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The White House is lowering its forecast for economic growth this year and next, held back by the toll of the housing, credit and financial debacles.

Under the Bush administration’s new forecasts, gross domestic product is estimated to grow by only 1.6% this year. That’s down from a 2.7% growth projection made earlier this year.

Growth next year is expected to clock in at 2.2%, also lower than the 3% growth rate previously estimated by the White House’s budget office payday loan online.

The budget office increased its estimate for next year’s budget deficit to a record $482 billion. 

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Federal Reserve Bank of New York President Timothy Geithner signaled the central bank's emergency lending programs are still needed, citing “exceptional'' tensions in financial markets.

“These facilities, all of them, are still providing a very important role in confidence as a backstop source of liquidity,'' Geithner said during a House Financial Services Committee hearing today. There's still an “exceptional set of tensions,'' he said.

Geithner indicated he favors keeping the programs, which include direct loans to primary U.S. government bond dealers, in place even as their use fades. Fed Chairman Ben S. Bernanke said earlier this month the central bank may extend the facilities into next year.

“I don't think you can really judge the value today to the firms themselves, or the people that fund them, from looking at use day-by-day,'' Geithner said at the hearing in Washington.

The Fed's Primary Dealer Credit Facility, engineered by Geithner in March to provide direct loans to dealers in the wake of the Bear Stearns Cos. collapse, has seen almost no lending for three weeks. A separate program that lends Treasuries typically draws fewer bids than the totals offered by the central bank.

The PDCF reached a record $38.1 billion in the week ending April 2. Officials said when they introduced the tool in March that it would be in place for “at least'' six months.''

`More Conservative'

Fed and Securities and Exchange Commission officials are trying to ensure that “major investment banks move to adopt a more conservative mix of leverage and funding than they had on the eve of the Bear Stearns'' crisis, Geithner also said, responding to questions from Representative Edward Royce, a California Republican fastcash.

“They have made substantial progress in moving towards an appropriately more conservative mix of leverage and funding,'' Geithner said.

Bernanke said July 8 the Fed may extend the facilities into next year “should the current unusual and exigent circumstances continue to prevail in dealer-funding markets.'' Bernanke has yet to say that such conditions have subsided.

Geithner said in his prepared testimony that the central bank should play a prominent part in regulating financial institutions and ensuring market stability after the biggest credit crisis in decades.

Fed's Role

The Fed “should play an important role in the consolidated supervision of those institutions that have access to central- bank liquidity and play a critical role in market functioning,'' he said.

During the same hearing, U.S. Securities and Exchange Commission Chairman Christopher Cox asked lawmakers to bolster his agency's authority to police investment banks. Former securities regulators say a more powerful Fed may undermine the SEC's authority and impede its efforts to protect investors.

Massachusetts Democrat Barney Frank, the House panel's chairman, and the U.S. Treasury advocate giving the Fed more supervisory authority over such companies to create safeguards against risk. Congress is likely to consider such legislation in 2009.

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Call it the big fizzle. The hoped-for second-half economic rebound is looking to be lethargic, with the country straining under high energy prices and fallout from the housing and credit debacles.

Forty-five percent of economists believe the economy won’t log any growth or will clock in at a feeble 1% pace in the final six months of this year, according to a survey being released Monday by the National Association for Business Economics, which is known by the acronym, NABE. And, 10% think economic activity could actually contract during the period.

"Forecasters are approaching the second half with a lot of caution," Ken Simonson, point person on the survey and chief economist for the Associated General Contractors of America, said in an interview. "Most forecasters are suggesting the outlook will be sluggish, but not desperate. I’m afraid we’re stuck on the ground floor of growth."

Thirty-two percent, meanwhile, think the economy growth’s during the second half could be between 1% and 2%, which would mark a plodding performance. The more bullish are clearly in the minority camp: 11% think growth will come in between 2% and 3%. Only 1% expect growth to surpass 3%.

The economy’s growth slowed sharply in the final quarter of 2007 and remained stuck in a rut in the first quarter of this year. Tax rebates, which have energized shoppers, should help lift the country out of the doldrums somewhat in the second quarter. The government releases its estimate of the second-quarter’s economic performance at the end of this month. However, as the bracing force of the rebates fade, some analysts fear the economy could hit another rough patch near the end of this year.

