June 29, 2007 — The dozens of politicians aiming to double taxes on Wall Street’s biggest earnings may have to march through an angry million-man army of vocal millionaires - on two continents.

In what’s the start of a long line of outcries over tax attacks arising from both Washington and London’s Parliament, a leading private equity chief yesterday said politicians are themselves guilty of greed and “envy.”

“People are making enormous amounts of money. The envy of that is driving the debate,” said Jon Moulton, a founder of Alchemy Partners.

He told a panel of lawmakers in London that the availability of cheap debt had allowed “mediocre people to make a lot of money because the amount of ammunition available to make deals has pushed prices higher.”

Lawmakers in Washington and their British counterparts are moving simultaneously with proposals to double or hike taxes on private equity funds and other partnerships that benefit from favorable tax rules in their respective nations.

The U.S. has more than 2.3 million private partnerships that could get hit for billions on taxes if new laws close their favorable tax loopholes.

Meanwhile, the partnerships also could get soaked by a surge in investor lawsuits. Insurance giant Marsh & McLennan said it expects lawsuits to double in the next two years from investors suffering possible new losses from tax law changes and market downturns.

Stocks lifted Tuesday, after dips in manufacturing growth and construction spending raised hopes for an interest rate cut that would bring more money back into Wall Street.

Though economic data came in a bit slower than anticipated, the market built on the big gains it made Friday, when Federal Reserve Chairman Ben Bernanke said the central bank stood ready to “act as needed” to prevent credit troubles from hurting the national economy. Many investors interpreted that statement as indicating the Fed’s willingness to lower rates if necessary.

In late morning trading, the Dow Jones industrial average rose 42.35, or 0.32 percent, to 13,400.09.

Broader stock indicators also advanced. The Standard & Poor’s 500 index added 10.13, or 0.69 percent, to 1,484.12, and the technology-dominated Nasdaq composite index jumped 27.72, or 1.07 percent, to 2,624.08.

The Institute for Supply Management reported that the manufacturing sector expanded in August at a slower pace than in July, while the Commerce Department said construction activity fell in July by 0.4 percent, the largest amount in six months.

Sluggish growth supports the argument for the Fed to cut the benchmark federal funds rate when it meets on Sept. 18, after more than a year of holding rates steady.

“We haven’t had anything happen to change that outlook,” said Arthur Hogan, chief market analyst at Jefferies & Co. “Everything still points to a Fed that could lower rates.”

In recent weeks, more difficult access to credit has made it harder for consumers and businesses to borrow, stirring concerns that tighter access to money will hurt the economy. On Tuesday, in keeping with its promise to aid the markets as needed, the Fed added a relatively moderate $5 billion to the banking system through a repurchase agreement.

In late morning trading, the Dow Jones industrial average rose 42.35, or 0.32 percent, to 13,400.09.

Broader stock indicators also advanced. The Standard & Poor’s 500 index added 10.13, or 0.69 percent, to 1,484.12, and the technology-dominated Nasdaq composite index jumped 27.72, or 1.07 percent, to 2,624.08.

“Technology stocks are cheapest they’ve looked in 10 years, on an earnings multiple basis,” Hogan said, noting that the tech sector got particularly pummeled during this summer’s stock market plunge.

Also helping boost the Nasdaq, discount wireless phone service provider MetroPCS Communications Inc. () offered to acquire rival Leap Wireless International Inc. () for about $5.12 billion in stock. Leap Wireless soared $10.25, or 14 percent, to $82.75 on the news. MetroPCS rose $1.31, or 4.8 percent, to $28.60.

The Dow’s gains, meanwhile, were limited by The Home Depot Inc. (), which saw its stock fall $1.77, or 4.6 percent, to $36.54 after saying it expects to buy back $10.7 billion in stock as a result of a tender offer — a little less than halfway towards its goal of repurchasing $22.5 billion in stock.

Bond prices fell as stocks gained. The yield on the 10-year Treasury note, which moves inversely to its price, rose to 4.57 percent from 4.53 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 74 cents to $74.78 a barrel on the New York Mercantile Exchange.

