DealBook: Facing Legal Costs, Citigroup Disappoints in 4th Quarter

Citigroup, which has been working to cut costs and unload troubled assets, continues to struggle under the weight of its mortgage woes.

The bank reported fourth quarter profit of $1.2 billion or 38 cents a share, significantly below analysts estimates. Excluding one-time time items, earnings amounted to 69 cents a share.

Ahead of the bank’s quarterly earnings, analyst estimated earnings at 96 cents a share, according to a survey by Thomson Reuters. Last year, the bank posted profit of $956 million, or 31 cents a share.

The disappointing quarter relates to the ongoing legal problems, as the bank works to clean up the mortgage mess stemming from the financial crisis. In the fourth quarter, Citigroup had $1.3 billion of legal costs and related expenses.

Citigroup has also faced increasing pressure from shareholders to buoy its returns. As part of that push, the bank has been working through a glut of soured loans and unloading less profitable business lines while systematically reducing costs. In December, the bank announced it would cut 11,000 jobs world wide, part of a much larger contraction.

“Our bottom line earnings reflect an environment that remains challenging,” Michael Corbat, the chief executive of Citigroup, said in a statement. “It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward.”

Beneath the headline numbers, Citigroup did experience gains in some of its businesses.

The bank has been focusing on developing countries, where there is comparatively more growth opportunities than in the United States. Within the global consumer banking group, revenue from international operations increased 4 percent to $4.9 billion in the fourth quarter. Revenue in North America rose 3 percent to $5.3 billion.

Citigroup’s securities and banking group also improved, on the strength of investment banking, equities and fixed income. The unit reported net income of $629 million for the quarter, compared with a $158 million loss.

The fourth quarter earnings are the first under Mr. Corbat’s leadership.

In October, the bank’s powerful chairman, Michael O’Neill, abruptly ousted Vikram S. Pandit as chief executive. Since taking the reins of the bank, Mr. Corbat has vowed to continue revamp the bank, focusing on its core businesses and exiting less profitable areas.

Such efforts have weighed on the bank’s bottom line in the short term. In the fourth quarter, Citigroup’s operating expenses rose 5 percent to $13.8 billion.

Along with its strategic moves, Citigroup also paid for its legal problems. Like rivals, the bank faces claims that it used shoddy documents in foreclosure proceedings that may have led to wrongful evictions.

Earlier this month, Citigroup, along with nine other banks, agreed earlier this month to sign on to an $8.5 billion settlement with the Federal Reserve and the Comptroller of the Currency. The settlement will allow Citigroup to move beyond an expensive review of loans mandated by regulators in 2011.

The costs related to that settlement amounted to $305 million in the latest quarter. Citigroup, however, did not provide any granularity on what accounted for the remainder of the bank’s increased legal costs.

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The New Old Age Blog: Officials Say Checks Won't Be in the Mail

The jig is up.

Two years ago, the Treasury Department initiated its Go Direct campaign to persuade people still receiving paper checks for their Social Security, Veterans Affairs, S.S.I. and other federal benefits to switch to direct deposit.

“At that point, we were issuing approximately 11 million checks each month,” or about 15 percent of the total, Walt Henderson, director of the campaign, told me.

After putting notices in every monthly check envelope, circulating public service announcements and putting the word out through banks, senior centers, the Red Cross, AARP and other organizations, the Treasury Department has since shrunk that number to five million monthly checks.

That means 93 percent of those getting federal benefits are using direct deposit or, if they prefer or lack a bank account, a Direct Express debit card that gets refilled each month and can be used anywhere that accepts MasterCard.

“So people have been getting the word and making the switch,” Mr. Henderson said. Now, federal officials are pushing the last holdouts to convert to direct deposit by March 1.

Although officials say the change is not optional, the jig isn’t entirely up. If you or your older relative does not respond to their pleading, “we’re not going to interrupt their payments,” Mr. Henderson said. But the department will start sending letters urging people to switch.

The major motive is financial: shifting the last paper checks to direct deposit or a debit card (only 2 percent of recipients go that route) will save $1 billion over the next decade, the department estimates.

