward McAndrew said the retail value of the programs Li sold on the black market exceeded $100 million.

During the hearing, Li told U.S. District Judge Leonard Stark that he disputes that figure. After the hearing, his lawyer said Li did not realize the retail value of what he was selling until he was caught and plans to present his own estimate at sentencing, which is set for May 3, he said.

In recent years, U.S. officials have targeted software pirates overseas but bringing them to the United States has proved difficult.

In one of the largest copyright cases, U.S. prosecutors last year charged seven people, including Megaupload founder Kim Dotcom, with racketeering conspiracy and copyright violations. The indictment alleges that Dotcom, who lives in New Zealand, ran an organization that earned $175 million selling an estimated $500 billion worth of pirated movies, TV shows and other entertainment media. Dotcom is fighting extradition from New Zealand.

EXPENSIVE SOFTWARE

The Li case involves sophisticated business software, not entertainment software, and thus small quantities of higher-priced products. The retail value of the products Li pirated ranged from several hundred dollars to more than $1 million apiece. He sold them online for as little as $20 to $1,200, according to government court filings.

At one point, Crack99.com and Li's other sites offered more than 2,000 pirated software titles, prosecutors said.

Li trolled black market Internet forums in search of hacked software, and people with the know-how to crack the passwords needed to run the program. Then he advertised them for sale on his websites. Li transferred the pirated programs to customers by sending compressed files via Gmail, or sent them hyperlinks to download servers, officials said.

"He was pretty proud of himself," Chen said of his client's business acumen. "He did not realize it was such a big crime."

Agents from Immigration and Customs Enforcement/Homeland Security Investigations learned of Li's enterprise after an unidentified U.S. manufacturer noticed his company's software for sale on crack99.com.

Working undercover for 18 months beginning in early 2010, the U.S. agents made at least five purchases from Li. These included pirated versions of "Satellite Tool Kit" by Analytical Graphics Inc. of Exton, Penn., a product prosecutors said is "designed to assist the military, aerospace and intelligence industries through scenario-based modules that simulate real-world situations, such as missile launches, warfare simulations and flight trajectories." Agents bought software worth $150,000 retail for several thousand dollars.

Agents lured Li from China to the U.S. territory of Saipan under the premise of discussing a joint illicit business venture. At an island hotel, Li delivered counterfeit packaging and, prosecutors said, "Twenty gigabytes of proprietary data obtained unlawfully from an American software company." Officials did not identify the company in court documents.

(Editing by Cynthia Osterman)

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Court in Bahrain Confirms Jail Terms for 13 Dissidents

CAIRO — A court in Bahrain on Monday upheld prison sentences for 13 of the country’s most prominent dissidents, in a decision that government opponents offered as evidence that the monarchy was ignoring calls to negotiate a political solution that could quiet a nearly two-year-old uprising.

The decision ends all appeals for the dissidents, who were sentenced to between five years and life in prison for their leadership roles in the revolt that began in February 2011, according to a colleague of one of the jailed opposition members. The 13 are part of a group of 20 opposition leaders who were sentenced by a military tribunal on charges that included trying to overthrow the government. Other dissidents were sentenced in absentia.

Since pledging to accept reform recommendations made by an independent panel that investigated the uprising — including to commute sentences of those charged with “political expression” — the government has continued to silence its critics. In November, the government stripped 31 people, including former opposition members of Parliament and exiled dissidents, of their citizenship.

Last month, a judge upheld a prison sentence for a popular human rights advocate, Nabeel Rajab, who was convicted of inciting protests. As the security forces have moved to contain street protests, the contest over freedom in Bahrain has moved to the judiciary. Activists accuse the courts of being little more than arms of the government that endorse charges for political crimes.

On Monday, in an apparent reaction to such allegations, Bahrain’s state news agency carried a statement affirming what it said was the judiciary’s independence and condemning “false defamatory statements.”

The dissidents who lost their appeal on Monday include human rights activists and opposition leaders. Some of the detainees have advocated the creation of a constitutional monarchy in Bahrain, while others have called for the fall of the government. They were arrested as part of a government crackdown on a pro-democracy uprising in 2011 led by members of Bahrain’s Shiite majority, who have protested against what they say is discriminatory rule at the hands of the Sunni monarchs.

