Bank of America in $8.5 billion mortgage settlement
NEW YORK (AP) _ Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.
The deal, announced Wednesday, comes after a group of 22 investors demanded that the Charlotte, N.C., bank repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.
The group, which includes the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, argued that Countrywide enriched itself at the expense of investors by continuing to service bad loans while running up servicing fees.
Bank of America, which bought Countrywide in 2008 for $4 billion, has denied those claims.
Greece passes steep cuts as riots seize capital
ATHENS, Greece (AP) _ Greece fended off a bankruptcy that threatened to roil global financial markets, approving severe spending cuts and tax increases Wednesday in the face of violent protests by Greeks who say they have suffered enough.
The package of austerity measures would keep bailout money flowing to Greece from the rest of the world. It would free $17 billion in fresh loans, although the money will only be enough to see the nation through September.
Investors around the world cheered the news, but protesters, fighting tear gas, hurled whatever they could find at riot police and tried to blockade the Parliament building.
FDA panel: Revoke drug's breast cancer approval
SILVER SPRING, Md. (AP) _ A panel of cancer experts has ruled for a second time that Avastin, the best-selling cancer drug in the world, should no longer be used in breast cancer patients, clearing the way for the government to remove its endorsement from the drug.
The unprecedented vote Wednesday by the Food and Drug Administration advisory panel comes less than a year after the same panel reached the same conclusion.
The six members of the FDA oncology drug panel voted unanimously that Avastin is ineffective, unsafe and should have its approval for breast cancer withdrawn.
Fed orders banks to lower retailers' debit fees
WASHINGTON (AP) _ The Federal Reserve said Wednesday that banks can only charge retailers 21 cents each time they swipe a debit card.
The board raised the cap from its initial proposal of 12 cents per swipe. Banks and big payment processors like Visa and MasterCard convinced the Fed that was too low to cover the cost of handling transactions, maintaining networks and preventing fraud.
Banks currently have no limit and charge an average of 44 cents per swipe.
The Fed voted 4-1 to adopt the rule, which was required under the financial regulatory law enacted last year. Fed Gov. Elizabeth Duke opposed the rule. It takes effect Oct. 1, later than expected.
IMF urges US lawmakers to raise $14.3 trillion debt limit
WASHINGTON (AP) _ The International Monetary Fund warned U.S. lawmakers Wednesday that a failure to raise the nation's borrowing limit would pose serious risks to the global economy and financial markets.
The U.S. last month reached its $14.3 trillion borrowing limit. The U.S. Treasury has said that it can keep the country operating for a couple months by employing various bookkeeping maneuvers. But if Congress doesn't raise the borrowing limit by Aug. 2, Treasury Secretary Timothy Geithner has said the country will default on its debt.
John Lipsky, acting managing director of the IMF, said a default "would have very serious and far-reaching consequences." It would rattle markets and send interest rates soaring, making mortgages and other consumer loans more expensive. Lipsky expressed confidence that Congress will reach a deal before that happens.
General Mills fourth-quarter profit climbs but outlook soft
General Mills Inc., one of the nation's largest food companies, reported Wednesday that its fourth-quarter profit rose 51 percent as higher prices boosted its revenue.
However, the maker of Cheerios, Lucky Charms and other foods warned that those prices hikes will not be enough to offset higher ingredient and energy costs this fiscal year, and it issued an outlook that fell short of expectations.
Food makers have struggled with soaring costs on everything from wheat to fuel and they've raised prices to cope.
KB Home stung by weak construction and charges
NEW YORK (AP) _ KB Home losses more than doubled in the second quarter with fewer homes being built and more than $30 million in charges.
The results were worse than Wall Street expected and shares slid 15 percent Wednesday.
The Los Angeles company said it lost $68.5 million, or 89 cents per share, in the three months ended May 31. That compares with a loss of $30.7 million, or 40 cents a share, in the same period last year. The results include $20.6 million in charges for inventory impairments and land option contract abandonments, and a loss of $14.5 million on a loan guarantee.
Monsanto posts $680 million profit in third quarter
ST. LOUIS (AP) _ Monsanto Co. says higher sales of genetically engineered seeds helped it boost its third-quarter profit 77 percent, as the company convinced more farmers to try its pricier new generation of corn and soybean seeds.
The St. Louis company reported Wednesday its net income rose to $680 million, or $1.26 per share, for the quarter ended May 31, compared with $384 million, or 70 cents a share, a year ago. It says revenue increased 21 percent to $3.59 billion.
The results widely beat expectations, with analysts surveyed by FactSet had expected net income of $1.10 per share on revenue of $3.4 billion.
News Corp sells MySpace for $35M mostly in stock
LOS ANGELES (AP) _ News Corp. has sold struggling social networking site MySpace for $35 million, mostly in stock, according to a person familiar with the matter. The deal values MySpace at a fraction of what News Corp. paid for the site six years ago, and paves the way for large scale layoffs and an uncertain future.
The sale to online advertising network operator Specific Media is expected to close later Wednesday, a day before the end of News Corp.'s fiscal year. News Corp. will maintain less than a 5 percent stake in the site, said the person, who was not authorized to speak publicly and spoke on condition of anonymity.
About half of MySpace's 500 workers will be laid off, the person said.
Goldman Sachs warns that layoffs could reach 230
NEW YORK (AP) _ Goldman Sachs Group Inc. says it could lay off as many as 230 workers by March of next year.
The New York investment firm notified the New York State Department of Labor of the possible layoffs in a notice filed on Wednesday. In the filing, Goldman said the layoffs would happen between now and March 31, 2012. The company simply cited economic reasons for the layoffs.
The investment bank in April reported that its first-quarter income fell 72 percent to $908 million. The drop came after the bank paid $1.64 billion in dividends to Berkshire Hathaway Inc.
By The Associated Press(equals)
The Dow Jones industrial average rose 72.73 points, or 0.6 percent, to close at 12,261.42 Wednesday. The Standard & Poor's 500 index rose 10.74, or 0.8 percent, to 1,307.41. The Nasdaq composite rose 11.18, or 0.4 percent, to 2,740.49.
Benchmark crude settled at $94.77 per barrel Wednesday on the New York Mercantile Exchange, up $1.88. Over two days, oil has nearly recovered the loss from last Thursday when the U.S. and other oil-importing countries said they'd dump emergency oil supplies onto the market.
Brent crude, which is used to price many international oil varieties, also rebounded. Although at $112.40 per barrel, it's still about 2 percent below where it was last week.
In other Nymex trading, heating oil for July delivery added 9.45 cents to settle at $2.9202 per gallon and natural gas for August delivery dropped 0.39 cents to settle at $4.315 per 1,000 cubic feet.