But safety enters the picture, too. One reason some beneficiaries resist direct deposit, Mr. Henderson said, is that they fear their electronic deposits can be hacked or diverted. Having grown up in a predigital age, perhaps they feel safer with a check in their hands.

But they probably aren’t. In 2011, the Treasury Department received 440,000 reports of lost or stolen benefits checks. With direct deposit, “there’s no check lingering unattended in a mailbox,” Mr. Henderson noted.

The greater reason for sticking with paper is probably simple inertia. “It’s human nature to procrastinate,” he said.

But unless you or your relatives want a series of letters from the Treasury Department, it is probably time for the last fence-sitters to get with the program.

They don’t need to use a computer. People can switch to direct deposit, or get the debit card, at their banks or the local Social Security office. More simply, they can call a toll-free number, (800) 333-1795, and have agents walk them through the change. Or they can sign up online at www.GoDirect.org.

They will need:

1. Their Social Security number.
2. The 12-digit federal benefit number found on their checks.
3. The amount of the most recent check.
4. And, for direct deposit, a bank or credit union routing number, usually found on the front of a check. They can have direct deposit to a savings account, too.

A caution for New Old Age readers: If you think your relative has not switched because he or she is cognitively impaired and can no longer handle his finances, you can be designated a representative payee and receive monthly Social Security or S.S.I. payments on your relative’s behalf. This generally requires a visit to your local Social Security office, documentation in hand.

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Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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The New Old Age Blog: Officials Say Checks Won't Be in the Mail

The jig is up.

Two years ago, the Treasury Department initiated its Go Direct campaign to persuade people still receiving paper checks for their Social Security, Veterans Affairs, S.S.I. and other federal benefits to switch to direct deposit.

“At that point, we were issuing approximately 11 million checks each month,” or about 15 percent of the total, Walt Henderson, director of the campaign, told me.

After putting notices in every monthly check envelope, circulating public service announcements and putting the word out through banks, senior centers, the Red Cross, AARP and other organizations, the Treasury Department has since shrunk that number to five million monthly checks.

That means 93 percent of those getting federal benefits are using direct deposit or, if they prefer or lack a bank account, a Direct Express debit card that gets refilled each month and can be used anywhere that accepts MasterCard.

“So people have been getting the word and making the switch,” Mr. Henderson said. Now, federal officials are pushing the last holdouts to convert to direct deposit by March 1.

Although officials say the change is not optional, the jig isn’t entirely up. If you or your older relative does not respond to their pleading, “we’re not going to interrupt their payments,” Mr. Henderson said. But the department will start sending letters urging people to switch.

The major motive is financial: shifting the last paper checks to direct deposit or a debit card (only 2 percent of recipients go that route) will save $1 billion over the next decade, the department estimates.

But safety enters the picture, too. One reason some beneficiaries resist direct deposit, Mr. Henderson said, is that they fear their electronic deposits can be hacked or diverted. Having grown up in a predigital age, perhaps they feel safer with a check in their hands.

But they probably aren’t. In 2011, the Treasury Department received 440,000 reports of lost or stolen benefits checks. With direct deposit, “there’s no check lingering unattended in a mailbox,” Mr. Henderson noted.

The greater reason for sticking with paper is probably simple inertia. “It’s human nature to procrastinate,” he said.

But unless you or your relatives want a series of letters from the Treasury Department, it is probably time for the last fence-sitters to get with the program.

They don’t need to use a computer. People can switch to direct deposit, or get the debit card, at their banks or the local Social Security office. More simply, they can call a toll-free number, (800) 333-1795, and have agents walk them through the change. Or they can sign up online at www.GoDirect.org.

They will need:

1. Their Social Security number.
2. The 12-digit federal benefit number found on their checks.
3. The amount of the most recent check.
4. And, for direct deposit, a bank or credit union routing number, usually found on the front of a check. They can have direct deposit to a savings account, too.