Advancing issues outnumbered decliners by about 7 to 4 on the New York Stock Exchange, where volume came to 414.3 million shares.

The Russell 2000 index of smaller companies rose 5.18, or 0.65 percent, to 798.04.

Overseas, Japan’s Nikkei stock average fell 0.63 percent. Britain’s FTSE 100 rose 0.06 percent, Germany’s DAX index rose 0.19 percent, and France’s CAC-40 slipped 0.24 percent.

Though the stock market appeared to be stable Tuesday, Wall Street has entered one of its historically most difficult months as investors return from their vacations and reassess their holdings. Though last September was good for the stock market, the S&P 500 typically loses 0.7 percent during the month and 0.6 percent in Septembers that precede an election year, according to the Stock Trader’s Almanac.

Later in the week, Wall Street will be reading reports on pending sales of existing homes, the U.S. service sector, and — most importantly to investors — the Labor Department’s employment report.

“We’ve got a pretty full week of economic data,” Hogan said. “Everything’s important to us when we’re on Fed watch, right?

WASHINGTON —The Federal Reserve and other banking regulators issued special guidance Tuesday urging loan service companies to work with borrowers in danger of defaulting on their home mortgages.

The new guidelines are not mandatory, but the regulators expressed the hope that companies that collect payments on mortgages would heed the advice.

Sheila Barr, chairman of the Federal Deposit Insurance Corp., said that mortgage collectors have the authority under existing accounting and tax rules to help deserving borrowers.

“More and more consumers with subprime and hybrid mortgage products are facing the very real prospect of losing their homes through foreclosure as their payments reset and become unaffordable,” she said in a statement. “It is vital that mortgage servicers work proactively with borrowers facing much higher payments as their interest rates reset.”

The banking regulators’ guidance issued by the Fed and the other agencies followed President Bush’s announcement Friday that his administration was putting forward proposals aimed at preventing defaults expected over the next two years as the housing industry goes through a serious downturn.

The effort by Bush and the banking agencies is an attempt to deal with growing anxiety as more and more homeowners worry about losing their homes because they can no longer meet the mortgage payments.

An estimated 2 million adjustable rate mortgages are scheduled to reset by the end of 2008, going from low introductory interest rates to higher rates that in some cases will double or even triple the monthly payment.

Already there has been a rising number of defaults of subprime mortgages, loans that were extended to borrowers with weak credit histories. Those rising defaults have roiled financial markets in recent weeks as investors have worried about whether the credit markets will be destabilized by a rising tide of bad loans.

The problem facing many homeowners with adjustable-rate mortgages is that those mortgages are now resetting at higher interest rates that in some cases are causing their monthly payments to double or even triple.

The guidelines were aimed at addressing the fact that in many cases the company in charge of collecting monthly mortgage payments is not the same company that originated the loan.

The guidance said that appropriate strategies to ward off defaults could include modifying the terms of the loan or deferring payments. Those modifications could include converting the loan from an adjustable rate loan, one in which the interest rate resets are periodic intervals, to a fixed-rate mortgage, which would keep the monthly payments from going higher.

Other possible modifications would include extending the length of the loan and rolling the amount of payments that the borrower has missed into the total loan amount that must be paid off.

“Reworking these loans will achieve long-term sustainable obligations to provide stability to borrowers, investors and the marketplace,” Barr said.

The joint statement also encouraged the mortgage servicing companies to consider referring borrowers in trouble to qualified homeownership counseling services.

Fed Governor Randall Kroszner said that the joint guidance was meant to encourage the companies that collect payments on mortgages packaged into certain debt securities and sold in debt markets to “reach out to financially stressed homeowners.”

“Keeping families in their homes is a matter of great importance to the Federal Reserve,” said Kroszner, one of the Fed board members who has taken the lead in dealing with the current mortgage crisis.

In addition to the Fed and the FDIC, which insures deposits at financial institutions, the other groups who issued the statement were the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Bank Supervisors.