Earlier this year, many thought that the first half of this year would be difficult and the second half would be stronger, lifted by the government’s $168 billion stimulus, including tax rebates for people and tax breaks for businesses. With the rebates kicking in earlier than some expected, the second half could turn sluggish.

Many have "abandoned the notion of seeing a rebound," Simonson said.

Federal Reserve Chairman Ben Bernanke, who briefed Congress on Tuesday and Wednesday, warned that over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.

Normal activity would be along the lines of a 2.5% to 3% growth rate for the economy.

Not only is the country slogging through lethargic growth, but it is also confronted by rising prices that threaten to spread inflation.

In the NABE survey, 75% reported paying more for raw materials, such as fuel and steel no fax payday loans. That’s the highest percentage in record keeping going back to 1994. Those higher prices are squeezing profit margins and leading some firms - 35% - to boost their prices, the survey found. That’s up from the 29% who said their companies raised prices in the previous survey in April.

Consumer prices in June rose at the second-fastest pace in a quarter century, the government reported Wednesday. Wholesale prices also went up sharply during the month.

Meanwhile, most forecasters expect a continued slowdown in housing over the next six months, although they think it will be "mild" versus "substantial."

Grappling with fallout from housing and credit troubles and stung by high costs for energy and other raw materials, employers have cut jobs in each of the first six months of this year. Over the next six months, 51% said they expected to hold payrolls steady. Twenty-nine percent expected to boost them and 20% thought jobs would be reduced through layoffs or attrition.

Caught between slow growth and rising prices, the Fed is likely to leave interest rates alone when they meet next on Aug. 5. Boosting rates to fend off inflation would deal a setback to the economy and further hurt the housing market. The Fed can’t afford to lower rates more to shore up economic activity because that would make inflation worse.

Sixty-two percent said the Fed’s nearly yearlong string of rate reductions and other steps to prop up financial markets, had no effect on their business.

The survey, based on the responses of 101 NABE members, was conducted between June 19 and July 10. 

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JPMorgan Chase said Thursday that profit plunged in the second quarter, stung by $1.1 billion in writedowns, but the firm still managed to beat Wall Street projections.

JPMorgan (JPM, Fortune 500) shares jumped 10% in early trading. Other banking firms - including Citigroup (C, Fortune 500), Merrill Lynch (MER, Fortune 500), Wells Fargo (WFC, Fortune 500) and Bank of America (BAC, Fortune 500) - also posted strong stock gains.

The New York-based bank reported net income of $2 billion in the second quarter, a 53% drop from $4.2 billion in the second quarter. The firm said earnings on a per-share basis fell 55% to 54 cents from $1.20 in the year-earlier period.

Analysts had expected a 64% decline in earnings per share to 44 cents, according to a consensus provided by Thomson/FirstCall.

But without a $540 million net loss stemming from its acquisition of Bear Stearns - which closed in May - net income would have been $2.5 billion, the company said.

"[JPMorgan] earnings are significantly better than what analysts have been looking for because the negative hysteria, panic, fear - whatever you want to call it that hit these stocks - made no sense whatsoever," said Richard Bove, analyst for Ladenburg Thalmann.

Bove said that financial firms tend to be multi-faceted, which allows them to compensate for the weak portions of their business with the stronger performing sections.

The firm reported $19.7 billion in second-quarter net revenue, a 1% decline from a year earlier. That beat the $16.5 billion projected by analysts surveyed by Thomson/FirstCall.

"Our earnings were down significantly due to the unfavorable credit environment and market conditions," CEO Jamie Dimon said in a statement.

JPMorgan bought Bear Stearns on May 29 for $2.2 billion, or $10 a share. The deal allows JPMorgan to expand its financial footprint, though it also has has to clean up the mess from its imploded acquisition.

Housing hit Dimon said the plummet in investment bank net income, to $400 million in the second quarter from $1.2 billion a year ago, was partly due to mortgage-related investments.

He blamed the drop in profit in retail financial services on higher charges to the home lending portfolio. Profit in that division fell to $600 million from $785 million a year ago.

"However, the firm overall continued to maintain solid underlying business momentum," Dimon said, noting that some other areas of the company performed well.

Commercial banking net income grew to $355 million in the quarter, up from less than $300 million a year earlier payday advance.

Despite the decline in earnings, and drop in share price - JPMorgan (JPM, Fortune 500) stock has plunged 29% so far this year without counting Thursday’s gains - the firm is considered one of the stronger companies in the banking industry.