A caution for New Old Age readers: If you think your relative has not switched because he or she is cognitively impaired and can no longer handle his finances, you can be designated a representative payee and receive monthly Social Security or S.S.I. payments on your relative’s behalf. This generally requires a visit to your local Social Security office, documentation in hand.

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Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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Gadgetwise Blog: Q&A: Moving from Hotmail to Outlook.com

I want to switch my Hotmail account to an Outlook.com account, but will I have to change my e-mail address?

Even if you switch your Hotmail account to the newer mail system at Outlook.com, Microsoft says you can still keep the old @hotmail.com address. (Users with the @live.com or @msn.com accounts can also switch to Outlook.com and keep their original addresses.) You also have the option of adding an @outlook.com address, as Microsoft outlines here.

To make the move from Hotmail to Outlook.com, log into your Hotmail account, click Options and choose “Free Upgrade to Outlook.com.” Your Hotmail account page should convert to the white Outlook.com page. In addition to keeping the same address, your password and old mail are saved after you switch.

The Outlook.com site should work with recent versions of most browsers, including Internet Explorer 8 and later, Mozilla Firefox 10 and later, Google Chrome 17 and later, and Safari 5.1 and later for the Mac. Older browsers may not display the site properly, or will not work with it at all. (You can also continue using your account with a standalone mail program, as long as you have the correct settings.)

Microsoft plans to automatically move all Hotmail accounts over to Outlook.com. The company describes the process as “gradual,” but says Hotmail users due for the upgrade will be notified in advance.

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IHT Rendezvous: Is Something Toxic Buried in China's Financial System?

BEIJING — China’s economy, whizzing ahead as the West struggles, seems quite remarkable. Perhaps a little too remarkable? Like many things too good to be true, is it all a little, well, too good to be true?

There will be the yea- and nay-sayers in any debate, and China’s economy provokes plenty of both. So here’s the “yea” side: the forces of urbanization and industrialization unleashed here in the 1970s after the death of Mao Zedong represent a historically singular phase that still has a way to go.

Here’s the “nay” side: that’s true, but we need to look at what’s actually happening in China’s financial system — is it safe? The trouble is, that system is mostly hidden from the outside world by a combination of language difficulty and the pitch-dark opacity that envelops much important business here. What’s interesting about the “nay” argument is that increasingly, it’s Chinese media and some prominent Chinese economists who are making it.

And of course all of this matters to the world because China is by now deeply part of the global economy, so what happens here affects everyone.

A Hong Kong online magazine that follows the Chinese-language debate closely recently presented a clear argument: among key concerns about China’s financial system are wealth management products offered by “trust companies,” part of the shadow banking system that operates outside the official banking sector but is entwined with it.

As Week in China wrote recently: “Analysts worry that the trust firms (and their wealth management products) could provide an explosive element to China’s financial landscape — much as toxic CDO’s made the American system vulnerable.”

CDO’s, of course, are collateralized debt obligations, those complicated financial tools that spurred unhealthy debt and lending in the United States, causing shocks that spread around the world when the system collapsed in 2007. (This graphic makes them as simple as possible.)

For some time, Chinese-language media have been looking at the scene, with outlets such as the 21st Century Business Herald and the National Business Daily leading the way.

Spurring concern was a recent remark by Xiao Gang, the chairman of the Bank of China, that the way trust companies were run was, potentially, “fundamentally a Ponzi scheme.” (The report is in English.)

It is difficult to measure the amount and value of wealth management products in circulation in China, wrote Mr. Xiao. (Mr. Xiao has been a proponent of Chinese banks vigorously investing overseas.)

“KPMG reports that trust companies will soon overtake insurance to become the second-largest sector in the Chinese financial industry. According to a report by CN Benefit, a Chinese wealth-management consultancy, sales of WMP’s soared 43 percent in the first half of 2012 to 12.14 trillion yuan,” or $1.9 trillion, he wrote.

Either way, there are now “more than 20,000” wealth management products in circulation, “a dramatic increase from only a few hundred just five years ago.”

