The Christmas Day underwear bomber has been providing the FBI with “useful, current” information, Politico reports. The Obama administration took some heat because law enforcement read the Nigerian suspect, Umar Farouk Abdulmutallab, his Miranda rights after 50 minutes of questioning. But since last week, Abdulmutallab has been cooperating with counterterrorism agents. “The information has been active, useful, and we have been following up,” a law enforcement source said. “The intelligence is not stale. He certainly sees that there are incentives provided by the criminal justice system to cooperate.” Abdulmutallab's family persuaded him to cooperate with the authorities, according to senior administration officials. The U.S. has acted on the information overseas. 

Paul Volcker was on the Hill Tuesday to pitch the rule that carries his imprimatur: The so-called Volcker Rule, which would separate commercial banking from investment banking. Volcker dismissed industry concern that it would be difficult to separate the activities, saying “Every banker I speak with knows very well what ‘proprietary trading’ means and implies.” Commercial banks would still be allowed to trade so long as it is undertaken for customers, and hedge funds and smaller institutions could continue aggressive betting so long as they are allowed to die when they fail.

Get ready for some more backlash: AIG is planning to pay employees $100 million in bonuses Wednesday, risking reigniting populist outrage at the insurance giant that needed a massive bailout financed by American taxpayers. Only employees of the company's Financial Products division, who agreed to take a 10 percent to 20 percent pay cut from what AIG had promised to pay, will receive the money. Financial Products is the unit that created risky derivatives deals that nearly collapsed the insurer. About 97 percent of those employees agreed to forgo 10 percent of their bonus in order to get it early, while about 35 percent of former employees agreed to take a 20 percent cut to get their bonuses early. By paying them less, the company is seeking to compensate for the $26 million those employees said they'd return at the end of 2009 but did not. AIG is attempting to comply with the new demands of compensation czar Kenneth Feinberg, who wants the size of Wall Street bonuses reduced and who is demanding some bonuses from last year be repaid.

Representative Mark Kirk has won the GOP nomination for the senate seat once held by Barack Obama. Kirk trounced the competition, winning 57 percent. The closest challenger, Patrick Hughes took in just 19 percent; Hughes had tried to build on ties to the Tea Party movement. The polls were tighter on the Democratic side Tuesday night, with Alexi Giannoulias holding a small lead at 38 percent over Chicago Inspector General David Hoffman at 34 percent. Giannoulias is a first-term state treasurer. The race is sure to draw national attention because the bitter symbolism of Democrats losing Obama’s old seat could rival their loss of Ted Kennedy’s to Republican Scott Brown last month. Additionally, it’s an open seat because its current occupant, Senator Roland Burris, is not running. It’s also the seat former Governor Rod Blagojevich allegedly tried to sell.

Democrats have started writing a compromise health-care bill in an effort to salvage the reform legislation, Democratic Representative Charles Rangel of New York said Tuesday, but it’s unclear when it would be ready to be voted on. The measure would convert the Senate bill into a version the House and Senate agreed upon before Scott Brown’s election threw a wrench into the negotiations. If true, Rangel’s remarks are the first concrete sign that Democrats have not given up on passing some sort of health-care legislation. Compromises include a Senate-approved tax on expensive “Cadillac” insurance plans, and the removal of a measure to fully pay for the expansion of Medicaid in Nebraska, which was inserted to win the vote of Democratic Senator Ben Nelson, who was the 60th vote for the bill. Rangel said he wasn’t sure whether the compromise would be tackled before a jobs bill.

Don’t tell Toyota, but automakers are posting gains again—even GM! Ford sales grew 24.6 percent in January and GM sales grew 14 percent. Mercedes-Benz sales skyrocketed 45.3 percent. But sales for Toyota, which is plagued by a recall and sales suspension, dropped 16 percent. Toyota has suspended sales and production of eight of its most popular models due to problems with the pedals; these cars make up almost 10 percent of total U.S. retail sales.

