Bank of America Corp (BOA) reached a US$2.8 billion settlement with Fannie Mae and Freddie Mac over claims that one of its businesses sold bad mortgages.
The payment is far lower than analysts expected and removes some uncertainty that has hovered over the bank.
The settlement is the biggest yet involving banks and the two US government-backed mortgage giants, which continue to suffer huge losses from the collapse of the housing market.
It was the second settlement in a week. The first involved Ally Financial Inc, which agreed to pay US$462 million in lieu of buying back faulty mortgages from Fannie Mae in the future.
Analysts and investors have been waiting to see how hard a line Fannie and Freddie would take with big mortgage lenders such as Citigroup Inc, JPMorgan Chase & Co and Wells Fargo & Co. Some estimates ran as high as US$10 billion for a Bank of America settlement.
The claims stem from mortgages sold to Fannie and Freddie by former mortgage giant Countrywide Financial, which Bank of America bought in 2008. The two US government-backed agencies buy mortgages from lenders and resell them to investors. They want banks to buy back mortgages that had incorrect information about the income and other qualifications of borrowers.
During the housing boom, lenders such as Countrywide routinely gave mortgages to people who ultimately couldn’t afford them. This lit the fuse for the financial meltdown in 2008. Most of the mortgages that Fannie and Freddie want to sell back to the banks are in default.
By removing this as an issue, Bank of America CEO Brian Moynihan hopes investors will buy his message of focusing on customers and building its traditional banking business.
However, Bank of America has several big challenges remaining. Last fall, the bank was accused of using faulty documents to foreclose on thousands of homeowners. All 50 US state attorneys general have launched investigations into the foreclosure practices of Bank of America and other banks.
Bank of America also faces lawsuits from other investors, who are trying to recoup losses from mortgages they say contained faulty information.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day