As the dissidents have disappeared into jail or exile, their likenesses, in spray paint, have started to fill the walls of Shiite villages, where clashes between youths and the riot police have become the principal interaction between the state and its opponents.

The government has accused many of the dissidents of colluding with Iran to topple the state and has blamed the violence of some protesters for the absence of dialogue. Critics of the monarchy argue that by sidelining the most influential opposition members, government officials are making negotiation impossible.

“They are trying to pull us toward a security solution,” said Radhi Mohsen al-Mosawi, the acting secretary general of the National Democratic Action Society, a leftist opposition group whose leader, Ibrahim Sharif, was among the dissidents who lost his appeal on Monday. Mr. Sharif is serving a five-year sentence.

“They have made things so difficult for them, and for us,” said Mr. Mosawi, who added that his group still favored negotiations for a constitutional monarchy. “Our demand is a peaceful demand. It is a minimum demand.”

This article has been revised to reflect the following correction:

Correction: January 7, 2013

An earlier version of this article incorrectly stated the name of the leader of the National Democratic Action Society. He is Ibrahim Sharif, not Ibrahim Hussein.

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RG3 defends himself as Redskins await knee results

ASHBURN, Va. (AP) — Robert Griffin III knows he's getting criticized for playing hurt in the Washington Redskins' playoff loss.

On Monday, he offered his latest defense on Twitter.

The rookie quarterback tweeted: "Many may question, criticize & think they have all the right answers. But few have been in the line of fire in battle."

The Redskins were awaiting the results of an MRI on Griffin's right knee, which he re-injured twice during Sunday's 24-14 loss to the Seattle Seahawks.

Griffin did not appear in the locker room during the two hours it was open to reporters Monday morning. Teammates defended Griffin, saying it's in an athlete's competitive nature to keep playing as long as possible.

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Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL

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Recipes for Health: Sicilian Pasta With Cauliflower

Andrew Scrivani for The New York Times

Every once in a while I revisit the cuisine of a particular part of the world (usually it is located somewhere in the Mediterranean). This week I landed in Sicily. I was nosing around my cookbooks for some cauliflower recipes and opened my friend and colleague Clifford A. Wright’s very first cookbook, “Cucina Pariso: The Heavenly Food of Sicily.” The cuisine of this island is unique, with many Arab influences – lots of sweet spices, sweet and savory combinations, saffron, almonds and other nuts. Sicilians even have a signature couscous dish, a fish couscous they call Cuscusù.

Cauliflower is a favorite vegetable there, though the variety used most often is the light green cauliflower that we can find in some farmers’ markets in the United States. I adapted a couple of Mr. Wright’s pasta recipes, changing them mainly by reducing the amount of olive oil and anchovies enough to reduce the sodium and caloric values significantly without sacrificing the flavor and character of the dishes.

I didn’t just look to Sicily for recipes for this nutrient-rich cruciferous vegetable, but I didn’t stray very far. One recipe comes from Italy’s mainland, and another, a baked cauliflower frittata, is from its close neighbor Tunisia, fewer than 100 miles away across the Strait of Sicily.

Sicilian Pasta With Cauliflower

I found the recipe upon which this is based in Clifford A. Wright’s first cookbook, “Cucina Paradiso: The Heavenly Food of Sicily.” And it is heavenly. I love the way raisins or currants and saffron introduce a sweet element into the savory and salty mix.

1/4 cup golden raisins or currants

Pinch of saffron threads

1 medium cauliflower, about 2 pounds, leaves removed and bottom trimmed

Salt to taste

2 tablespoons extra virgin olive oil

2 garlic cloves, minced

3 anchovy fillets, rinsed and chopped

1 14-ounce can chopped tomatoes, with juice

3 tablespoons pine nuts or chopped blanched almonds

Freshly ground pepper to taste

3/4 pound perciatelli (also sold as bucatini) or spaghetti

2 tablespoons grated pecorino

2 tablespoons slivered basil

1. Place the raisins or currants in a small bowl and cover with warm water. In another bowl combine the saffron with 3 tablespoons warm water. Let both sit for 20 minutes while you prepare the other ingredients.