“Given that the number is so big and hard to manage, China’s shadow banking sector has become a potential source of systemic financial risk over the next few years,” wrote Mr. Xiao. “Particularly worrisome is the quality and transparency of WMP’s. Many assets underlying the products are dependent on some empty real estate property or long-term infrastructure, and are sometimes even linked to high-risk projects, which may find it impossible to generate sufficient cash flow to meet repayment obligations.”

The details are complex. But Week in China’s conclusion is this: “WiC suspects — along with swathes of the Chinese press — that the trusts and their wealth management products have now intertwined to become the weakest link in the Chinese financial system. In recent weeks it’s become clearer that these obscure institutions have waded into some wayward financial positions,” with certain companies, such as Zhongrong Trust and Shangdong International Trust, particularly involved.

“The question now is whether this might lead to a broader crisis,” the magazine wrote.

“On balance that may still be a way off,” it wrote.

As long as the economy expands at close to 8 percent a year, “the trusts may be able to ‘grow’ out of their bad assets. But if one of the major players collapses, the dynamic may be much more explosive. As Charles Ponzi well understood, confidence is everything,” it concluded.

Last week, several Chinese-language media reported the big four state banks had stopped selling trust company products to clients in Beijing and were scaling back in Guangzhou. “The official clampdown on the trusts might already have begun,” wrote Week in China.

Read the story and see what you think: Is China veering towards a U.S.-style financial crisis, or will it take action and avoid one? Or is the concern overblown?

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Consumer Prices Unchanged in December

WASHINGTON — Lower gas prices offset more expensive food and higher rents to keep the main measure of consumer inflation flat last month, the Labor Department said Wednesday.

Food prices increased 0.2 percent in December from November. Rents and airline fares also rose. Gasoline prices fell a seasonally adjusted 2.3 percent.

The flat reading of the December consumer price index meant that prices rose only 1.7 percent in 2012, down from 3 percent in 2011. Food prices increased 1.8 percent, down from 4.7 percent in 2011. Energy prices rose slightly.

Excluding the volatile food and energy categories, core prices ticked up 0.1 percent in December compared with November. And core prices rose only 1.9 percent in 2012. That was below the Federal Reserve’s inflation target of 2 percent and it was lower than 2011’s increase of 2.2 percent.

Mild inflation leaves consumers with more money to spend, which is good for the economy. Lower inflation also makes it easier for the Fed to continue with its efforts to accelerate the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.

With job gains and economic growth steady but modest, many businesses are reluctant to raise prices for fear of losing customers, and that has helped keep inflation tame. Workers also aren’t able to demand higher wages when growth is weak.

Prices are likely to stay low in the early months of 2013, based on a measure of wholesale prices reported Tuesday.

The producer price index, which measures price changes before they reach the consumer, fell for the third straight month in December. Wholesale food prices dropped by the most in 19 months, largely because of a sharp drop in beef and veal costs. Vegetable and cheese prices also declined.

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The New Old Age Blog: In Flu Season,Use a Mask. But Which One?

Do face masks help prevent people from getting the flu? And if so, how much protection do they give?

You might think the answer to this question would be well established. It’s not.

In fact, there is considerable uncertainty over how well face masks guard against influenza when people use them outside of hospitals and other health care settings. This has been a topic of discussion and debate in infectious disease circles since the 2009 H1N1 flu pandemic, also known as swine flu.

As the government noted in a document that provides guidance on the issue, “Very little information is available about the effectiveness of facemasks and respirators in controlling the spread of pandemic influenza in community settings.” This is also true of seasonal influenza — the kind that strikes every winter and that we are experiencing now, experts said.

Let’s jump to the bottom line for older people and caregivers before getting into the details. If someone is ill with the flu, coughing and sneezing and living with others, say an older spouse who is a bit frail, the United States Centers for Disease Control and Prevention recommends the use of a face mask “if available and tolerable” or a tissue to cover the nose and mouth.

If you are healthy and serving as a caregiver for someone who has the flu — say, an older person who is ill and at home — the C.D.C. recommends using a face mask or a respirator. (I’ll explain the difference between those items in just a bit.) But if you are a household member who is not in close contact with the sick person, keep at a distance and there is no need to use a face mask or respirator, the C.D.C. advises.