As the year has progressed, analysts have become increasingly concerned about JPMorgan’s performance, particularly in its large leveraged loan portfolio and rapidly weakening home-equity loan holdings.

But the firm’s troubles seem manageable compared to other participants in the devastated industry, such as Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500).

"I think we’re executing quite well," Michael Cavanagh, chief financial officer, said during a call with journalists. "The conditions continue to be choppy. A lot of stuff is resolving itself and working itself through."

"At a point, it will stabilize, but I would be cautious for the near term," he added.

Bank sector woes Both large and small financial institutions that bet big on the mortgage industry continue to be plagued by ongoing deterioration in the housing market. Now with signs that the economy is weakening further, analysts are paying particularly close attention to banks’ credit card and auto loan portfolios for signs of rising delinquencies.

JPMorgan said its auto loan net profit slipped 2% on a year-over-year basis to $83 million. The firm’s credit card net profit plunged 67% to $250 million.

JPMorgan’s results come at the start of what is expected to be a particularly difficult second-quarter bank reporting period.

Despite Wednesday’s better-than-expected numbers from Wells Fargo (WFC, Fortune 500), both Merrill Lynch and Citigroup are expected to book losses for the quarter. Merrill is due to report earnings after the market close Thursday. Citigroup’s results are slated for release early Friday.

Wachovia (WB, Fortune 500), which reports on July 22, warned last week that it expects to lose between $2.6 billion and $2.8 billion during the second quarter. Profits for Bank of America (BAC, Fortune 500), due out on July 21, are expected to be less than half of what they were just a year ago.

Bove, the analyst, does not own banking stocks and his firm does not conduct business with them. 

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The U.S. economy needs months to recover from its slowdown, but the banking system remains sound despite a home mortgage crisis that could cause more problems, Treasury Secretary Henry Paulson said.

Paulson also said on Sunday morning news programs he was optimistic Congress would approve the Bush administration’s request for authority to shore up the troubled mortgage giants Fannie Mae and Freddie Mac.

The treasury secretary has been trying to reassure nervous financial markets and is scheduled to deliver an important speech on markets and the economy in New York on Tuesday.

“We’re going to be in a period of slow growth for a while,” Paulson told “Face the Nation” on CBS. “I think it’s going to be months that we’re working our way through this period.”

High energy prices would prolong the slowdown, but the key to recovery was stabilizing the housing market, Paulson said.

He added that U.S cashadvance.com. banking problems were manageable despite this month’s highly publicized failure of mortgage lender Indy bank.

The July 11 takeover of the bank by Federal regulators marked the third-largest bank failure in U.S. history. The lines of frustrated depositors outside its doors provided a stark illustration of the U.S. home financing crisis.

“Our banking system is a safe and a sound one,” Paulson insisted on CNN’s “Late Edition.” 

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Psst! Here’s one you can trade on: The Securities and Exchange Commission, buffeted on all sides from the great leverage collapse of 2008, is now going to get to the bottom of the age-old dilemma of the trading desk rumor.

In a press release Sunday night that coincided with the opening of Asian markets, the SEC announced it was conducting examinations at brokers and hedge funds to determine if false information is being deliberately spread by traders to manipulate stock prices.

Philosophically, there’s little argument against cracking down on those who knowingly develop or pass on bad info. After all, such bald attempts to manipulate the market have long been illegal.

But given that sharing of rumors and information - some of it good, some not - occurs constantly across trading desks, there appear to be some truly head-scratching aspects to the SEC’s move.

The first is that the agency’s overburdened enforcement unit is already looking into, to name just a few - mortgage originator fraud, investment dealer disclosure on auction-rate securities, and broker valuations of the arcane vehicle known as collateralized debt obligations (CDOs) that has been the source of so much misery on Wall Street.

Now the watchdogs are going to chase down down trading desk rumors too?

The second is that much of the impetus of this investigation appears to have come from senior executives at several Wall Street brokerages outraged over the effect rumors are having on their companies’ stock prices.

Last week, for example, Lehman Brothers saw its share price hurt last Thursday when a story made the rounds - and was picked up by CNBC - that stock-trading giant SAC Capital and giant bond manager PIMCO had ceased trading with the firm.

A likely death-blow if true, but it was easily disproved. The stock, which closed at $19.74 on Wednesday, dropped to $15.79 before rallying to close at $17.30 on Thursday. Whatever the story is behind the origination of the rumor, shorting Lehman’s stock that day proved to be a pretty volatile - if not outright crummy - trade for those who piled on http://easy-quick-payday-loans.com.

