California's highest court on Monday ruled that Bank of America Corp need not pay a potential $1 billion or more to customers who claimed the bank illegally raided Social Security benefits to collect fees.

Plaintiffs in the class-action case had accused the largest U.S. bank of dipping into their Social Security direct deposit accounts between 1994 and 2003 to collect fees for overdrafts and other debts.

A San Francisco trial court in 2004 ordered the Charlotte, North Carolina bank to pay $284.4 million of damages, plus up to $1,000 to each customer who suffered substantial emotional or economic harm. The case was filed on behalf of more than 1.1 million customers, many of whom were elderly or disabled.

In 1974, the California Supreme Court had ruled that a bank may not satisfy a credit card debt by deducting fees owed from a separate checking account containing deposits that "derived from unemployment and disability benefits."

But in Monday's unanimous ruling, the court distinguished the current case by saying the transactions at issue occurred "within a single account" rather than in multiple accounts.

For many Americans who could use a bailout just to balance their checkbooks and make it through the month, the thought of their tax dollars going to million-dollar bonuses for AIG executives is enough to make them furious.

"It's difficult to comprehend how screwing up gets you rewards," said George Padilla, a teacher in El Paso, Texas. "I tell my students that if they don't put in the effort and get passing grades, I will not pass them." He added: "I use the old `In the real world ...' line to point out that you would be fired if you didn't do well in your job. Well, I guess `the real world' proved me wrong."

Workers, business owners and taxpayers interviewed across the country this week fumed over the $165 million payout, with some questioning whether the government should even be in the business of bailing out Wall Street — an attitude that could dangerously undermine further efforts by the Obama administration to prop up the economy.

"Wasn't Obama supposed to fix this?" said Maria Panza-Villa, a mother of two in Hillsboro, Ore. She said she has lost three jobs since November as one employer after another folded.

The intensity of the populist fury became plain when a member of the Senate, Iowa Republican Charles Grassley, actually suggested AIG executives should follow the Japanese warrior example and resign or commit suicide.

While many ordinary Americans said Grassley's comments were out of line, others weren't so sure.

AIG executives are "not going to bleed to death because I'm not sure that they've got blood. I think it's ice water that runs through their veins," said Gary Jarvis of Herron, Ill., who lost his job as a forklift driver in a factory closing two years ago. "To me, it's just stunning to think they're not even ashamed of their disgusting greed."

Others note Wall Street typically finds ways to exploit loopholes and figure this time will be no different.

"You've got a lot of people on Wall Street who are not executives but still make extremely big salaries," said Mark Borges, a principal at compensation consulting firm Compensia Inc. "I suspect this doesn't impact them at all."

The new rules require banks that receive "exceptional assistance" from the government to cap salaries, including cash bonuses, at $500,000 for senior executives.

If those firms wanted to pay their executives more, they would have to use stock that couldn't be sold until the bank had repaid the bailout money. The rules apply only to the future, not to banks that have already received bailout money.

Healthier banks that will receive bailout money technically would also face the $500,000 cap. But they could avoid it by providing full public disclosure and holding a nonbinding shareholder vote.

The White House is trying to stem rising public concern that financial firms are using billions in federal bailout dollars to pay for executive bonuses, corporate junkets and other perks.

The full 10th U.S. Circuit Court of Appeals will hear arguments Thursday as judges review a decision overturning Joe Nacchio's April 2007 conviction.

Prosecutors argued he sold $52 million worth of stock when he knew Denver-based Qwest Communications International Inc. was at risk while other investors did not.

In March, a three-judge panel of the appeals court ruled that the trial judge improperly barred testimony from a defense witness. Prosecutors sought a review by the full appeals court, which granted the request.

Still pending is a civil lawsuit the Securities and Exchange Commission filed against former Qwest executives, including Nacchio.

An investigation by the Federal Bureau of Investigation and the U.S. Attorney for the Western District of Texas focused initially on vendor kickbacks and has involved several local elected officials and business leaders, some of whom were involved in overseeing bond-related matters for the city and area school districts. Some of the local officials have pleaded guilty in the case.

The latest El Paso pleadings come as federal officials pursue a yearlong nationwide criminal probe into alleged widespread bid-rigging in the municipal bond industry. Several Wall Street firms that underwrite the deals as well as insurers that handle part of the business have reported receiving subpoenas.