Defense Secretary Robert Gates and Joint Chiefs of Staff Chairman Michael Mullen announced on Tuesday the creation of a panel that will asses how to repeal Don’t Ask, Don’t Tell—a process that could take years. The panel will take the rest of this year to produce an "implementation plan," but in 45 days the Defense Department will also recommend ways, in the words of Gates, to "enforce this policy in am ore humane and fair manner" within existing law.  

The movie industry hopes to draw a bigger audience for the Academy Awards this year by including more popular films among its nominees for Best Picture. This year, the Academy of Motion Picture Arts & Sciences doubled the number of movies considered for the top prize, Best Picture, to 10 from five. The awards show once garnered massive ratings, but in recent years has seen its audience age and fall away, and many question its standing as a definitive reflection of pop culture. But the larger number of nominees allows movies with mass appeal to compete with art house flicks that the academy favors—three of the 10 selected are among the top eight grossing films of the year. The nomination of The Blind Side was one of the biggest surprises, with its family-friendly football story designed to appeal to heartland viewers. Though last year's ceremony drew an audience of 36 million and was 13 percent bigger than the previous year's, it was still far smaller than the all-time high of 55 million in 1998—the year Titanic received 14 nominations and won 11 Oscars.

Iranian President Mahmoud Ahmadinejad told state-controlled TV that he’d have “no problem” with complying with an earlier deal to send Iran’s uranium abroad for enrichment, to prevent the country from weaponizing the nuclear material. If true, it represents a major reversal in Iran’s policy, though Western officials remain skeptical. Americans said if Iran is serious, it should alert the United Nations’ nuclear watchdog, the International Atomic Energy Agency. Several months ago, Iran, the IAEA, and the P5+1 (the U.S., Russia, China, U.K., France plus Germany) agreed to have Iran send 70 percent of its low-enriched uranium to France and Russia, where it would be turned into fuel rods to be used for research purposes. Then Tehran seemed to go back on the agreement, publicly criticizing its terms—especially a waiting period between sending the material and getting it back as fuel. But in his interview, Ahmadinejad said that was no longer a concern.

Dr. Conrad Murray, Michael Jackson's personal doctor and the man accused of involuntary manslaughter in the singer's death, will meet with his lawyers before surrendering to police tomorrow, TMZ reports. Though Murray's California lawyer told TMZ, "I don't know what's going on," sources say that if Murray surrenders, charges will be filed first thing in the morning.

Chinese and American relations—already tense after Hillary Clinton reprimanded China for its lack of Internet freedom—could get worse if President Obama meets with the Dalai Lama, a Chinese official said on Tuesday. The Communist Party official said such a meeting would “seriously undermine the political foundation of Sino-U.S. relations.” The U.S. has been signaling that Obama might soon meet with the spiritual leader; Chinese President Hu Jintao is also expected to visit soon, perhaps in April.

The Oscar race is officially on: Avatar and Hurt Locker lead the pack with nine nominations each, The Blind Side and District 9 have surprise nods for Best Picture, and Mo'Nique and Sandra Bullock are up for acting honors. For the first time, there are 10 nominations for Best Picture: District 9, Up, The Blind Side, Inglourious Basterds, Up in the Air, A Serious Man, An Education, Avatar, Hurt Locker, and Precious. Best Actress nominees: Meryl Streep for Julie & Julia, Sandra Bullock for The Blind Side, Carey Mulligan for An Education, Gabourey Sidibe for Precious, and Helen Mirren for The Last Station. Best Actor nominees: Jeff Bridges for Crazy Heart, George Clooney for Up in the Air, Colin Firth for A Single Man, Morgan Freeman for Invictus, and Jeremy Renner for The Hurt Locker. Precious' Mo'Nique is up against Penelope Cruz in Nine, Vera Farmiga in Up in the Air, Maggie Gyllenhaal in Crazy Heart and Anna Kendrick in Up in the Air for Best Supporting Actress.

The Lancet has formally retracted a report published 12 years ago that claimed to prove that the measles-mumps-rubella vaccine causes autism. The British medical journal’s action comes less than a week after U.K. General Medical Council's Fitness to Practice Panel concluded that the report’s author, Dr. Andrew Wakefield, provided false information and acted with “callous disregard” for the children in his study. The council is now deciding whether to find Wakefield guilty of serious professional misconduct, which would strip him of his medical license. Wakefield’s study led to a sharp drop in the number of parents vaccinating their kids, and a resurgence of measles in the U.K. and U.S.

