US stocks head lower, following drops overseas

NEW YORK — The U.S. stock market slid to start the week, following European markets lower. The Dow Jones industrial average dropped 178 points at the start of trading on Monday then slowly climbed back.

KEEPING SCORE: As of 1:05 p.m. Eastern time, the Dow was down 83 points, or 0.5 percent, to 17,030. The Standard & Poor's 500 index lost eight points, or 0.4 percent, to 1,974. The Nasdaq composite fell 13 points, or 0.3 percent, to 4,499.

The losses were modest but broad. More than two stocks fell for every one that rose on the New York Stock Exchange, and nine of the 10 industry groups in the S&P 500 traded lower, but not much. Energy stocks lost the most, 0.8 percent.

WHAT'S UP: The market has turned choppy in recent weeks, flipping between solid gains and steep losses. Since hitting a record on Sept. 18, the S&P 500 has slipped 1.4 percent.

"It seems like the last couple of weeks we've seen such a lack of direction," said John Canally, chief economic strategist at LPL Financial in Boston. "We're also way overdue for a pullback. I can't tell you how many calls we're getting now asking, 'Is this it? Is this the big one?'"

THE ECONOMY: Traders have pushed the stock market lower despite a string of encouraging economic news. On Monday the Commerce Department reported that consumer spending in August rose 0.5 percent from the previous month after no gain in July. Auto sales made up about half of the increase. It was the best result since spending expanded at the same rate in June and further evidence that the economy is on solid footing heading into the end of the year.

RESPONSE: "The consumer is back in the driver's seat where they should be, moving the economy ahead at what looks like a strong 3 percent pace," said Chris Rupkey, chief financial economist at the Bank of Tokyo in New York. "Somebody please tell the stock market. Can't ask more of the economy than that."

DEAL CHATTER: DreamWorks Animation, the studio behind "Shrek" and "Madagascar," soared 25 percent following reports that Japan's SoftBank Corp. is in talks to buy the company. DreamWorks gained $5.65 to $28.01.

SPIN OFF: NiSource surged 7 percent, the biggest gain in the S&P 500. The utility said Sunday that it plans to split off its natural-gas pipeline business into a stand-alone company. NiSource expects that new company, Columbia Pipeline Group, to be listed on the New York Stock Exchange by the middle of next year. NiSource gained $2.63 to an even $41.21.

OVER THERE: Major markets in Europe sank. France's CAC-40 fell 0.8 percent, while Germany's DAX fell 0.7 percent. The FTSE 100 of leading British companies was flat.

HONG KONG: Pro-democracy protests escalated Monday, raising concerns that business in Hong Kong might be disrupted. In a rare scene of disorder, thousands of people took to the streets over the weekend in a challenge against Beijing's decision to limit political reforms. Police fired tear gas and detained 78 protesters.

ASIA'S DAY: Concerns over the situation in Hong Kong weighed on its main stock index, the Hang Seng, which closed with a loss of 1.9 percent. Japan's Nikkei 225 index rose 0.5 percent, and China's Shanghai Composite added 0.4 percent.

BONDS: Prices for U.S. government bonds rose, sending yields lower. The yield on the 10-year Treasury note fell to 2.48 percent from 2.53 percent late Friday.

CURRENCIES: The euro edged up to $1.27 while the dollar was little changed at 109.35 yen. The dollar has gained more than 3 percent against the euro this month as the U.S. economy has gathered strength and as traders price in the prospect of interest rate increases from the Fed.

ENERGY: Benchmark U.S. crude oil rose 53 cents to $94.07 a barrel on the New York Mercantile Exchange.

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Contracts to buy US homes slide in August

WASHINGTON — Fewer Americans signed contracts to buy homes in August, suggesting that real estate sales will remain sluggish over the next few months.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index fell 1 percent over the past month to 104.7. Higher prices and weak wage growth has limited buying, as the index is 2.2 percent below its level from a year ago.

The five-year recovery from the Great Recession has been uneven, such that historically low mortgage rates have failed to propel buying back to usual levels. Price increases going back to 2013 have led to fewer homebuyers, while many families have lacked the income to save for down payments. Investors making all-cash offers on homes have also begun to retreat, reducing the total number of sales.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

The Realtors project that 4.94 million existing homes will be sold this year, down 3 percent from 5.09 million in 2013. Analysts generally associate sales of roughly 5.5 million existing homes with a healthy market.

