WASHINGTON – The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

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Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI’s hunt for culprits in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.

The bailout proposed by the Bush administration is aimed at helping unlock credit and stabilize badly shaken markets in the United States and around the globe.

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In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country’s two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.

Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

President Bush said Wednesday morning that, despite congressional debate over his proposed $700 billion financial bailout plan, “a robust plan” will be passed. He said the leaders can see clearly that the legislative process in the U.S. is “give and take.”

Bush added: “I am confident when it’s all said and done, that there will be a robust plan.”

Separately, the FBI is also investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation’s largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

NEW YORK – Yahoo Inc. launched a much-anticipated upgrade to its online advertising system Wednesday, one the company termed revolutionary as it bids to emerge from the shadow of search industry leader Google Inc.

Playing to Yahoo’s strengths in graphical display ads and technology targeting pitches to users’ interests, the new Apt from Yahoo platform will initially involve the newspaper companies in a 2-year-old consortium led by Yahoo, which many joined hoping for relief from the decline in their industry.

The platform, formerly known as Amp, promises to make it easier for advertisers and publishers alike to buy and sell display ads, borrowing many of the self-service techniques that have made search ads lucrative for Internet companies, especially Google.

By tapping data Yahoo already collects on users’ preferences, Apt aims to help advertisers narrow their pitches to specific groups of customers because sharper targeting will let Web sites charge more for ads.

William Dean Singleton, vice chairman and chief executive with MediaNews Group Inc. and chairman of The Associated Press, said the typical newspaper now sells more than half of its inventory at deeply discounted rates because it can’t offer such specific targeting.

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Singleton said Apt should help eliminate or reduce the need for deep discounts.

“If we can sell the amount of online advertising we are selling today at rates that were much more normal, you wouldn’t be hearing people talk about the woes of the newspaper industry,” Singleton said at a launch event during the ad industry’s Advertising Week.

It’s unclear whether the technology will give Yahoo the lift it needs. A previous technology revival focusing on search ads, called Panama, failed to resonate with Wall Street despite accolades from advertisers, and Yahoo has remained in a funk, its stock recently sinking to its lowest level in nearly five years.

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The new platform, 18 months in the making, comes at an inopportune time because advertisers are pulling back spending as the U.S. economy weakens, said David Hallerman, a senior analyst with eMarketer.

But even if it isn’t a game-changer, Hallerman said, it can help Yahoo reach the companies that are still advertising.

In an interview with the AP, Yahoo President Sue Decker said Apt positions the company to capture growth in display advertising following several years of focus on search innovations.

Decker said Apt replaces legacy systems “created 10 or 15 years ago when the Internet first started.”

Noting that Google still is weak in display ads, Decker said Yahoo is trying to build the technology and assemble a large enough network of Web sites that it becomes “a must buy” for advertisers.

Apt seeks to automate many of the tasks now handled manually with display ads and allows Web sites to pool their available ad spaces so advertisers can make larger purchases more quickly, the company said.

Such automation has been crucial to the growth in search, but display ads involve more variables that have made automation challenging.

The technology could help newspapers’ Web sites, in particular, because of its large inventory of display ads and the comfort advertisers already have with newspapers’ brands, Hallerman said.

Online advertising at newspapers has been growing, but too slowly so far to compensate for steep declines in print advertising.

Yahoo is initially offering the platform to the San Francisco Chronicle and the San Jose Mercury News, both near the company’s headquarters in Sunnyvale, Calif. It will extend Apt to the 782 other newspapers in its consortium over the next several months and will open it to other sites, including its own, and to advertisers in 2009.

Shares in Yahoo increased 12 cents, or 0.6 percent, to $19.05 in mid-afternoon trading Wednesday.

WASHINGTON – A record decline in U.S. home prices in August attracted more buyers in some areas and led to a sizable decline in the number of unsold homes on the market, the National Association of Realtors said Wednesday.

The median sales price fell 9.5 percent to $203,100, the largest price decline on records dating to 1999. As prices fall, buyers are taking advantage of steep discounts, especially in hard-hit markets like California, Nevada and Florida.

“Time and price are the real cures for the housing market slump,” said Mike Larson, an analyst at Weiss Research.

The inventory of unsold homes fell 7 percent to 4.3 million, down from the all-time record of 4.6 million in July. That’s a 10.4-month supply at the current sales pace.

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The decline, however, merits only “a small round of applause” because around five months of inventory is a more typical level, wrote Global Insight economist Patrick Newport. Also, many homeowners who don’t have to sell are likely keeping their properties off the market. At the same time, thousands of foreclosed properties are tied up in court and are not for sale yet.

Lawrence Yun, the trade group’s chief economist, said he hopes the downward trend in inventories continues because, “home prices will not stabilize as long as inventories remain high.”

Inventories have been driven higher by a massive wave of mortgage foreclosures, especially on risky loans.

