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US
sues BofA for $1bn over home loans - (www.ft.com)
The US Department of Justice
sued Bank of America for more than $1bn on
Wednesday, alleging the bank committed civil fraud by selling defective home
loans to US government-backed mortgage companies. The lawsuit said that
Countrywide, the California-based mortgage originator that BofA bought in 2008,
implemented a process called the “Hustle” to deal with loans at high speed
without checking their quality. Thousands of loans were then sold to Fannie Mae and Freddie Mac, which guarantee most US
mortgages, and later defaulted, the Justice Department’s lawsuit claims. “As
described, Countrywide and Bank of America systematically removed every check
in favour of its own balance – they cast aside underwriters, eliminated quality
controls, incentivised unqualified personnel to cut corners, and concealed the
resulting defects,” said Preet Bharara, US attorney for the southern district
of New York. “These toxic products were then sold to the government sponsored
enterprises as good loans.”
Robin
Hood tax gains traction in Europe - (money.cnn.com) Supporters say the controversial move will
raise billions of euros, by applying a small tax on transactions in financial
markets. Robin Hood may not have roamed Sherwood Forest for hundreds of years,
but fans of his "steal from the rich, give to the poor" ethos appear
to have made inroads into European tax policy. The European Union's executive
body said Tuesday that 10 members of the 27-nation group had agreed to move
forward with a Financial Transaction Tax, also known as the Robin Hood tax. Supporters
say the controversial move will raise billions of euros for cash-strapped
governments by applying a small tax on transactions in financial markets. But
critics say imposing the tax will drive investors away and act as a break on
economic growth. Nobel Prize wining economist James Tobin first proposed taxing
transactions in the foreign exchange market in the 1970s to limit volatility and
curb speculation. The idea of taxing financial transactions more broadly really
started to gain ground earlier this year, when former French President Nicolas
Sarkozy began touting it as a way out of Europe's financial crisis.
Cheap Natural Gas Gives New Hope to the Rust Belt - (online.wsj.com) Three decades after being
devastated by the closing of steel mills, this gritty river valley is hoping
its revival will come from cheap natural gas. The hope doesn't rest on drilling
rigs, but on a multibillion-dollar chemical plant that Royal Dutch Shell RDSB.LN +0.78% PLC is considering
building here because of a flood of domestically produced natural gas.
Community leaders are touting the plant as the first step toward reviving a
manufacturing industry many thought was gone for good. "I never would have
expected that as a region we'd have a second chance to be a real leader in
American manufacturing," Bill Flanagan of the Allegheny Conference on Community
Development, a regional business group, told a crowd of locals who came to hear
about the chemical plant. "Suddenly we're back in the game." It isn't
just Beaver County reaping the benefits of cheap gas. Plunging prices have
turned the U.S. into one of the most profitable places in the world to make
chemicals and fertilizer, industries that use gas as both a feedstock and an
energy source. And they have slashed costs for makers of energy-intensive
products such as aluminum, steel and glass.
Zynga doing layoffs,
closing studios; Seattle intact - (www.seattletimes.com)
Struggling social games giant
Zynga is announcing sweeping layoffs and studio closures but it appears the
company's engineering office in Seattle was largely spared. Word of the layoffs
surfaced earlier and was confirmed in an internal memo to employees from
founder Mark Pincus. The memo said the
company is cutting 5 percent of its full-time workers and closing its studio in
Boston. That would be around 160 of its roughly 3,200 positions. Also proposed
is the closure of studios in Japan and the United Kingdom. The company is
phasing out 13 older games and cutting back investment in The Ville, leading to
layoffs at its Austin, Texas, studio. Zynga's Seattle office is relatively safe
because it's working on new game genres such as arcade titles, not the older
franchises that are being trimmed back. Zynga opened the Seattle office in
Pioneer Square last year and now has about 60 employees here. It was planning
to expand the office, at least before the company lost some of its momentum.
Facebook's earnings report confirmed the slide, disclosing that its revenue
from Zynga were down 20 percent.
Eurozone debt hits 90 percent of its economy - (finance.yahoo.com) In spite of years of harsh
spending cuts and tax increases, Europe's debt problems are getting worse. Figures
from the EU's statistics office Wednesday showed that, at the end of the second
quarter, the total government debt of the 17 countries that use the single
currency was worth 90 percent of the group's total economic output for the year
— the highest level since the euro was launched in 1999. The rise from the
previous quarter's debt to gross domestic product ratio of 88.2 percent, and
the previous year's equivalent of 87.1 percent, is a result of the eurozone's
economic problems — which are making it harder for countries to handle their
debts.
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