August contracts fell in all four geographical regions — Northeast, Midwest, South and West — compared to the prior month. The index had registered overall gains in four of the previous five months.

Combined with homebuilders catering to higher-income buyers instead of the mass market, the contracts index points to trivial improvements in home sales in September.

"We hope this lost ground will be recovered gradually, but with investors disappearing from the market and homebuilders gaining market share from private sellers, it will take time," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

The housing rebound started to struggle in the middle of 2013. Mortgage rates started to rise from historic lows, even though they remain below their historic averages. Fierce winter storms delayed construction and slowed foot traffic at open houses at the beginning of 2014. Sales, however, never quite showed much strength during the summer buying season because wage growth has been so modest coming out of the downturn.

Purchases of existing homes fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August, the Realtors said last week. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward.

New-home sales did show greater strength in August, but they continue to be below the 1990s pace of more than 700,000 sales a year.

Sales of new homes climbed 18 percent last month to a seasonally adjusted annual rate of 504,000, although much of the gains were concentrated in the West. More importantly, 28 percent of the new homes sold in August cost more than $400,000, compared to just 18 percent a year earlier.

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How Marriott wants to be the Red Bull of the hotel industry

If it worked for an energy drink maker like Red Bull, why not a hotel chain operator?

Marriott International today announced the formation of an internal content studio through which it will develop, produce and distribute a slate of entertainment projects that will include web series, short films, TV shows, music events and movies.

The goal for the Bethesda, Maryland-based company is to appeal to the "next-generation traveler" -- made up mostly of millennials -- with story driven content marketing.

"We're saying we're going to be the largest publishers of life style," said David Beebe, who is running the new studio, and is now partnering up with producers on the first projects. "We're going to be the Red Bull of this category. That's where we want to get to."

With 18 brands, Marriott is the world's largest hotel company with over 4,000 hotels in 78 countries. Through its individual properties, in-room TVs, websites, mobile platforms and reward program, Marriott certainly has the network through which it can distribute entertainment.

"Everyone understands that all of us today are really media companies and content publishers," Beebe said. "It's more about how do we do it?

To pull that off, Marriott turned to two executives from Disney and ABC.

Karin Timpone, a former head of product strategy and marketing for Disney ABC Television Group's Digital Media group, was named Marriott's global marketing officer last year, and came up with a more entertainment-focused marketing approach to try something new at a time when so many consumers are distracted and glued to screens of various sizes.

"The purpose is to create and establish original content as a key component of the company's global marketing strategy," said Timpone, and get away from the traditional hotel marketing campaign which has focused on selling rooms.

"Today's consumers are in control of the message and not necessarily looking for brands to be your friends but to add value first," added Beebe, a former Disney exec, himself. "If brands can help you out and give you a good experience, you're most likely to go back to them."

In joining Marriott over the last several months, as VP, content marketing, Beebe is reuniting with Timpone, a former colleague at ABC. Beebe was a founding executive and VP of the Disney-ABC Television Group's Digital Studio, which oversees the company's WATCH ABC app and produced a digital behind-the-scenes look at the Oscars telecast.

After that, Beebe executive produced the travel series "Lucky Bastard," with Phil Rosenthal for PBS, and developed the digital series "Ultimate Proposal" and "Stunt Nation" with Vin Di Bona for Yahoo.com and digital brands "Petsami" and "Toddletable" on YouTube.

"Rather than talk at consumers, we're shifting to speaking with them using attention-grabbing content that adds value to consumers' lives by providing them with information and entertainment at the right time and in the right context," Beebe said of his new role. "While content is just part of the overall travel experience we provide, we believe Marriott can become the world's leading publisher of travel lifestyle content for the next generation. Our goal is to produce engaging content that builds communities of people passionate about travel that will drive commerce."

Three teams make up Marriott's content studio, with a creative group overseeing the company's campaigns, special projects and short-form lifestyle related content. An entertainment team manages episodic story driven content, while a live team is responsible for Marriott's social media efforts and tapping into real-time trends and pop culture conversations.

Marriott's move into entertainment comes after the company already has produced "The Navigator Live," a Renaissance Hotels-branded TV series for AXS TV that features live performances by bands and explores cities, restaurants and local attractions with the musicians. AEG co-produced the project which included groups Walk The Moon, DJ Cassidy, LaRoux and Capital Cities. The first episode aired in September.

It plans to continue to partner with producers for new projects.