More important, while Lehman chief executive Richard Fuld has a well-documented antipathy towards shortsellers who question his firm’s financial health, he and his deputies made decisions that have saddled the company with big losses and required it to make repeated trips to the markets to raise more capital.

So which has proven more painful for Lehman shareholders: the quick-buck artist who passes on some bogus tip - or Lehman’s decision to become the most aggressive investment bank to speculate on Southern California real estate?

Then there’s the case of Bear Stearns. A cottage industry of sorts, typified by a much-discussed Vanity Fair article, has developed that blames shortsellers for Bear’s near-collapse and subsequent fire sale to JPMorgan Chase (JPM, Fortune 500).

It’s true there was no shortage of rumors swirling around Bear Stearns on the eve of its mid-March rescue. Like most trading desk rumors, they were easily disproved and immediately forgotten.

Ultimately, what allowed the run on the bank were the huge holes in Bear’s balance sheet. Alone among Wall Street’s big brokers, Bear Stearns had a nearly $33 billion gap between what it had borrowed short-term and what it had available to repay those loans. No other broker had anything like this exposure.

In the end, the people who did business with Bear Stearns came to see it as a highly-leveraged, mortgage-bond-centered hedge fund and wanted less exposure to it.

Veteran analyst Barry Ritholtz, in his "Big Picture" blog, put it well in a post Friday. "Why is it that all these rumor-mongerers and shorts are only bringing some firms to their knees? How come they always seem to be the over-leveraged, under-capitalized, unhedged, most poorly-managed companies?"  

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Marcus Brauchli was named executive editor of The Washington Post on Monday, three months after resigning under pressure from the top newsroom job at The Wall Street Journal.

Brauchli, 47, is to succeed Leonard Downie Jr., who has led the Post for 17 years and will retire Sept. 8 at the age of 66. Brauchli will be in charge of both the Post’s print and online editions.

Brauchli’s appointment is part of a broader leadership change at The Washington Post, which named Katherine Weymouth, 42, publisher in February. Weymouth is a member of the Graham family, which controls The Washington Post Co (WPO).

Weymouth said in a statement that Brauchli’s broad experience would help the newspaper "navigate the new world of media," building on the standards set by Downie and his predecessor, Ben Bradlee.

At the Journal, Brauchli oversaw the integration of the newspaper’s print and online operations. At the Post, both washingtonpost.com executive editor Jim Brady and the newspaper’s managing editor, Phil Bennett, will report to Brauchli. Bennett was seen as a potential candidate for executive editor.

Shortly after announcing his retirement last month, Downie told AP that the Post needed a new, younger editor to lead the paper’s next phase of change as it adapts to the new realities of the journalism business being wrought by the Internet.

Like many other newspapers, The Washington Post is struggling with revenues declining due to the nation’s economic slump and to advertising dollars flowing online. The Post recently went through its third round of job cuts and reported an 11% decline in print advertising revenues for its first quarter.

Online news readership is growing, but revenue from online advertising hasn’t grown nearly enough to replace the losses in revenue from print advertising.

Brauchli (whose name is pronounced BROCK’-lee), became managing editor of The Wall Street Journal in May 2007, shortly after Rupert Murdoch’s News Corp freecreditscore. (NWS, Fortune 500) mounted a bid to acquire the Journal’s parent company, Dow Jones & Co.

Brauchli left that post in April.

A native of Boulder, Colo., Brauchli started his career at Dow Jones in 1984 as a copy reader for its news service and was soon posted to Hong Kong. He later served as Scandinavia correspondent for The Wall Street Journal’s European edition, reported for the Journal from Tokyo and became China bureau chief. He moved to New York in 1999 as a news editor and became national news editor the following year.

Brauchli left the top newsroom job at the Journal just four months after News Corp. closed its acquisition of the paper, saying he had come to believe the paper’s new owners should have an editor of their own choosing.

News Corp. had moved quickly to shake up the Journal shortly after buying it, bringing in more political stories and reorganizing the paper’s layout. It also installed a news executive above Brauchli - Robert Thomson, former editor of The Times of London. Thomson’s title was publisher but he had broad editorial oversight of the Journal and other Dow Jones properties.

Brauchli did not return phone or e-mail messages seeking comment Monday evening.

