NEW YORK, Dec. 5 (UPI) -- U.S. stock indexes were lower Friday as the Labor Department said unemployment had reached 6.7 percent in a recession now digging it its heels.

The U.S. employment picture includes 533,000 non-farm jobs lost in November, 403,000 lost in October and 320,000 in September, the department said.

In midmorning trading, the Dow Jones industrial average were down 1.26 percent, 105.93 points, to 8,270.31. The Standard and Poor's 500 fell 1.27 percent, 10.73 points, to 834.49. The Nasdaq composite index lost 14.20 points, 0.98 percent, to 1,431.36.

The benchmark 10-year U.S. Treasury bond fell 14/32 to yield 2.601 percent.

The dollar was mixed Friday. The euro fell to $1.2683, compared to $1.2788 Thursday. Against the Japanese yen, the dollar fell to 92.15 yen from 92.28 yen Thursday.

In Tokyo, the Nikkei average lost 6.73 points to 7,917.51, off 0.08 percent.

Frank: 'To do nothing would be a disaster'

WASHINGTON, Dec. 5 (UPI) -- Allowing the U.S. automakers to declare bankruptcy would worsen the credit crisis, Rep. Barney Frank, D-Mass., said Friday during an auto bailout hearing.

If the the Big Three Detroit automakers are permitted to "stop paying their debts" through bankruptcy, "it would greatly exacerbate the credit crisis," Frank said in his opening remarks at the House Financial Services Committee hearing.

"For us to do nothing ... in the midst of the worst credit crisis and unemployment situation in the last 70 years would be a disaster, said Frank, who is chairman of the committee.

Chief executive officers from Ford Motor Co., General Motors Corp. and Chrysler LLC were on Capitol Hill for a second round of hearings on their request for $34 billion in federal assistance. The testified before the Senate Banking Committee Thursday.

Frank recognized that the automakers and the autoworkers union have worked to reorganize business plans and offer concessions to help reduce the red ink.

Ranking minority member Rep. Spencer Bachus of Alabama said the financial crisis has overwhelmed "the reality ... that Detroit is making good cars."

U.S. automakers must not be allowed to fail because it would have a detrimental effect on the economy, Bachus said.

"Having said that," he said. "the No. 1 obligation is to the taxpayers. Government has no money of its own. In order to give ... it has to take."

Job picture deteriorates sharply in month

WASHINGTON, Dec. 5 (UPI) -- The U.S. employment picture eroded sharply in November with unemployment jumping from 6.5 percent to 6.7 percent, the U.S. Labor Department said Friday.

Nonfarm jobs employment dropped a precipitous 533,000 jobs in the month in a report that included revised figures for September and October, when the department said 320,000 and 403,000 jobs were lost, respectively.

November's decline was worst monthly drop since 602,000 jobs were lost in December 1974.

Since the start of the recession in December 2007, 1.9 million U.S. jobs have disappeared, the department said.

The report said employment in "all major industries" declined in the month.

The employment picture includes 10.3 million U.S. workers listed as unemployed.

Unemployment rates rose for adult men to 6.5 percent and for adult women to 5.5 percent.

Among whites, 6.1 percent are unemployed, while the unemployment rate for blacks rose to 11.2 percent. Unemployment for Hispanics was "little changed" in the month at 8.6 percent. The unemployment rate for Asians rose to 4.8 percent, the Labor Department reported.

Construction lost 82,000 jobs in November. Manufacturing lost an additional 85,000.

Employment in transportation equipment "edged up" by 27,000 the report said, owing to machinists ending a strike at Boeing.

Primary Fund offers investors Catch-22

NEW YORK, Dec. 5 (UPI) -- The Reserve Primary Fund has said if push comes to shove it will use its investors' money to fight lawsuits brought on by the investors themselves.

In September, the fund "broke the buck" by reporting share prices falling to less than $1, The New York Times reported Friday.

But, in response to the lawsuits filed against the firm for mismanaging their investments, fund managers have offered investors a choice of either accepting a potential payment of 98.5 cents on the dollar or having their own investments pay for court battles, which would cut into their returns even further.

"The Reserve's plan is ingenious," said attorney Harvey J. Wolkoff, a lawyer with Ropes & Gray in Boston, which is handling a suit filed against The Reserve for Ameriprise Financial.

"Their plan is that their own investors reimburse them for their wrongdoing," Wolkoff told the Times.

The Primary Fund collapsed soon after Lehman Brothers filed for bankruptcy in September.

Although only $785 million of the fund's $64 billion in assets was tied to Lehman Brothers, the managers froze redemptions and said they would liquidate the Primary Fund the day after Lehman Brothers fell.