On his blog, James Fallows shares a story from a friend about a GOP Congressman who tells a Democratic Congressman that he’d like something added to the health-care bill, and then says he’s going to vote against the health-care bill anyway. It illustrates, Fallows’ friend says, just how broken our system is. GOP discipline is so strong that Republicans are unwilling to trade votes for compromises. The GOP denies the party label and financial support to candidates who break ranks, and possibly even runs more conservative candidates against them. Fallows' friend calls the lock-in-step GOP minority bloc “unprecedented” and says, “There's really nothing more to be said about ‘why no bipartisanship,’ once one recognizes the GOP party discipline. On this issue, it's absolutely astounding to blame Obama or even the Congressional leadership.”

Iranian President Mahmoud Ahmadinejad is currently in talks with the U.S. about a possible release of three American hikers who have been jailed since July 2009 for illegally entering into the country from Iraq. The hikers, who were traveling in Iraq's northern Kurdistan region, have been accused of spying and had been set to be tried in Iranian courts. Ahmadinejad is seeking an exchange of Iranian prisoners being held without charges in U.S. prisons, though he did not specify which prisoners he wanted freed.

Punxsutawney Phil of Pennsylvania signalled six more weeks of winter when he saw his shadow this morning. But although Phil wore the crown of Groundhog Day prognosticator, his rivals were making sure he wasn't the only rodent in the spotlight this year. Octorara Orphie and Sammi II, who replaced Sammi I after a heartstroke after riding in a parade, are fighting for equal attention and hoping to prove they are the real deal. President of the Punxsutawney Groundhog Club's Inner Circle Bill Deeley, a group of businessmen who have used groundhogs to predict weather since 1887, however, claims his own operation is "the real McCoy," and says Phil's competitors are "impostors." Deeley used Phil to determine the weather forecast for the rest of winter Tuesday morning, and entertain a crowd of 15,000 people as he raised the rodent into the air to observe his shadow. Yet many are quick to call Phil a fake, since he doesn't stand on the ground or have the chance to return to his burrow if it's sunny. Whatever special rodent used, thousands gathered Tuesday to observe the Groundhog Day tradition.

Matt Damon won't return as Jason Bourne in the franchise's fourth installment, reports The Boston Globe. Damon told BANG Showbiz that the next movie, likely five years out, will be "with another actor and another director." Though the actor previously expressed a desire to begin working on the new Bourne movie in 2011, he's now unsure if he'll go ahead without director Paul Greengrass. Instead, Damon wants to focus on directing, perhaps trying to replicate his Good Will Hunting success.

A crowded ballot is set for Tuesday’s gubernatorial election in Illinois, a state that hasn’t been able to stay out of the news—and not for the right reasons. Incumbent Pat Quinn is facing a tough slew of competitors one year after replacing Rod Blagojevich. Quinn is currently facing a challenge from state Comptroller Dan Hynes for the top spot on the Democratic ballot. Racial tensions have flared in the fight between Quinn and Hynes, as both have run ads that critics describe as intentionally inciting a division in the African-American community. The Republican side features a seven-way race, out of which three GOP aspirants have taken the lead. Former Illinois GOP Chairman Andy McKenna is the frontrunner, with former state Attorney General Jim Ryan and state Senator Kirk Dillard trailing not far behind. Also at stake is a narrowing of the field for the Senate seat left open by President Obama. Players in the state’s notoriously political-machine-driven election for the 14th Congressional District include former House Speaker Dennis Hastert’s son, Ethan Hastert. Hastert is the current frontrunner for the Republican side, but he faces challenges from state Senator Randy Hultgren. Kirk Dillard recently became the butt of a friendly joke of Obama’s when the president noted the ridiculously bipartisan nature of the race by commenting that “in the Republican primary, of course, they’re running ads of him saying nice things about me. Poor guy.” (an earlier version misidentified the target of Obama's joke as Hultgren)

President Obama debuted his $30 billion program to lend money to small businesses with the hopes that it will spur hiring in a prolonged period of high unemployment. The program would take its funds from the Troubled Asset Relief Program (TARP) and encourage community banks to lend to small businesses. "Small businesses … have created roughly 65% of all new jobs over the past decade and a half. And I think we should make it easier for them," Obama said. Officials said the Treasury would provide capital investments to the 8,000 banks across the country with assets of less than $10 billion—those institutions do more than half of small business lending in the U.S.