The recommendations are included in another document related to pandemic influenza — a flu caused by a new virus that circulates widely and ends up going global because people lack immunity. That is not a threat this year, but the H3N2 virus that is circulating widely is hitting many older adults especially hard. So the precautions are a good idea, even outside a pandemic situation, said Dr. Ed Septimus, a spokesman for the Infectious Diseases Society of America.

The key idea here is exposure, Dr. Septimus said. If you are a caregiver and intimately exposed to someone who is coughing, sneezing and has the flu, wearing a mask probably makes sense — as it does if you are the person with the flu doing the coughing and sneezing and a caregiver is nearby.

But the scientific evidence about how influenza is transmitted is not as strong as experts would like, said Dr. Carolyn Bridges, associate director of adult immunization at the C.D.C. It is generally accepted that the flu virus is transmitted through direct contact — when someone who is ill touches his or her nose and then a glass that he or she hands to someone else, for instance — and through large droplets that go flying through the air when a person coughs or sneezes. What is not known is the extent to which tiny aerosol particles are implicated in transmission.

Evidence suggests that these tiny particles may play a more important part than previously suspected. For example, a November 2010 study in the journal PLoS One found that 81 percent of flu patients sent viral material through air expelled by coughs, and 65 percent of the virus consisted of small particles that can be inhaled and lodge deeper in the lungs than large droplets.

That is a relevant finding when it comes to masks, which cover much of the face below the eyes but not tightly, letting air in through gaps around the nose and mouth. As the C.D.C.’s advisory noted, “Facemasks help stop droplets from being spread by the person wearing them. They also keep splashes or sprays from reaching the mouth and nose of the person wearing them. They are not designed to protect against breathing in the very small particle aerosols that may contain viruses.”

In other words, you will get some protection, but it is not clear how much. In most circumstances, “if you’re caring for a family member with influenza, I think a surgical mask is perfectly adequate,” said Dr. Carol McLay, an infection control consultant based in Lexington, Ky.

By contrast, respirators fit tightly over someone’s face and are made of materials that filter out small particles that carry the influenza virus. They are recommended for health care workers who are in intimate contact with patients and who have to perform activities like suctioning their lungs. So-called N95 respirators block at least 95 percent of small particles in tests, if properly fitted.

Training in how to use respirators is mandated in hospitals, but no such requirement applies outside, and consumers frequently put them on improperly. One study of respirator use in New Orleans after Hurricane Katrina, when mold was a problem, found that only 24 percent of users put them on the right way. Also, it can be hard to breathe when respirators are used, and this can affect people’s willingness to use them as recommended.

Unfortunately, research about the relative effectiveness of masks and respirators is not robust, and there is no guidance backed by scientific evidence available for consumers, Dr. Bridges said. Nor is there any clear way of assessing the relative merits of various products being sold to the public, which differ in design and materials used.

“Honestly, some of the ones I’ve seen are almost like a paper towel with straps,” Dr. McLay said. Her advice: go with name-brand items used by your local hospital.

Meanwhile, it is worth repeating: The single most important thing that older people and caregivers can do to prevent the flu is to be vaccinated, Dr. Bridges said. “It’s the best tool we have,” she said, noting that preventing flu also involves vigilant hand washing, using tissues or arms to block sneezing, and staying home when ill so people do not transmit the virus. And it is by no means too late to get a shot, whose cost Medicare will cover for older adults.

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The New Old Age Blog: In Flu Season,Use a Mask. But Which One?

Do face masks help prevent people from getting the flu? And if so, how much protection do they give?

You might think the answer to this question would be well established. It’s not.

In fact, there is considerable uncertainty over how well face masks guard against influenza when people use them outside of hospitals and other health care settings. This has been a topic of discussion and debate in infectious disease circles since the 2009 H1N1 flu pandemic, also known as swine flu.

As the government noted in a document that provides guidance on the issue, “Very little information is available about the effectiveness of facemasks and respirators in controlling the spread of pandemic influenza in community settings.” This is also true of seasonal influenza — the kind that strikes every winter and that we are experiencing now, experts said.