Reckless lending standards during the real estate boom coupled with the current decline in home prices are the driving forces behind record mortgage defaults. They have spurred a credit crisis that has shaken Wall Street to its core and caused the Bush administration to propose a $700 billion financial industry bailout.

The Realtors hope the government’s takeover of mortgage finance companies Fannie Mae and Freddie Mac, combined with a massive purchase of distressed mortgage securities on Wall Street will ultimately make it easier for homebuyers to get a mortgage.

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But with credit remaining tight and foreclosures still surging, “home prices are likely to decline considerably further in the quarters ahead,” wrote Joshua Shapiro, chief U.S. economist at MFR Inc., in a research note.

Making matters worse for buyers, mortgage rates, which fell after the takeover of Fannie Mae and Freddie Mac, have been creeping back up amid uncertainty over how the government’s intervention in financial markets would play out. New applications for home loans fell 10.6 percent last week, the Mortgage Bankers Association said Wednesday.

Existing home sales fell in August to a seasonally adjusted rate of 4.91 million units, down 2.2 percent from an upwardly revised pace of 5.02 million in July. Sales were down almost 11 percent from August last year. Without adjusting for seasonal factors, sales were down 15 percent from year-ago levels.

While buyers are pouncing on lower prices — especially in places like California, Florida and Nevada — sales are sluggish in formerly stable markets like the Pacific Northwest and Charlotte, N.C., Yun said.

Dave Lenderking, 67, saw his house in Holly Springs, N.C., sit on the market for four months before taking an offer $50,000 lower than his original listing price of $565,000.

“It was the only offer I had,” said Lenderking, who is in the process of moving to retirement community in Virginia. “Mentally I was just ready to move on.”

The rate of home sales fell from July to August in the Northeast and West, which posted 6.6 percent and 5.3 percent sales declines, respectively. Sales rose by less than 1 percent from July to August in both the Midwest and South.

Meanwhile, the Bush administration sought Wednesday to overcome obstacles to its plan to rescue financial firms and restore confidence in the credit markets. Real estate industry groups lined up behind the administration’s plan.

“The flow of credit has been severely curtailed for housing and other sectors of the economy,” Sandy Dunn, president of the National Association of Homebuilders said in a statement. “There’s no time to waste.”

The Mortgage Bankers Association wants to kill an effort by Democrats to allow bankruptcy judges to rewrite mortgages to ease the burden on borrowers facing foreclosure. John Courson, the group’s chief operating officer, wrote in a letter to lawmakers that the change “will inevitably raise the cost of credit.”

WASHINGTON – In the next few years, consumers could see the fruits of $25 billion in government loans for the auto industry through a broader lineup of gas-electric hybrid vehicles, new plug-in electric cars and an expansion of fuel-efficient engines.

The loans, approved by the House as part of a larger spending bill Wednesday, are intended to help the industry refurbish decades-old plants and develop advanced batteries and gas-electric hybrids. The loans are a major win for General Motors, Ford and Chrysler, who lobbied for the funding as they dealt with a sluggish economy and weak sales.

“We all know that there is real growth for our economy in this sector of jobs — green jobs, alternative fuel jobs — and I think we all feel the stresses on our domestic auto producers,” said Sen. Claire McCaskill, D-Mo. The Senate was considering the loans later this week.

The loans were authorized in last year’s energy bill but not funded. The loans were designed to help automakers meet costly new fuel-efficiency standards of at least 35 miles per gallon by 2020, a 40 percent increase. Auto suppliers are also eligible for the loans.

Loans will be issued from the government at discounted rates and administered by the Energy Department, which is currently writing regulations for the program. The spending plan, which includes $7.5 billion in case one of the companies defaults, would enable the department to speed up the rulemaking process. Companies would apply to the Energy Department for a loan, so it was unclear how the funding would be divided.

Ron Gettelfinger, president of the United Auto Workers, said the loans ensured that the “products will be built and the plants will be retooled right here in the United States.” He said recent product announcements offered a sign of how the loans might be used.

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GM recently unveiled a production version of the Chevrolet Volt, which is expected to propel the car up to 40 miles on a single charge and be in showrooms by late 2010. GM also plans to build four-cylinder engines in Flint, Mich., for the Chevrolet Cruze, a new small car.

Ford is producing more hybrid vehicles and announced plans in July to bring over six small, fuel-efficient cars it makes in Europe and sell them in North America. Chrysler showed three electric-powered prototypes on Tuesday and plans to sell one in the U.S. in 2010.

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The loans were helped by the importance of Michigan, Ohio and Missouri, key auto manufacturing states, in the presidential campaign. Both Barack Obama and John McCain had expressed support for the loans.

Sen. Debbie Stabenow, D-Mich., said the loans were “critical to saving jobs” in an industry that has already shed jobs and struggled with weak sales, credit problems and a rapid shift to fuel-efficient cars as gasoline prices topped $4 a gallon.

Auto executives told House Speaker Nancy Pelosi last week that the economic conditions were the worst they had seen in 30 years and warned that tens of thousands of employees could be affected.