Upcoming projects include the short film "Two Bellmen," an action comedy about a bellman and his hapless counterpart who prove their company loyalty when they must stop art thieves at J.W. Marriott at L.A. Live, in downtown Los Angeles. Substance Over Hype's Daniel "Malakai" Cabrera directs the project that will star William Spencer and Caine Sinclair. Another is "Marriott Rewards' Year of Surprises," a 12-webisode series, with the first hosted by basketball player Jordan Farmar. The series launches in October.

One in development is "Love Travels," that examines how love travels around the world and is set at the company's various properties in the world, like the J.W. Marriott in Dubai, the Ritz-Carlton in London or the Marriott Marquee in New York. "When they watch the story, they might say, 'I didn't know Marriott owns the Ritz,'" Beebe said.

SEE ALSO: Pepsi Launches the Creators League as In-House Studio to Be a Little More like Red Bull

For additional content, Marriott has partnered with travel vlogger Sonia Gil, behind "Sonia's Travels," which streams weekly on YouTube and Yahoo Screen; comedian and actress Taryn Southern; and Shira Lazar's online series "What's Trending."

To promote the projects, Marriott will use its website, considered the seventh largest online retail website; its mobile app; various social media channels; in-room TV network; and Marriott Rewards, a loyalty membership program that has over 45 million subscribers.

"With Marriott Rewards, that's a huge platform to build content around," Beebe said. "Those are loyal brand enthusiasts."

The company also plans to expand its existing presence on YouTube and launch additional travel-related channels.

While digital will play a significant role in how Marriott distributes its entertainment, "we want to try all formats, all platforms," Beebe said.

"Through content, we can build relationships, whether it's informing people or entertaining them," he said. "If we do this enough, they will come back to us."

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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10 things every celebrity should do for better online security

I've talked to clients and friends who have had their online accounts hacked and private information leaked. It's repugnant. It feels like a huge violation and can make people feel helpless.

Bringing massive awareness to the issue was three waves of leaks that exposed dozens of private photos of celebrities -- the latest this past Friday after the initial incident at the end of last month, and another just one week ago.

Neither I nor anyone else can guarantee anyone an absolutely safe, privacy-protected experience online with absolutely no risk of hacking or compromise. But what I have learned through my crisis work is that so few high-profile people are even employing the most basic protections that I thought it was time to provide some much needed advice:

1. Be careful what is on your phone. Try not to put any content on there that you wouldn't want splashed across the world. I know this is tough and I also know this is generational. But I also know that as a celebrity, you're a bigger target and you need to recognize and own that.

2. Who has your log-in information? Assistants, publicists, managers? The less people who have it, the more secure you are. Keep that circle small. And if there is a change to your team, you need to change passwords immediately.

3. Most major websites (Apple, Google, Facebook, Yahoo, etc.) offer something called two-step verification. It requires an additional step to verify any new device from immediately logging into your account. The additional security is well worth the effort it takes.

4. Time to change your passwords. It's best to change them regularly and you must make your passwords difficult. There are free sites to generate random passwords. And once you create this awesome password, limit who gets access to it.

5. Don't just have one email address you use for everything. I suggest multiple email addresses: 1. Professional 2. Personal (close family and friends) 3. Financial 4. If you have a child in school, create one email address for all the messages that schools and their extracurricular activities generate. Email accounts are free and smartphones accommodate multiple email addresses so you don't have any inconvenience.

6. Check your privacy preferences on social media. Most of the big sites you log into have whole sections on privacy, and you need to set parameters. And they sometimes reset without notice, so check them regularly. This will limit or expand the people who have access to your postings.

7. You are able to create a second number on your smartphone by installing Google Voice. It's a further layer of protection when you need to communicate with someone but don't feel comfortable giving your main cell number. It's easier than a second phone and callers are required to identify themselves before being connected.

8. Make sure your home Wi-Fi is secure. I've gone to celebrities' homes, and while outside my phone picked up their systems with the owners' names. Even though they were locked systems they are just too tempting. Use hidden Wi-Fi or an anonymous name.

9. Companies like the one I work with, Reputation.com, offer a comprehensive privacy program that can delete personal information from hundreds of sources.

10. I have one friend who has multiple names--he prefers his contact information in friends/colleagues' contacts be listed under an alias; things are sent to his home under another name; he checks into hotels under still another name, and financial and certain other records are under still other names. In other words--be discreet.

As I started out by saying, none of this can guarantee your privacy, but you need to think about these issues even if they pain you. You need to take action to protect yourself before anything happens or before it happens again.