2. Bring a large pot of water to a boil and salt generously. Add the cauliflower and boil gently until the florets are tender but the middle resists when poked with a skewer or knife, about 10 minutes. Using slotted spoons or tongs (or a pasta insert) remove the cauliflower from the water, transfer to a bowl of cold water and drain. Cover the pot and turn off the heat. You will cook the pasta in the cauliflower water. Cut the florets from the core of the cauliflower and cut them into small florets or crumble coarsely using a fork or your hands.

3. Heat the olive oil over medium heat in a large, heavy skillet and add the garlic. Cook, stirring, until it smells fragrant, about 30 seconds to a minute, and add the anchovies and tomatoes. Turn the heat down to medium-low and cook, stirring often, until the tomatoes have cooked down and smell fragrant, about 10 minutes. Drain the raisins or currants and add, along with the saffron and its soaking liquid, cauliflower, pine nuts or almonds, and about 1/4 cup of the cooking water from the cauliflower. Season to taste with salt and pepper. Cover, turn the heat to low and simmer 10 minutes, stirring occasionally. Keep warm while you cook the pasta.

4. Bring the cauliflower water back to a boil and cook the pasta al dente, following the timing instructions on the package. Check the sauce and if it seems dry add another 1/4 to 1/2 cup of the pasta cooking water. Drain the pasta and transfer to the pan with the sauce. Toss together and serve, sprinkled with pecorino and chopped basil leaves. If desired, drizzle a little olive oil over each serving.

Yield: Serves 4

Advance preparation: The cauliflower preparation can be prepared up to a day ahead through Step 3 and refrigerated. Reheat and proceed with the recipe.

Nutritional information per serving: 510 calories; 12 grams fat; 2 grams saturated fat; 3 grams polyunsaturated fat; 6 grams monounsaturated fat; 4 milligrams cholesterol; 85 grams carbohydrates; 6 grams dietary fiber; 196 milligrams sodium (does not include salt to taste); 18 grams protein

Martha Rose Shulman is the author of “The Very Best of Recipes for Health.”

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DealBook: Banks Reach Settlement on Mortgages

11:38 a.m. | Updated

Bank of America agreed on Monday to pay more than $10 billion to Fannie Mae to settle claims over troubled mortgages that soured during the housing crash, mostly loans issued by the bank’s Countrywide Financial subsidiary.

Separately, federal regulators reached an $8.5 billion settlement on Monday to resolve claims of foreclosure abuses that included flawed paperwork used in foreclosures and bungled loan modifications by 10 major lenders, including JPMorgan Chase, Bank of America and Citibank. About $3.3 billion of that settlement amount will go toward Americans who went through foreclosure in 2009 and 2010, while $5.2 billion will address other assistance to troubled borrowers, including loan modifications and reductions of principal balances. Eligible homeowners could get up to $125,000 in compensation.

The two agreements are not directly related, but they illustrate the extent of the banks’ role in the excesses of the credit boom, from the making of loans to the seizure of homes.

Under the terms of the Bank of America deal, the bank will pay Fannie Mae $3.6 billion and will also spend $6.75 billion to buy back mortgages from the housing finance giant.

The settlement will resolve all of the lender’s disputes with Fannie Mae, removing a major impediment to Bank of America’s rehabilitation. The bank had settled its fight with Freddie Mac, the other government-owned mortgage giant, in 2011.

Both Fannie and Freddie, which have posted billions of dollars in losses in recent years, have argued that Countrywide misrepresented the quality of home loans that it sold to the two entities at the height of the mortgage bubble. Bank of America assumed those troubles when it bought Countrywide in 2008.

Before the latest settlement announced on Monday, the Countrywide acquisition had cost Bank of America more than $40 billion in losses on real estate, legal costs and settlements, according to several people close to the bank.

By removing part of the bank’s mortgage albatross, the move is a continued retreat from home lending by Bank of America, even as rivals including JPMorgan Chase and Wells Fargo compete for the profitable refinance business that has boomed with interest rates persistently low.