Downie joined The Washington Post as a summer intern in 1964 and later served as investigative reporter, a metro reporter, London correspondent and national editor. He oversaw the paper’s Watergate coverage as its deputy metro editor.

Downie, who said he will turn his focus to writing projects, will stay on as a vice president at large at The Washington Post Co., a title that Bradlee also holds.

The Washington Post Co. also owns Newsweek magazine and Kaplan Inc., a major education company. 

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Australian job-vacancy advertisements declined by the most in almost two years in June, adding to signs employers will pare hiring as economic growth slows.

Jobs advertised in newspapers and on the Internet fell 3 percent from May to an average of 262,075 a week, the biggest drop since November 2006, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.

The central bank raised interest rates to a 12-year high in March to engineer a slowdown in the economy and cool inflation that is running at the fastest pace in almost two decades. Governor Glenn Stevens left borrowing costs unchanged for a fourth month last week, saying there are “tentative signs'' the jobs market is easing and domestic demand is moderating.

“This report is consistent with a softening in the labor market,'' said Sally Auld, co-head of economics at ANZ Bank in Melbourne. “Employment growth should ease modestly over the next six months.''

The Australian dollar traded at 96.17 U.S. cents at 11:35 a.m. in Sydney from 96.20 cents before the report was released free credit report .com. The two-year government bond yield fell to 6.74 percent from 6.82 percent on July 4.

Employers cut 19,700 workers in May, ending a record 18 months of job gains, the government reported on June 12.

Economy Slows

Other figures suggest the economy's expansion is losing momentum after the central bank raised its benchmark interest rate to 7.25 percent in March.

The construction industry contracted for a fourth month in June as rising borrowing costs reduced demand for houses and factories, the Australian Industry Group said today.

Qantas Airways Ltd., Australia's largest carrier, said in June that it will slash services to Japan, shift other Asian routes to low-cost unit Jetstar and cut jobs in response to surging fuel costs.

The number of jobs advertised in newspapers fell 3.5 percent in June, today's report showed. Vacancies on the Internet declined 2.9 percent.

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There's no single solution to high oil prices, and lawmakers need to take an “ecumenical'' approach to drafting legislation and policy, according to Daniel Yergin, chairman of Cambridge Energy Research Associates.

“We ought to really get beyond `either-or' and the notion that there's only one thing to do,'' said Yergin, the Pulitzer Prize-winning author of “The Prize,'' a history of the oil industry. “It doesn't work that way in a $14 trillion economy.''

Changes to oil policy, renewable fuels, alternative energy sources and improving fuel efficiencies can all be part of a solution, Yergin said in an interview with Bloomberg Radio.

Oil futures rose 48 percent in the first half of the year amid declines in the dollar and concern that supplies won't be able to keep pace with demand, particularly from developing countries. Unrest in Iraq and Nigeria and speculation that Israel may bomb Iran have also supported prices.

Crude oil for August delivery rose 97 cents, or 0.7 percent, to $140.97 a barrel yesterday on the New York Mercantile Exchange. Futures have almost doubled from a year ago. Oil touched a record $143.67 on June 30. The price climbed 38 percent between April and June, the biggest quarterly increase in nine years.

The oil market “really reflects the success of globalization and hundreds of millions of people rising out of poverty,'' Yergin said. “Demand isn't stagnant.''

U.S. gasoline use may have peaked in 2007, Yergin told a congressional panel June 25. Consumption for the week to June 20 slipped 5 percent from its peak of 21.3 million barrels a day on Jan. 4, data from the Energy Department shows.

Supply Concerns

The International Energy Agency said yesterday that global supplies may not keep up with demand through 2013 and that spare capacity from the Organization of Petroleum Exporting Countries will shrink by 2013, keeping the market “tight.''

“I think there is a kind of shortage mentality that is particularly strong in the financial markets that believes in three to five years from now we're in an oil crunch because of a lack of timely investment,'' he said cash til payday loan. “We still have this very sort of old-fashioned view that price matters and supply and demand do work, even with delays.''

Yergin cautioned Senators Barack Obama and John McCain, the Democratic and Republican contenders for U.S. president, to “have a basic confidence in the ability of markets and don't overdo it in terms of interference and regulation'' when they plan energy policy. “Be careful what you do.''

Congressional Action

The U.S. House of Representatives last week approved a bill calling on the Commodity Futures Trading Commission to use its emergency powers to “curb immediately the role of excessive speculation'' in any market it oversees where energy futures or swaps are traded. The measure, which passed 402-19, must be approved by the Senate and be signed by the president to become law.

