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Marcy Gordon
Associated Press|ap.org

Pete Yost and
 Marcy Gordon, Associated Press

WASHINGTON (AP) — The government has reached a $16.65 billion settlement with Bank of America over its role in the sale of mortgage-backed securities in the run-up to the financial crisis, the Justice Department announced Thursday.

The deal calls for the bank, the second-largest in the U.S., to pay a $5 billion cash penalty, another $4.6 billion in remediation payments and provide about $7 billion in relief to struggling homeowners. read more »

 

WASHINGTON — One in four consumers found an error in a credit report issued by a major agency, according to a government study released Monday.

The Federal Trade Commission study also said that 5 percent of the consumers identified errors in their reports that could lead to them paying more for mortgages, auto loans or other financial products.

The study looked at reports for 1,001 consumers issued by the three major agencies — Equifax, Experian and TransUnion. The FTC hired researchers to help consumers identify potential errors. read more »

 

WASHINGTON — A government watchdog says U.S. taxpayers stand to lose $27 billion from the 2008 financial bailout, up from an estimate of $22 billion made in the fall.

A report issued Jan. 30 by the special inspector general for the Troubled Asset Relief Program (TARP) says the estimate is higher because of increased losses for the Treasury Department on sales of shares in bailed-out companies.

Ally Financial, the former financial arm for General Motors, still owes $14.6 billion of the $17.2 billion in aid it received. The report says taxpayers can expect to lose $5.5 billion on that investment because of the company’s losses on risky mortgages issued ahead of the financial crisis. read more »

 

WASHINGTON — Goldman Sachs and Morgan Stanley will pay a combined $557 million to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.

The agreements announced Jan. 16 with the Federal Reserve were similar to deals struck earlier this month with 10 other major banks and mortgage lenders. Combined, the 12 firms will pay more than $9 billion.

Goldman will pay $330 million. Morgan Stanley is paying $227 million.

The settlements could compensate hundreds of thousands of Americans whose homes were seized because of abuses such as “robo-signing,” when banks automatically signed off on foreclosures without properly reviewing documents. read more »

 

WASHINGTON — A federal watchdog has found that government-controlled Fannie Mae and Freddie Mac may have lost more than $3 billion from big banks’ alleged rigging of a key interest rate.

The staff of the inspector general for the Federal Housing Finance Agency, which oversees the two mortgage giants, gave the estimate in an internal memo obtained by The Associated Press. It recommended that the FHFA consider suing banks over the LIBOR rate.

Switzerland’s largest bank, UBS, agreed last week to pay $1.5 billion in fines, becoming the second bank fined for trying to manipulate LIBOR. The rate is used to price trillions of dollars in contracts including mortgages and credit cards. read more »

 

WASHINGTON — U.S. banks are enjoying their best profits in six years and are lending a bit more freely. The gradual improvement suggests that the industry will sustain its healing from the worst financial crisis in decades and help strengthen the economy.

The industry earned $37.6 billion from July through September — a 6.6 percent increase from its earnings in the same quarter last year.

For the first time since 2009, the stronger earnings were due mainly to higher revenue rather than to less money set aside by the banks to cover losses, data issued by the Federal Deposit Insurance Corp. showed. And loans to consumers rose nearly 1 percent from the July-September period of 2011. read more »

 

CEOs from more than 80 major U.S. companies are pressing Congress to reduce the federal deficit by raising taxes and cutting spending. The deficit and how to tame it has become a key theme in the presidential campaign.

They warned in a statement issued Oct. 25 that the uncertainty spawned by the deficit, which has topped $1 trillion for four consecutive years, is dampening businesses’ hiring and investment and stifling the fragile economic recovery.

The CEOs said the solution requires a combination of higher taxes and reduced government spending including on entitlement programs such as Medicare and Medicaid. They also seek federal investment in infrastructure and math and science education. read more »

 

Average U.S. rates on fixed mortgages fell to fresh record lows for the second straight week. The declines have led more homeowners to refinance, a trend that could help jumpstart the economy.

Mortgage buyer Freddie Mac said Oct. 4 that the rate on the 30-year loan dropped to 3.36 percent. That’s down from last week’s rate of 3.40 percent, which was the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.69 percent, down from last week’s record low of 2.73 percent.

Rates are falling after the Federal Reserve started buying mortgage bonds to help strengthen a housing recovery that began earlier this year. The Fed plans to continue the program until there is substantial improvement in the job market. read more »

 

WASHINGTON — American Express Co. is paying $112.5 million in refunds and fines to settle regulators’ accusations that it charged unlawful late fees and deceived customers to pressure them to pay off old debts or buy extra credit card services.

The company agreed to the settlements announced Monday by four federal agencies, including the Federal Reserve and the Consumer Financial Protection Bureau, and Utah regulators.

American Express is refunding $85 million to about 250,000 customers and is paying $27.5 million in civil fines.

The agencies said American Express violated federal laws prohibiting deceptive practices by using false statements to get customers to settle old debts. The regulators say that included falsely telling customers that if they agreed to settlements to partially pay off their debts, the remaining balance would be forgiven. read more »

 
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