Marcus W. Brauchli was given $6.4 million when he was asked by News Corp. to leave his job as managing editor of The Wall Street Journal, according to a new book, War at the Wall Street Journal by Sarah Ellison, a former media reporter at the paper. When News Corp.—headed by media titan Rupert Murdoch—took over the newspaper, it signed an editorial independence agreement many feared was meaningless. Those fears seemed warranted when Brauchli resigned with a payout just months after the deal in April 2007.

When James O’Keefe, the ACORN “pimp,” was arrested at Senator Mary Landrieu’s office, his patron Andrew Breitbart originally distanced himself. But now, Breitbart has enthusiastically taken up O’Keefe’s defense, and is even floating complicated theories about O’Keefe’s arrest. Breitbart has accused the U.S. Attorney—who has stepped aside from the case—of leaking information to the media and says the office has it in for O’Keefe because “it's tied to the Justice Department. And we've been very aggressive in asking Eric Holder to investigate what's seen on the ACORN tapes, and he's ignored it." Breitbart also claimed that O'Keefe was denied access to a lawyer for 28 hours. O’Keefe, meanwhile, appeared with Sean Hannity to announce, "I really did not think we broke any laws. I think this is sort of a misunderstanding."

Nearly 100 of music's greatest talents gathered at Henson Studios Monday night to record a charity remake of "We Are the World," originally sung by Bob Dylan. The song is in support of Haitian earthquake relief, and Wyclef Jean noted, 'What's bigger than a contribution is that you lend your voice." The all-star ensemble included Kayne West, Lil Wayne, Celine Dion, Barbara Steisand, Nick Jonas, Jamie Fox, Jason Mraz, Usher, and even Vince Vaughn. From singer to dancer to actor, the diverse group laid down a modern hip-hop influenced track in a session that was said to last long into the night, with some sessions screened for journalists. Justin Bieber, who sang Lionel Richie's opening line, called the experience "out of this world." The 3-D music video will debut February 12.

The debate is laced with emotion and urgency: Adoptions in the midst of the chaos in Haiti increase the risk of human trafficking and mistakes, but if action isn't taken soon, children may end up in institutions or on the streets. Although the 10 Americans arrested for alleged kidnapping say they were only trying to help, their actions have sparked a backlash and a closer look into international adoption. "Maybe the Americans thought they were helping 33 kids, but now there's going to be a much slower process and maybe even a ban on future adoptions—and that would be a tragedy," said an executive of the National Council for Adoption. Although there are upsides and downsides to expedited adoption, the Haitian government is approaching the issue cautiously to avoid situations similar to the recent arrests.

Just how visible will Oprah Winfrey be on her own cable channel? For starters, producers at the Oprah Winfrey Network have found an unusual way to feature their star: Until Winfrey's syndicated talk show on local stations ends in September 2012, OWN will run a meta-show about the end of The Oprah Winfrey Show. On Tuesday, OWN will announce Behind the Scenes: Oprah's 25th Season, a weekly reality show that promises to go inside Winfrey's talk show. Christina Norman, the chief executive of OWN, said the show will show what “everybody wants to see.”

High-school students are typically told that a college degree will earn them $800,000 extra in their lifetime. But new analysis shows that that information is not accurate, and that a college degree may not be as valuable as it was once hailed to be. Mark Schneider, a vice president of the American Institutes for Research, said the calculation is "a million-dollar misunderstanding." He pointed out that account deductions and student-loan debt are not taken into consideration, and that the income used for the Census estimates were from 1999, when tuition was more than $10,000 less per year. In his own estimates, Dr. Schneider calculated a lifetime-earnings average for college graduates of $279,893, a far cry from the $800,000 figure that the College Board puts on its Web site. "Averages don't tell the whole story," said president of the Institute for College Access & Success Lauren Asher. "The truth is that no one can predict for you exactly what you're going to earn," she says.