Howard Bragman is founder of Fifteen Minutes PR, vice chairman of Reputation.com and a longtime crisis PR expert.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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US consumer spending up 0.5 percent in August

WASHINGTON — Americans boosted spending by a healthy amount in August, offering welcome evidence that the economy is on solid footing heading into the final quarter of the year.

Consumer spending in August rose 0.5 percent from the previous month after showing no gain in July, the Commerce Department reported Monday. It was the best result since spending also expanded 0.5 percent in June.

Helped by higher wages and salaries, income rose a modest 0.3 percent in August, slightly faster than a 0.2 percent July increase.

The acceleration in spending added to signs that the economy is sustaining strength in the current July-September quarter. Consumer spending accounts for about 70 percent of economic activity, and the lackluster showing in July had raised concerns about whether the economy would retain the momentum it built in the spring after a harsh winter.

Analysts noted that the spending growth was the strongest in six months after the effects of inflation were removed.

"The August rebound on the spending front was broad based and driven by better than expected back-to-school spending and surging auto sales," said Chris G. Christopher Jr., director of consumer economics at HIS Global Insight. "Consumers are holding up and this holiday retail sales season is looking significantly brighter compared to last year."

Economists also said the stretch of solid gains in employment this year should help boost incomes.

"With incomes starting to rise a little faster, the outlook for consumer spending on everything, including housing, is brightening," said Joel Naroff, chief economist at Naroff Economic Adivsors.

The saving rate fell slightly to 5.4 percent of after-tax income in August. That was down from a saving rate of 5.6 percent in July, which had been the highest monthly rate since December 2012.

Inflation was well contained during the month, with an inflation measure tracked closely by the Federal Reserve showing no change after a 0.1 percent July increase. Over the past 12 months, this measure of inflation is up just 1.5 percent, well below the Fed's 2 percent target.

About half of the spending growth came from a big jump in car sales in August. That helped push durable goods purchases up 1.8 percent in August after no change in July. Sales of nondurable goods fell 0.3 percent, a decline that likely reflected falling gas prices. Spending on services including utilities and rent rose 0.5 percent in August.

The government on Friday reported that the overall economy as measured by the gross domestic product grew at a rapid 4.6 percent annual rate in the April-June quarter, a significant rebound after the economy had gone into reverse in the first quarter.

Many expect that the momentum created in the spring will keep activity rising at a solid pace for the rest of this year and into 2015. The latest outlook from top forecasters with the National Association for Business Economics predicts the economy will grow at a 3 percent rate in the second half of this year and will average 3 percent in 2015, which would give the country its strongest annual growth rate in a decade.

Since the recession ended five years ago, growth has averaged a lackluster 2 percent. The optimism for higher growth stems on the belief that rising employment will generate growing incomes, which would then support more consumer spending. In addition, the significant drag from cutbacks in government spending and higher taxes are beginning to wane.

Responding to stronger job growth, consumer confidence rose in September to 84.6, the highest point in 14 months and the second highest level in the past seven years.

The Federal Reserve is continuing to pursue its ultra-low interest rate policies as a way to make sure that the forecasts for stronger growth are not suddenly derailed by rising borrowing costs. At its last meeting two weeks ago, it retained language that it expected to keep rates low for a "considerable time," which was seen as a strong signal by many economists that its key short-term interest rate will remain at a record low near zero until next summer.

The Fed has been able to maintain low rates because inflation has remained well below the Fed's 2 percent target.

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Macy's joins others in a big holiday hiring spree

NEW YORK — Macy's plans to hire about 86,000 seasonal holiday workers nationwide to bolster its stores, call centers and distribution hubs, a 3.6 percent increase from last year.

The department store chain, which also operates Bloomingdale's, said Monday that the growth is being fueled by its expanding online business. This year, about 10,000 of the total 86,000 seasonal workers will be based in eight distribution center across the country. Last year, that figure was 7,000, the company said.

Macy's recently announced new efforts to complete with online rivals. This fall, it's testing a same-day delivery service for products purchased at Macys.com, bloomingdales.com or on its mobile-enabled websites. Macy's will offer same-day delivery to customers in eight major U.S. markets — Chicago, Houston, Los Angeles, New Jersey, San Francisco, San Jose, Seattle and Washington, D.C. Bloomingdale's will offer same-day delivery to customers in four major markets— Chicago, Los Angeles, San Francisco and San Jose.

The pace of hiring at a retailer can serve as an indicator of expectations for the holiday shopping season, which accounts for 20 percent of the industry's annual sales, according to the National Retail Federation.