“We were going to be in a real box later on this year,” said Rep. Fred Upton, R-Mich.

The companies hope to receive the loans at government interest rates of about 5 percent, which would save them about $100 million a year for every $1 billion in loans. The auto manufacturers have poor bond ratings and would only qualify for double-digit interest rates.

Industry officials floated a three-year, $50 billion loan proposal earlier in the month before settling on $25 billion. “As we go forward, we will be starting on the second $25 billion,” said Rep. John Dingell, D-Mich.

WASHINGTON – President Bush and the two men running to succeed him raised the political stakes dramatically Wednesday in the great bailout debate of 2008, effectively stamping a “too big to fail” sign on congressional efforts to pass a pre-election economic rescue plan.

With the outcome all but assured, details and a timetable for passage of an unprecedented federal intervention in the capital markets remain to be settled. And both John McCain and Barack Obama will be able to claim credit for winning changes in the administration’s original plan — some of which the White House has already accepted.

“The whole world is watching to see if we can act quickly,” President Bush said early in the week, before his proposal ran into criticism from Democrats and Republicans alike.

So, too, the American electorate, six weeks before choosing between two presidential candidates, now staging side-by-side auditions for the job of national crisis manager-in-chief.

With Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke issuing dire warnings daily, Bush arranged a prime time address to the nation. It was designed to rescue the rescue plan that Bush sent to Congress less than a week ago after he was told that earlier, piecemeal bailouts had not restored confidence to the markets.

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With less than four months remaining in office and approval ratings in the 30 percent range, Bush’s persuasive powers are as uncertain in Congress as they are with the public.

It was a point some Republicans were willing to make, uncharitably at times.

“It’s a tough sell to most of our members,” said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. “It’s a terrible plan, but I haven’t heard anything better.”

“They sold the war, they sold the stimulus package and some other things. It’s the ‘wolf at the door’” argument, said Davis, who is retiring at the end of the year.

If Republicans weren’t exactly clamoring for Bush to show them the way, Democrats insisted the president step up, for reasons of their own.

“It is time for him to explain why his administration sat on its hands for months and only now has come to realize the need for immediate and unprecedented government action,” said Senate Majority Leader Harry Reid of Nevada.

“It is time for him to explain how he could tell our country for months that our economy was fine, yet overnight declare that if American taxpayers don’t accept his bailout bill, our country will face an economic disaster.”

Translation: Neither Reid nor House Speaker Nancy Pelosi intended to put their rank and file in the position of voting for legislation that Republicans could oppose and then use as a campaign issue against them. But if many Republicans were planning to vote for the measure eventually, they were quiet about it on Wednesday.

While Bush was exercising his presidential powers, would-be successors McCain, the Republican, and Obama, the Democrat, were trying out for his job.

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McCain, trailing once more in the race for the White House, announced he would return to Washington to help work on legislation. He suggested he and Obama hold around-the-clock meetings with congressional leaders and administration officials until they had reached an agreement, and he said this Friday’s presidential debate should be rescheduled in deference to the crisis.

DETROIT – General Motors Corp.’s treasurer said Wednesday that the automaker is planning to put its Strasbourg, France, manufacturing operation and its Hummer truck brand up for sale, and it may announce more asset sales later this year.

Company Treasurer Walter Borst said in a slide presentation at the Deutsche Bank Leveraged Finance Conference that the company expects to distribute marketing materials for both operations in October.

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The slides posted on GM’s Web site Wednesday say the assets under review are worth $2 billion to $4 billion. The presentation also says GM continues to review other asset sales and will make more announcements in the fourth quarter.

“We believe that we can monetize certain assets without impacting the strategic direction of the company,” Borst said during his presentation, which was posted on GM’s investor Web site.

GM and other automakers have faced liquidity problems as losses have mounted and U.S. sales have declined. GM announced a plan in July to cut $10 billion in costs and raise another $5 billion through asset sales and borrowing through the end of next year.

On Friday, the nation’s largest automaker gave notice that it would draw the remaining $3.5 billion of a $4.5 billion revolving credit facility to boost its liquidity.

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Borst said GM expects the global market to grow from 70.6 million in sales last year to more than 75 million in 2010, and says GM is positioned to capture that growth in emerging markets. The growth, coupled with cost cuts, factory capacity reductions and other management decisions, will set the stage for improved financial results by 2010, he said.

By 2010, GM will sell two-thirds of its vehicles outside the U.S., compared with 59 percent in 2007, he said.

He said GM plans to reduce its North American structural costs from $33.2 billion in 2007 to $26 billion to $27 billion in 2010. That figure includes savings from shifting retiree health care costs to a trust administered by the United Auto Workers, although the accounting of those savings could change, he said.

By 2010, the company also expects to reduce its hourly health care costs by more than $2 billion. The company spent $3.8 billion in 2007, he said.

Borst said GM is shoring up its liquidity and has the scale to be well positioned for an industry rebound.

“We’re making changes to compete and win in what we think is an industry revolution,” he said.