The Federal Deposit Insurance Corp. said higher trading revenues at big banks helped the industry earn a $7.6 billion profit in the January-March period, compared with a record loss of $36.9 billion in the fourth quarter. The profit was 61 percent below the $19.3 billion earned in the year-ago period and followed the first quarterly loss in 18 years.

U.S. banks and thrifts set aside $60.9 billion in the first quarter to cover potential loan losses, up from $36.2 billion a year earlier.

The number of troubled banks jumped to 305, the highest number since 1994 during the savings and loan crisis, from 252 in the fourth quarter, according to the FDIC.

Thirty-six federally-insured institutions already have failed and been shut down by regulators this year, extending a wave of collapses that began in 2008. This year's tally compares with 25 in all of 2008 and three in 2007.

The failures sliced the amount in the deposit insurance fund to $13 billion in the first quarter, the lowest level since 1993. That compares with $17.3 billion a year earlier.

"Troubled loans continue to accumulate" and the costs to banks from soured loans "are weighing heavily on the industry's performance," FDIC Chairman Sheila Bair said. "Nevertheless, compared to a year ago, we see some positives."

The justices agreed to review a ruling by a U.S. appeals court that upheld the Sarbanes-Oxley Act of 2002, which set up the private sector Public Company Accounting Oversight Board.

A conservative activist group called the Free Enterprise Fund and a small Nevada accounting firm appealed to the Supreme Court in arguing that the law violated constitutional requirements on separation of powers because it failed to allow adequate control of the board by the U.S. president.

The board polices the U.S. audit industry, including the Big Four firms that review the books of major corporations: Ernst & Young LLP, KPMG, PricewaterhouseCoopers and Deloitte & Touche LLP.

A board spokeswoman said: "We remain confident that the PCAOB's structure is constitutional and look forward to our opportunity to demonstrate that in the Supreme Court."

As Congress and the president talk about ending so-called abuses in the credit card industry like sudden rate hikes and late fees, Brady Dougan is in Connecticut courts fighting claims that he owes his ex-wife nearly $1 million for being 12 days tardy with a $7.5 million divorce-related payment.

The 49-year-old chief executive, who lives in Greenwich, suffered a blow in his legal case Wednesday, when the state Appellate Court ruled 2-1 that he must abide by the late payment penalty terms in his 2005 divorce agreement with Tomoko Hamada Dougan.

Retired state Supreme Court Justice David Borden, sitting on the Appellate Court for Dougan v. Dougan, wrote that Brady Dougan is a "highly educated and financially sophisticated" person who "wants to avoid the obligation that he knowingly undertook."

Supreme Court Justice C. Ian McLachlan, appointed to the high court in January, voted with Borden in the appellate ruling. He noted that at the time of the divorce agreement, Brady Dougan's estate was worth nearly $80 million and it appeared he could have made the $7.5 million payment soon after signing the deal.

The Appellate Court overturned a Superior Court decision and sent the case back to the lower court to decide how much Dougan should pay his ex-wife.

It was not clear if Dougan planned to appeal to the state Supreme Court. A message was left Thursday with his attorney, Gary Cohen.

Lawyers also will advocate for GM franchise owners, who are under increasing pressure to go out of business as the auto maker races to downsize in an effort to avoid a government-led bankruptcy.

GM's National Dealer Council retained the law firm of Orrick Herrington & Sutcliffe LLP to help ensure dealers being forced to close get payouts they're owed from the auto maker, according to a memo sent to dealers.

The auto maker is looking to eliminate 2,600 dealers by 2010 as part of a recovery plan that aims to keep the company out of bankruptcy court by slashing costs and restructuring debt.

GM, which has said it expects minimal costs in reducing its dealer body, will inform dealers within the next two weeks whether they are among those marked to close.

A federal appeals court Tuesday revived a lawsuit alleging that a unit of Boeing Co. (BA) helped the Central Intelligence Agency seize terrorism suspects abroad and secretly transfer them to other countries for interrogation.

The ruling reinstates allegations by five men who claim that U.S. operatives - with support from Jeppesen Dataplan Inc., a Boeing unit - abducted them and sent them to other countries where they were tortured. They allege that Jeppesen provided critical flight planning and logistical support to the CIA's "extraordinary rendition" program. The men are seeking unspecified monetary damages from the company.

The Bush administration had intervened on behalf of Jeppesen and warned that allowing the lawsuit to go forward could threaten national security. The Obama administration has made the same arguments.

A federal trial judge dismissed the case last year, ruling that it could not proceed because the very subject matter of the lawsuit was a state secret. But on Tuesday, the 9th U.S. Circuit Court of Appeals in San Francisco said the trial judge was wrong to dismiss the case at such an early stage in the proceedings.

"According to the government's theory, the judiciary should effectively cordon off all secret government actions from judicial scrutiny, immunizing the CIA and its partners from the demands and limits of the law," 9th Circuit Judge Michael Daly Hawkins wrote for a unanimous three-judge panel.

Though it revived the lawsuit, the appeals court said the government could assert a state-secrets privilege to protect specific pieces of secret evidence in the case. The court sent the case back to the trial judge for further proceedings.

A Jeppesen spokesman said the company was reviewing the ruling and had no comment. The U.S. Justice Department also said it was reviewing the decision.

The American Civil Liberties Union, which is representing the plaintiffs, called the ruling historic.

"Our clients, who are among the hundreds of victims of torture under the Bush administration, have waited for years just to get a foot in the courthouse door," ACLU attorney Ben Wizner said. "Now, at long last, they will have their day in court."

A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals said that a lower court judge wrongly tossed out the lawsuit after the government asserted the case was a "state secret" that would harm national security if allowed to go forward.

The trial court judge dismissed the case before the prisoners could present evidence allegedly showing that the company's participation in the program was illegal. The Bush administration and then the Obama administration argued that the lawsuit should be thrown out before the government turns over any evidence because the nature of the legal action is itself a classified matter.

The federal government inserted itself into the lawsuit on the company's side because it said feared top-secret information would be disclosed.

The appeals court, however, said the five prisoners suing San Jose-based Jeppesen Dataplan Inc. can try to prove their case without using top-secret information that legitimately needs protection from disclosure.

Mattel sued MGA in 2004, alleging that Bratz designer Carter Bryant developed the concept for the pouty-lipped doll while working for Mattel.

After a four-year legal dispute, a jury last year awarded Mattel $10 million for copyright infringement and $90 million for breach of contract.

After the verdict, Mattel sought to block MGA from ever making the Bratz dolls, and Larson ordered the company in December to end its sales in early 2009.

MGA argued that retailers would not order the toys unless the court could guarantee they would remain in stores through most of this year. MGA got a reprieve in January when Larson ruled that the dolls could remain in stores for the rest of the year.

He left open the possibility that Mattel or a court-appointed receiver could ultimately market the dolls this year.

A hearing is scheduled for May 18 to discuss whether the receivership should be made permanent.