Hiring so far this year suggests rising optimism, and that extends to major shippers like UPS and FedEx.

UPS was caught off guard last year by spiking online orders, particularly from Amazon.com.

After announcing plans to hire 55,000 seasonal workers last year, UPS hired 30,000 more. The company this year said it would be hiring 95,000 people to handle the load. FedEx plans to hire more than 50,000 seasonal workers, 10,000 more than last year.

Wal-Mart Stores Inc., the nation's largest private employer, plans to hire 60,000 temporary workers, a nearly 10 percent increase over last year.

Kohl's plans to hire more than 67,000 seasonal workers, a 15 percent increase. It expects to hire an average of 50 associates per store, up 25 percent from a year ago.

Still, some merchants say they'll keep their holiday hiring steady with last year's level.

Target Corp. said it will hire 70,000 seasonal workers, even with 2013.

Shares of Macy's Inc., based in Cincinnati, slipped 41 cents to $59.26.

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Follow Anne D'Innocenzio at http://www.Twitter.com/adinnocenzio

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5 questions, answers on 'net neutrality'

WASHINGTON — The Federal Communications Commission is considering whether Internet providers should be allowed to cut deals with online services like Netflix, Amazon or YouTube to move their content faster.

It's a topic that has attracted record-setting public attention. The agency received 3.7 million comments on the subject — more than double the number filed to the regulatory agency after Janet Jackson's infamous "wardrobe malfunction" at the 2004 Super Bowl.

FCC Chairman Tom Wheeler — a former industry lobbyist and venture capitalist — says financial arrangements between broadband providers and content sites might be OK so long as the agreements are "commercially reasonable" and companies disclose publicly how they prioritize Internet traffic.

But not everyone agrees, with Netflix and much of the public accusing the FCC of handing the Internet over to the highest bidders.

Some questions and answers about the concept of "net neutrality."

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Q: What is "net neutrality"?

A: Net neutrality is the idea that Internet service providers shouldn't block, manipulate or slow data moving across their networks. So long as content isn't against the law, such as child pornography or pirated music, a file posted on one site will load generally at the same speed as a similarly sized file on another site. Proponents say this concept is critical to encouraging innovation and competition because it means anyone can connect to the Internet and provide a service or content without having to get permission from broadband providers or pay extra.

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Q: Doesn't everyone want a free and open Internet?

A: Yes, but not everyone agrees on how to define it. Major cable and telecom companies that sell Internet access often tout the benefits of an open Internet, saying they would lose business if their customers tried to access popular content and couldn't get it. Another problem would be retaliation. Verizon subsidiaries, for example, regularly send traffic over the networks of rival Internet service providers. It doesn't want to block or slow traffic any more than it wants to see its own traffic blocked or slowed, company officials have told regulators.

Having said that, Verizon and other broadband providers also want to ensure they have flexibility to think up new ways to package and sell Internet services. They say that's only fair, considering they are investing hundreds of billions of dollars into a network infrastructure that, so far, has prospered without much government intervention. How they would use that flexibility, though, isn't entirely clear.

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Q: Why is this being debated now?

A: Last January, a federal court overturned key portions of an open Internet regulation put in place by the Federal Communications Commission in 2010. The court said the FCC had "failed to cite any statutory authority" to keep broadband providers from blocking or discriminating against content.

That ruling sent the FCC back to the drawing board. Until the FCC can agree on new regulations that satisfy the court's requirements, Internet service providers could block or discriminate against content moving across their networks with impunity.

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Q: What's on the table?

A: Last May, FCC Chairman Tom Wheeler released a proposal that leaves the door open for paid agreements between Internet service providers and content providers — also called "paid prioritization" — so long as the agreements are "commercially reasonable." Wheeler says the FCC would step in if broadband providers act unfairly, such as providing favored access to a subsidiary.

Wheeler said he was trying to follow guidelines suggested by the court, and invited the public to comment on whether these paid arrangements should be banned altogether.

Internet activists don't like the idea because they say it gives too much power to Internet service providers and would create "fast lanes." They say the FCC should reclassify the Internet as a public utility under Title II of the 1934 Communications Act to ensure it has enough power to regulate the Internet effectively.

Title II classification is exactly what Verizon and other providers don't want. They say it would subject them to onerous regulations that would stifle investment into infrastructure at a time when the Internet is still growing.

Some Democrats have proposed legislation that would ban paid prioritization outright.

