WASHINGTON — The economy sank at a pace of just 1 percent in the second quarter of the year, a new government report shows. It was a better-than-expected showing that provided the strongest signal yet that the longest recession since World War II is finally winding down.

The dip in gross domestic product for the April-to-June period, reported by the Commerce Department yesterday, comes after the economy was in a free fall, tumbling at an annual rate of 6.4 percent in the first three months of this year. That was the sharpest downhill slide in nearly three decades.The economy has now contracted for a record four straight quarters for the first time on records dating to 1947, underscoring the grim toll of the recession on consumers and companies.

HOUSE VOTES TO HALT HUGE FINANCIAL-INDUSTRY BONUSES

WASHINGTON — Bowing to populist anger, the House voted yesterday to prohibit pay and bonus packages that encourage bankers and traders to take risks so big they could bring down the entire economy.
Passage of the bill on a 237-185 vote followed the disclosure a day earlier that nine of the nation’s biggest banks, which are receiving billions of dollars in federal bailout aid, paid individual bonuses of $1 million or more to nearly 5,000 employees.
Aware of voter outrage about the bonuses, Republicans were reluctant in yesterday’s debate to push back, even though they voted overwhelmingly against the bill.
The White House and Senate Democrats haven’t endorsed the measure, leaving its prospects uncertain. The Senate Banking Committee planned to take up the proposal in the fall as part of a broader bill overhauling financial regulations.

SWITZERLAND, U.S. SETTLE OVER DIVULGING DEPOSITORS

MIAMI — Days before a high-stakes trial with implications for bankers worldwide, the U.S. and Swiss governments said yesterday they reached a hard-fought settlement in the U.S. effort to get names of thousands of wealthy Americans suspected of evading taxes by hiding billions of dollars with Swiss banking giant UBS AG.
Both governments and UBS said details would remain confidential until a written settlement was finalized, likely within the next week.
A trial scheduled to begin Monday was canceled by U.S. District Judge Alan S. Gold, who set an Aug. 7 conference call to go over a proposed final agreement.
Shares of UBS rose 95 cents, or 6.9 percent, to close at $14.74 yesterday.