As biofuels such as ethanol become more important in the global transportation mix in the next three to four decades, oil isn't likely to become irrelevant or disappear, Yergin said. Still, “oil is not going to have the almost totally dominating position in transportation that it had kind of until now.''

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The Supreme Court on Wednesday reduced a $2.5 billion punitive damages award against energy giant Exxon for its role in an infamous 1989 maritime oil spill off the coast of Alaska.

The high court concluded that punitive damages should roughly match actual damages from the environmental disaster, which were about $507 million. Lower courts were asked to reassess the jury verdict, extending the years-long litigation in the case.

"The award here should be limited to an amount equal to compensatory damages," wrote Justice David Souter.

Justices Ruth Bader Ginsburg, John Paul Stevens and Stephen Breyer agreed in part and disagreed in part with the majority ruling. In such cases, it is left open to interpretation whether their dissent is strong enough to be considered a vote against the majority.

In the incident, commonly known as the Exxon Valdez spill, 11 million gallons of crude oil spilled in pristine waters off the southern end of the state when a supertanker - the Exxon Valdez - ran aground on an offshore reef. Petroleum soaked some 1,200 miles of coastline, killing countless birds and marine life.

Much of the initial blame for the accident was placed on Capt. Joseph Hazelwood, who was cited by various courts for relapsed alcoholism that contributed to mistakes, leaving his vessel helplessly stuck on Bligh Reef.

Witnesses said he had been drinking heavily before the Exxon Valdez left port that night, and had left the ship’s bridge when it left the normal shipping channels to avoid ice. Both actions violated Coast Guard and company policies.

A class-action lawsuit was brought against Exxon by nearly 33,000 plaintiffs - including fishermen, landowners, local governments and Native Americans - who claimed private economic harm from the spill.

The company, now known as Exxon Mobil (XOM, Fortune 500), has already paid $3.4 billion in cleanup costs and millions in government fines and it argues it should not be forced to continue to pay for the spill.

A jury in 1994 awarded $5 billion in the class-action suit. A federal court later cut that amount in half, but it was still believed to be the largest punitive-damages judgment of its kind in U.S. courts. Punitive damages are designed to punish a wrongdoer, while compensatory damages compensate a wronged party for the loss they suffered.

The issue before the justices was whether the judgment was too high, based on past high court precedents limiting punitive awards.

Lawyers for the plaintiffs claimed the company has deep financial pockets, and noted in their appeal that even a multibillion-dollar judgment amounts only to "barely more than three weeks of Exxon’s net profits."

Alaska residents who attended oral arguments in April held signs noting the Texas-based company reported an annual profit last year of $40.6 billion, a record for a U.S faxless payday advance. firm.

Exxon Mobil claimed the federal Clean Water Act does not allow for punitive damages for oil spills and other open-water environmental incidents similar to the Exxon Valdez. And they said federal maritime law prevents company owners from being held liable for personally negligent conduct by the captain or crew.

Souter wrote, "The common sense of justice would surely bar penalties that reasonable people would think excessive for the harm caused in the circumstances."

The ruling was applauded by organizations such as the U.S. Chamber of Commerce, the world’s largest business federation.

"This is good news for companies concerned about reining in excessive punitive damages," said Tom Donohue, the chamber’s president and CEO, in a written statement. "For years, the chamber has argued that punitive damages are too unpredictable and unfair, and today the court agreed."

The high court has generally tried to limit punitive damages that are deemed "excessive." Last term, it threw out a $79 million award to an Oregon smoker’s family who claimed tobacco giant Philip Morris contributed to his death by cancer. The justices, in their divided ruling in that case, said punitive damages almost always should match "actual," or compensatory, damages.

Justice Samuel Alito withdrew from deciding the case. Although no reason was given, financial disclosure reports indicated the newest justice had owned substantial amounts of Exxon stock.

Meanwhile, the long-running case has made it hard for residents of the community to move on, Travis Vlasoff, a native Chugach fisherman from Tatitlek, told CNN after oral arguments in the case. Vlasoff said the long legal fight has taken a financial and emotional toll among his family and friends.

"It’s very difficult to advance the healing process without any sort of finality," he said. "Each turn has reopened long, deep wounds within the community and with individuals."

The case is Exxon Shipping Co. v. Baker (07-219). 

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