Former Federal Reserve Chairman Paul Volcker—once a peripheral adviser to President Obama; now the inspiration behind his financial crackdown—is to urge Congress on Tuesday to adopt the “Volcker rule,” which will limit banks’ risk and separate commercial and investment banking. The key, however, lies with eight senators on the Senate Banking Committee, who have been working in pairs of one Republican and one Democrat. So far—no surprises here—the Republicans aren’t biting. Senator Judd Gregg (R-NH), who once almost left Congress to take a job in the Obama administration, tells The New York Times, “I think it’s confused the issue considerably, because he’s basically fanned the fires of populism and in a lot of instances, populism doesn’t give you either good regulatory activity or strong markets.”

After 40 years of working tirelessly for Democrats—and sucking up so much cash for the party he was called "the Hoover"—Louis Susman finally picked a winning presidential candidate: Barack Obama. Susman bundled $247,000 for Obama's 2008 campaign and another $300,000 for his inauguration, and he was rewarded handsomely. Susman is now the American Ambassador to the U.K., widely recognized as the most plum of all diplomatic appointments, one that comes with a 35-room mansion in a country blissfully free of imminent civil war. But Susman, a Chicago investment banker, has taken some flak for being the latest beneficiary of a long tradition of rewarding the best fundraisers with diplomatic positions. Obama promised change, after all. "If the reporters seemed snappish, perhaps it was because the press secretly had hoped for more celebrity wattage. Among the names that had been loosely mentioned as possible candidates for the ambassadorship were Oprah Winfrey; Anna Wintour, the editor of Vogue; and Caroline Kennedy," Chicago Magazine says. Beginning with John Adams, Five envoys to England have gone on to become president.

Now that Tiger Woods has fallen, who should replace him as the No. 1 sports role model? A 60 Minutes/Vanity Fair poll has a clear winner: No one. 45 percent of respondents think sports stars shouldn’t be role models. Indianapolis Colts quarterback Peyton Manning was the next most frequent response, with 23 percent of the vote, followed by Derek Jeter (6 percent), Venus Williams (5 percent), Roger Federer (3 percent), and Danica Patrick (2 percent).

A single, vague sentence about Fannie Mae and Freddie Mac in President Obama’s budget packs a weighty meaning: The two companies are likely to remain wards of the state for years. Even so, they—and their $3.9 trillion in liabilities—remained off the federal budget, despite the fact that the government lifted the $400 billion ceiling and now extends to the companies an unlimited credit line of federal money. So far, the companies have cost American taxpayers $112 billion.

Save your money: Michiko Kakutani pans Don DeLillo’s new novella, Point Omega, in The New York Times. The story of a scholar who helped design the framework for the Iraq War and a filmmaker who is courting him for a documentary, Kakutani bemoans the book’s “uncharacteristically simplistic portrait of its hero” and its “dreary and highly portentous musings about mortality and time.” Kakutani concludes, “There is something suffocating and airless about this entire production. Unlike the people in his most memorable novels, the three characters here do not live in a recognizable America or recognizable reality.”

It’s not only Conan O’Brien’s comedy that’s stand up: According to TMZ, Conan is paying his Tonight Show crew who did not receive severance from NBC out of his own pocket. He’s offered the 50-person crew at least six weeks severance, sources say, though Conan’s people had no comment.

Harvey and Bob Weinstein have been approached by two hedge funds about possibly buying Miramax from Disney. The brothers founded the studio in 1979 and even named it after their parents, but parted ways with Disney in 2005. Since then they've formed the Weinstein Company, an independent studio that has struggled financially. Miramax has a library of 700 films, but parties interested in buying it have balked at the $700 million pricetag. One insider says the library brings in $300 million a year, but others put the estimate closer to $100 million. "Here's the issue everyone's having: What do you do with the rights?" said one person interested in the deal told The Wrap. "Other than Harvey Weinstein, who knows how to do ‘Inglourious Basterds'?"