Let’s jump to the bottom line for older people and caregivers before getting into the details. If someone is ill with the flu, coughing and sneezing and living with others, say an older spouse who is a bit frail, the United States Centers for Disease Control and Prevention recommends the use of a face mask “if available and tolerable” or a tissue to cover the nose and mouth.

If you are healthy and serving as a caregiver for someone who has the flu — say, an older person who is ill and at home — the C.D.C. recommends using a face mask or a respirator. (I’ll explain the difference between those items in just a bit.) But if you are a household member who is not in close contact with the sick person, keep at a distance and there is no need to use a face mask or respirator, the C.D.C. advises.

The recommendations are included in another document related to pandemic influenza — a flu caused by a new virus that circulates widely and ends up going global because people lack immunity. That is not a threat this year, but the H3N2 virus that is circulating widely is hitting many older adults especially hard. So the precautions are a good idea, even outside a pandemic situation, said Dr. Ed Septimus, a spokesman for the Infectious Diseases Society of America.

The key idea here is exposure, Dr. Septimus said. If you are a caregiver and intimately exposed to someone who is coughing, sneezing and has the flu, wearing a mask probably makes sense — as it does if you are the person with the flu doing the coughing and sneezing and a caregiver is nearby.

But the scientific evidence about how influenza is transmitted is not as strong as experts would like, said Dr. Carolyn Bridges, associate director of adult immunization at the C.D.C. It is generally accepted that the flu virus is transmitted through direct contact — when someone who is ill touches his or her nose and then a glass that he or she hands to someone else, for instance — and through large droplets that go flying through the air when a person coughs or sneezes. What is not known is the extent to which tiny aerosol particles are implicated in transmission.

Evidence suggests that these tiny particles may play a more important part than previously suspected. For example, a November 2010 study in the journal PLoS One found that 81 percent of flu patients sent viral material through air expelled by coughs, and 65 percent of the virus consisted of small particles that can be inhaled and lodge deeper in the lungs than large droplets.

That is a relevant finding when it comes to masks, which cover much of the face below the eyes but not tightly, letting air in through gaps around the nose and mouth. As the C.D.C.’s advisory noted, “Facemasks help stop droplets from being spread by the person wearing them. They also keep splashes or sprays from reaching the mouth and nose of the person wearing them. They are not designed to protect against breathing in the very small particle aerosols that may contain viruses.”

In other words, you will get some protection, but it is not clear how much. In most circumstances, “if you’re caring for a family member with influenza, I think a surgical mask is perfectly adequate,” said Dr. Carol McLay, an infection control consultant based in Lexington, Ky.

By contrast, respirators fit tightly over someone’s face and are made of materials that filter out small particles that carry the influenza virus. They are recommended for health care workers who are in intimate contact with patients and who have to perform activities like suctioning their lungs. So-called N95 respirators block at least 95 percent of small particles in tests, if properly fitted.

Training in how to use respirators is mandated in hospitals, but no such requirement applies outside, and consumers frequently put them on improperly. One study of respirator use in New Orleans after Hurricane Katrina, when mold was a problem, found that only 24 percent of users put them on the right way. Also, it can be hard to breathe when respirators are used, and this can affect people’s willingness to use them as recommended.

Unfortunately, research about the relative effectiveness of masks and respirators is not robust, and there is no guidance backed by scientific evidence available for consumers, Dr. Bridges said. Nor is there any clear way of assessing the relative merits of various products being sold to the public, which differ in design and materials used.

“Honestly, some of the ones I’ve seen are almost like a paper towel with straps,” Dr. McLay said. Her advice: go with name-brand items used by your local hospital.

Meanwhile, it is worth repeating: The single most important thing that older people and caregivers can do to prevent the flu is to be vaccinated, Dr. Bridges said. “It’s the best tool we have,” she said, noting that preventing flu also involves vigilant hand washing, using tissues or arms to block sneezing, and staying home when ill so people do not transmit the virus. And it is by no means too late to get a shot, whose cost Medicare will cover for older adults.

