PRESS DIGEST - Wall Street Journal - May 16

May 16 (Reuters) - The following were the top stories in The Wall Street Journal on Friday. Reuters has not verified these stories and does not vouch for their accuracy.

* The Federal Reserve is giving more thought to actively heading off financial bubbles in the wake of the housing and credit crises. A group of researchers Ben Bernanke hired when he was at Princeton found that investment mania can persist even though many smart investors see it coming.

* The Federal Aviation Administration is looking into why American Airlines ordered mechanics to start skipping certain long-established safety inspections to detect damage to planes from suspected lightning strikes, according to internal company and agency documents.

* Central-bank officials in the U.S. and U.K. are paying more attention to the London interbank offered rate, or Libor, after unusual moves in the rate and concerns about its accuracy.

* Billionaire investor Carl Icahn filed a proxy slate to unseat Yahoo Inc's (YHOO.O: Quote, Profile, Research, Stock Buzz) board, accusing its directors of acting "irrationally" and setting the stage for what could be a battle for control of the company. Yahoo defended its current board and its efforts to maximize shareholder value.

* China predicted that the death toll from mega-earthquake will top 50,000, as the government approved the first group of foreign experts to help with relief efforts -- an acknowledgement that the disaster is proving too big to handle alone.

* John McCain said that if elected president, he would win the Iraq war and bring most U.S. troops home by January 2013, offering his first date for withdrawal and refuting Democratic charges he would keep the U.S. mired there indefinitely.

* U.S. refiners are trying to maximize output of more-profitable diesel fuel, rather than gasoline production, as consumers cut back on energy consumption. Demand for diesel is growing briskly in the developing world.

* California's high court overturned a gay-marriage ban. The ruling makes it the second state, after Massachusetts, to give same-sex couples the right to wed. Lawyers said California's size and national influence make the decision the most important legal victory to date for proponents.