Bank of America also agreed to sell the servicing rights on about $306 billion worth of home loans to other firms. In separate statements, Nationstar Mortgage Holdings and the Newcastle Investment Corporation announced they were buying the rights. Those servicing costs, which were roughly $3.4 billion in the third quarter, have weighed on the bank’s profits, especially as borrowers fall behind on their bills.

Brian T. Moynihan, the bank’s chief executive, said in November that he intended to sell off about two million loans the bank currently serviced.

“Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” Mr. Moynihan said in a statement on Monday.

Bank of America said it expected the settlement to hurt its fourth-quarter earnings by $2.5 billion because of costs tied to foreclosure reviews and litigation. The firm also expects to record a $700 million charge, an accounting move known as a debt-valuation adjustment, related to an improvement in the prices of its bonds.

The deal on Monday helps the bank move away from its troubled mortgage business. Still, the bank’s attempts to resolve other costly mortgage litigation have so far been stymied. Looking to appease investors that sued the bank for losses when mortgages packaged into securities imploded during the financial crisis, the bank agreed to pay $8.5 billion in June 2011. But the settlement, which would help mollify investors including the Federal Reserve Bank of New York and Pimco, has been stalled.

Further thwarting Bank of America’s retreat from the mortgage business, federal prosecutors sued the bank in October, accusing it of churning through loans so quickly that quality controls were virtually forgotten. The Justice Department sued the bank under a law that could mean Bank of America could pay well more than $1 billion to settle.

Bank of America has been embroiled with other legal woes, including accusations that it misled investors about the acquisition of Merrill Lynch. Shareholders, led by pension funds, had said the bank provided false and misleading statements about the health of the Wall Street firm, which, unknown to the public, was racking up huge losses in late 2008 amid turmoil in the markets.

The separate agreement with 10 banks on foreclosure abuses concludes weeks of feverish negotiations between the federal regulators, led by the Office of the Comptroller of the Currency, and the banks. That settlement will end a troubled foreclosure review mandated by the banking regulators.

The deal, which was hashed out over the weekend, had teetered on the brink of collapse after officials from the Federal Reserve demanded that the banks pay an addition $300 million to address their part in the 2008 financial crisis, according to several people briefed on the negotiations who spoke on condition of anonymity.

The Federal Reserve, though, agreed to back down on the demands in the hope that the pact could move ahead and bring more immediate relief to homeowners struggling to stay afloat in a time of persistent unemployment and a sluggish economy.

The multibillion-dollar foreclosure settlement was driven, to a large extent, by banking regulators, who decided that a review of loan files was inefficient, costly and simply not yielding relief for homeowners, these people said. The goal in scuttling the reviews, which were mandated as part of a consent order in April 2011, was to provide more immediate relief to homeowners.

The comptroller’s office and the Federal Reserve said on Monday that the settlement “provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process.”

The relief will be distributed to homeowners even if they did not file a claim for their loan files to be reviewed.

Concerns about the Independent Foreclosure Review began to mount in within the comptroller’s office, according to the people familiar with the matter. The alarm, these people said, was that the reviews were taking more than 20 hours a loan file at a cost of up to $250 an hour. Since the start of the review, the banks, which are required to pay for consultants to review the files, had spent an estimated $1.5 billion.

More vexing, the banking regulators said that the reviews were not providing any relief to borrowers or turning up meaningful instances where homes of borrowers current on their payments were seized, according to these people.

Michael J. de la Merced and Ben Protess contributed reporting.

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Letter From Washington: U.S. Fiscal Talks Made No One Look Good

WASHINGTON — A grand fiscal bargain, with perhaps $2 trillion more in deficit reduction over 10 years — more than a quarter of which would be additional revenue, with much of the rest obtained through well-crafted, significant cutbacks in big-ticket entitlements — could have been a win-win for Republicans and Democrats.

Along with terminating the high-end Bush tax cuts, this would have earned lawmakers public approbation for working together and given investor and business confidence a boost.

The corollary is the small-bore deal cobbled together to avoid the so-called fiscal cliff, which may be a lose-lose for both sides. Defying political physics, the White House and congressional Republicans emerged politically weaker and facing more trouble ahead.