Read More..

Gadgetwise Blog: Tip of the Week: Monitor Your Memory

If your computer seems to be running slowly and acting as if it does not have enough memory installed, you can use software that comes with the operating system to see what is going on under the hood.

On a Windows system, open the Task Manager program by right-clicking on the Windows task bar and choosing Start Task Manager. (You can also use the keyboard shortcuts of Control-Alt-Delete or Control-Shift-Escape to summon the Task Manager.) In the Task Manager window, you can see all the programs, services and processes currently running on the computer. You can also use the Task Manager to close an application that is not responding; Microsoft has a demonstrations video online.

On a Mac, open the Activity Monitor program. Go to the Applications folder, then to the Utilities folder and double-click on the Activity Monitor icon. On Macs with the Launchpad feature, just click the Launchpad icon in the Dock, click the Other icon and open Activity Monitor. Here, you can see the amount of system memory being used, what programs and processes are currently running and other system information. Apple has more information about using the Activity Monitor and steps for quitting a frozen or memory-hogging program on its site.

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Defense Secretary Leon Panetta Meets Pope

Francesco Sforza/Osservatore Romano

Defense Secretary Leon E. Panetta met with Pope Benedict XVI at the Vatican on Wednesday.

ROME — On what is likely his last trip as defense secretary, Leon E. Panetta had an audience on Wednesday morning at the Vatican with Pope Benedict XVI, who told him, Mr. Panetta said, “Thank you for helping to protect the world.” Mr. Panetta said he replied, “Pray for me.”

Mr. Panetta, the son of Italian immigrants who attends Mass every Sunday, is halfway through a weeklong trip to Europe meant as a goodbye tour of American allies. Later on Wednesday he is to meet with the Italian prime minister, Mario Monti, as well as the president of Italy, Giorgio Napolitano.

Mr. Panetta’s audience with the pope was far from private, although he had a close-up view. Mr. Panetta sat in the front row of the Pope Pius VI Audience Hall, where some 7,000 others had gathered for the pope’s weekly audience. After an hour-long service, Mr. Panetta filed up with several dozen people, including a bride, to receive a blessing from the pope, who spoke to him at that time.

Defense officials said that Mr. Panetta previously had an audience with Pope John Paul II when Mr. Panetta, who was a budget director and a chief of staff to President Bill Clinton, accompanied Mr. Clinton to Rome. He also had an audience with Pope John Paul II in Washington.

Mr. Panetta is to be succeeded by Chuck Hagel, who is preparing for Senate confirmation hearings later this month or early next month. After 28 months as defense secretary and many decades in government, Mr. Panetta plans to return to his walnut farm in Carmel Valley, California.

He has also visited Spain and Portugal during the trip. On Tuesday, in Lisbon, Mr. Panetta restated the administration position that the United States would not send ground troops to Mali, where militants were pushing toward one of Mali’s largest cities as France continued with airstrikes and pledged more troops.

“There is no consideration of putting any American boots on the ground at this time,” he said.

Later on Tuesday in Madrid he reiterated that the United States would offer France air and logistical support but declined to be more specific. He said that France faced a difficult task in trying to rout extremists from a vast area in northern Mali and that the Pentagon remained in talks with the French over what kind of military aid the United States would provide.

At a news conference in Madrid, Mr. Panetta deflected a question asking him to assess any progress the French had made against the extremists, who overran a central village on Monday only hours after the French foreign minister said confidently that France had blocked “the advance of the terrorists.” Mr. Panetta said the United States was “still trying to get a read” on French efforts and strategy.

“I can’t really give you a full analysis as to just exactly what they’re targeting and how successful or not successful they may be in that effort as of this moment,” Mr. Panetta said at a joint news conference with the Spanish defense minister, Pedro Morenés. But Mr. Panetta added that “any time you confront an enemy that is dispersed and that is not located necessarily in one area makes it challenging, and the ability to go after that enemy and be able to stop them from moving forward represents a difficult task.”

 

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