It isn't clear how the El Paso case, which is still open, is related to other parts of the bid-rigging investigation.

Many details of the El Paso case remain under seal. Documents filed in one of the first parts of the case to become public include references to meetings earlier this year at which the Bear Stearns bankers, not identified by name, discuss paying for a personal trip to New York for one local official implicated involved in the case and his wife. The documents also describe local officials' discussions allegedly seeking bribes from another financial firm handling local bond deals, First Southwest Co., of Dallas, in order to keep their county contract. First Southwest was later fired, prosecutors suggest in court papers, for refusing to pay.

Russell Sherman, a Bear Stearns spokesman, said the men are no longer employees, adding, "Bear Stearns is not the subject of the inquiry. We will continue to cooperate with the authorities regarding this matter."

First Southwest CEO Hill A. Feinberg on Friday said the company has been assured that it isn't a target of the El Paso public-corruption investigation. "We remain ready, willing, and able to cooperate with the federal government, if contacted," he said.

The two officers placed on paid leave for using a Taser on a University of Florida student explained Wednesday why they felt it necessary to use a stun gun on the unruly student.

Andrew Meyer, 21, refused to sit down at the end of a question-and-answer session with Sen. John Kerry and insisted that his questions be answered, they said.

The officers added that Meyers' rant, directed toward Kerry after the question and answer period was over, included a reference to a sex act.

Police also suggested Meyer staged the incident. They said he handed a woman next to him a camera and asked her, "are you taping this? Do you have this? You ready?"

When, police said, Meyer would not be quiet to let Kerry answer, his microphone was cut off and organizers of the event asked officers to escort him out.

"The man lifted me up and pushed Officer Wise to avoid being taken in to custody," Officer Nicole Mallo said.

When more officers were called in, they said he continued to "push, kick and elbow the officers."

When officers were only able to place one handcuff on Meyer, Sgt. Eddie King gave the order to use the Taser.

"One contact Tase to the man's left shoulder was deployed," King said.

One officer said he drew his Taser on Meyer but was ordered not to use it.

Police said it was only after his continued, active, physical resistance to being arrested that the order was given to Tase Meyer.

On his way to jail, Meyer became lighthearted, police said.

According to the police report, Meyers told officers: "I am not mad at you guys, you didn't do anything wrong, you were just trying to do your job."

Meyer's lawyer said the Taser was unnecessary and promised to vigorously fight the charges police filed, which include inciting a riot and disrupting a school function.

The videotaped incident in Gainesville, Fla., has rekindled a national debate over the controversial stun guns.

A spokeswoman for the U.S. attorney in the Southern District of New York, which is overseeing the case, declined to comment. An attorney for Mr. Makov couldn't be reached.

Mr. Makov would be the second person to plead guilty in the case. He is one of two people who didn't work at KPMG, but his guilty plea should give the government's case a boost. Federal prosecutors indicted 19 individuals on tax-fraud charges in 2005 for their roles in the sale and marketing of bogus shelters.

The government billed the case as the largest tax-fraud case in U.S. history. But last month the federal judge overseeing the case dismissed the charges against 13 of the defendants after finding that prosecutors violated their constitutional rights by pressuring KPMG to cut off payment of their legal fees.

The government denies using any undue influence in KPMG's legal fee decision and plans to appeal. If the judge's ruling is reversed, the 13 former defendants could be indicted again.

For now, opening statements in the trial against the remaining defendants is scheduled for Oct. 16. Two of the defendants -- John Larson and Robert Pfaff -- left KPMG and formed Presidio Advisory Services, where Mr. Makov worked. Prosecutors allege the firm earned fees helping to sell bogus tax shelters. The other defendants are R.J. Ruble, a former law partner at Sidley Austin LLP, and David Greenberg, a former partner at KPMG.

Each of the remaining defendants has pleaded not guilty and is fighting the charges.

KPMG admitted to criminal wrongdoing but avoided indictment that could have put the tax giant out of business. Instead, the firm reached a deferred-prosecution agreement that included a $456 million penalty. Last week, the federal court in Manhattan received $150,000 from Mr. Makov as part of a bail modification agreement that allows him to travel to Israel.