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Q: What happens next?

A: The FCC is still sifting through the record-setting 3.7 million comments filed by the public before the Sept. 15 deadline. In the meantime, the agency is hosting several "roundtables" to hear from stakeholders, and lawmakers have convened hearings on Capitol Hill.

One big question is whether the FCC will subject mobile networks to the same rules. The FCC's 2010 rules for an open Internet only applied to wired Internet access and exempted mobile networks. But that might not make as much sense considering the explosion in wireless devices in recent years.

While FCC officials had hoped to wrap up the issue by year's end, the large public response is likely to push any decision into next year.

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Road salt supply low, demand high as winter looms

DETROIT — The rewards for surviving last winter's punishing weather are tight supplies and drastic price increases for road salt across much of the U.S.

Local officials in several Midwestern states are facing prices that are twice what they were last season. In some cases, the price is five times as much.

And that's only if they can get road salt.

Replenishing stockpiles is proving to be a challenge nationwide after so much salt was used last winter, when supplies were diminished by frigid weather and record snowfall.

From Boston to Raleigh, North Carolina, many cities are increasing their stocks by at least 20 percent.

But some local governments are avoiding the problem, thanks to previous contracts or secured bids, or simply being close to salt sources.

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US grants $450M to link job training to employers

WASHINGTON — Vice President Joe Biden announced almost a half-billion dollars of grants Monday to community colleges working with employers on job training.

Linking training to industry demand is key to the Obama administration's strategy for improving wages and reducing unemployment.

Massasoit Community College in Massachusetts and Wisconsin's Chippewa Valley Technical College received the largest grants of about $20 million each.

A Maryland program will receive $15 million to partner with companies like Raytheon and IBM to train workers with little education for jobs in cybersecurity or information technology. Schools in Kentucky will get $10 million to expand online learning for degrees in computer and medical fields.

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VA settles complaints by 3 Phoenix whistleblowers

WASHINGTON — The Veterans Affairs Department said Monday it has reached financial settlements with three employees who faced retaliation after filing whistleblower complaints about the troubled Phoenix VA hospital.

The employees were among the first to report widespread wrongdoing at the Phoenix hospital, including chronic delays for veterans seeking care and falsified waiting lists covering up those delays. Similar problems were soon identified at other VA medical facilities across the country in a scandal that forced the ouster of former VA Secretary Eric Shinseki and a new law overhauling the agency and making it easier to fire senior officials.

Dr. Katherine Mitchell, a former co-director of emergency care at the Phoenix hospital; Paula Pedene, the hospital's former chief spokeswoman; and Damian Reese, a program analyst, all filed retaliation complaints with the independent Office of Special Counsel. The counsel's office and the VA announced the settlements Monday in separate statements.

The three employees will remain with the VA and received what the special counsel's office called "full and fair relief." Exact terms of the settlements were not disclosed.

Mitchell and Pedene have accepted new assignments, while Reese will continue as a program analyst at the Phoenix hospital. Mitchell will oversee the hospital's quality of patient care, while Pedene will work in the communications office of the Veterans Health Administration, which oversees VA health care.

"Dr. Mitchell, Ms. Pedene and Mr. Reese followed their consciences and reported wrongdoing, and their efforts have improved care and accountability at the VA," said Special Counsel Carolyn Lerner.

Lerner applauded VA Secretary Robert McDonald and other VA leaders for acting quickly to resolve the Phoenix cases and taking steps to change the agency's culture, which she said has allowed and even encouraged retaliation against those who filed complaints.

By allowing the three "courageous employees to return to successful careers at the VA," the agency's current leaders are "sending a clear message: Whistleblowing should be encouraged, not punished," Lerner said.

McDonald said in a separate statement that the VA takes whistleblower complaints seriously and will not tolerate retaliation against those who raise issues that may enable VA to better serve veterans.

"We depend on VA employees and leaders to put the needs of veterans first and honor VA's core values of 'integrity, commitment, advocacy, respect and excellence,' " he said.

Pedene was removed from her $106,000-a-year job in December 2012 and transferred to the hospital library. In April, she was assigned to work in a windowless basement where she had few if any duties. "A horrible way to live" is how she described the experience in a phone interview Monday.

"I was humiliated every day," Pedene said. "Although I am looking forward to new opportunities I feel saddened I am not going to be able to do my public affairs role as I have done in Phoenix for the past 20 years."

Follow Matthew Daly on Twitter: https://twitter.com/MatthewDalyWDC

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