President Barack Obama, who Republicans acknowledged had all the leverage in the latest round, could have hung tough and persevered with one goal: the bigger deal. Indisputably, Democrats got much more than Republicans. Yet even with this unusual leverage — without a deal, taxes would have increased for everyone — the Democrats got only about 60 percent of what the House speaker, John A. Boehner, had once been willing to give on taxes.

Republicans reinforced their image as protectors of the privileged. In the House of Representatives, which they control, they displayed dysfunction remarkable even by Washington standards. With bigger fights ahead over the debt ceiling and indiscriminate across-the-board spending cuts, the problems outweigh the possibilities for both sides.

The estate tax epitomizes this state of affairs. It is assessed on fewer than 1 percent of the wealthiest estates. Michael J. Graetz, a former Treasury official in the administration of President George H.W. Bush who has written a book on the subject, says that with huge deficits and worsening income inequality, “it is amazing that our political system cannot maintain an estate tax that contributes less than 1 percent of federal revenues from those Americans best able to afford it.”

Lawrence H. Summers, a former Treasury secretary, once observed, “There is no case other than selfishness” for cutting the estate tax.

There are legitimate debates about the effect on economic growth of tax rates on capital gains, dividends or corporate income. It’s tough to find a serious economist who makes that case for the estate tax; years ago, the conservative economist Irwin M. Stelzer described a low tax as “affirmative action” for wealthy heirs.

Still, reducing or eliminating the estate tax was a top priority for Republicans in this latest round. The White House essentially caved to a measure that will cost about $100 billion over 10 years and will benefit fewer than 5,000 wealthy estates.

In the 2010 year-end tax-cut deal, the Obama administration insisted on extending the refundable tax credits for the poor; resistant Republicans said they would go along only if the White House accepted two years of lower estate-tax rates. Agreed. This time, however, the refundable credits for the poor were extended only temporarily, while the more generous estate-tax provision is permanent.

The political appeal here is to reward big campaign contributors; that matters to Democrats as well as Republicans. When Vice President Joseph R. Biden Jr., in the private bargaining, argued for a tougher provision, the Senate Republican leader, Mitch McConnell, asked that it be put to a vote. The vice president knew that Democrats like Senators Max Baucus of Montana and Mary Landrieu of Louisiana would side with the rich heirs.

Lawmakers are braced for a tougher battle in the next two months over the debt ceiling and across-the-board spending cuts that neither side likes. Republicans contend that, unlike with the fiscal cliff — the package of tax increases and spending cuts that had been set to take effect with the new year — this time they have the leverage to force the president to accept big spending cuts, particularly of big-ticket entitlements.

House Republicans insist on the “Boehner rule,” that any increase in the debt ceiling be matched by a comparable reduction in spending. That isn’t realistic: The debt ceiling will have to be increased by almost $2 trillion over the next two years, and spending cuts of that order would be politically and economically disastrous. The speaker’s ability to maneuver may be limited, though. On the fiscal deal, his own majority leader and whip deserted him, as did seven current committee chairmen and almost two-thirds of his caucus.

Tougher still is the substance. House Republicans are all for big spending cuts, though other than some easy ones, including going after programs for the poor, they duck specifics.

They are fierce deficit hawks in principle, yet when specific cuts to Medicare, a health insurance program for the elderly, or Social Security, a retirement fund, are raised, they turn into pacifists.

And the president, who wouldn’t play for keeps when he had the leverage, vows this time will be different. He won’t negotiate over the debt ceiling; that would be tantamount, he proclaims, to negotiating with terrorists.

Mr. Obama demands that any spending cuts be accompanied by revenue increases.

He correctly notes that there already has been more than twice as much in spending cuts as in tax increases and that any subsequent action that involves only cuts would run counter to the recommendations of bipartisan panels like the 2010 commission headed by Alan K. Simpson, a former Republican senator, and Erskine Bowles, a former White House chief of staff under Bill Clinton. Republicans dismiss that as a nonstarter.

The bottom lines: The White House believes Republican leaders privately realize that holding the nation’s full faith and credit hostage to cutting popular programs is a loser. Congressional Republicans dismiss Mr. Obama’s lines in the sand, saying that he invariably backs down and that any economic fallout ultimately hurts his presidency.

Both points are persuasive.

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