WASHINGTON – Bank of America Corp. has agreed to fork over nearly $17 billion to settle government claims over toxic mortgage securities that helped trigger the recession, according to people close to the negotiations with the Justice Department.
The agreement – $9 billion in cash penalties and the rest in mortgage modifications and other consumer relief – remained tentative Wednesday, these people said. It would be by far the largest in a series of billion-dollar settlements with the “too big to fail” banks over the subprime mortgage meltdown.
At issue are $245 billion in soured home loans, only $10 billion of which were from Bank of America. The rest were sold, packaged in bonds, by three companies Bank of America acquired in 2008.
Trade deficit drops7 percent in June
The U.S. trade deficit fell in June to its lowest level since January as imports dropped sharply, led by lower shipments of cellphones, petroleum and cars.
The trade deficit fell 7 percent in June to a seasonally adjusted $41.5 billion, from $44.7 billion in May, the Commerce Department said Wednesday. Exports rose 0.1 percent to $195.9 billion, a record high. Imports fell 1.2 percent, the most in a year, to $237.4 billion.
The decline suggests that growth may have been stronger than the government initially estimated. A lower trade deficit can boost economic growth when it shows Americans are buying more U.S. products and fewer overseas goods. The economy grew at a 4 percent annual rate in the April-June quarter, the government said last week.
Chrysler sees gains,but Fiat deal unsafe
Chrysler remained on the comeback trail with a 22 percent second-quarter profit increase, but U.S. investors may not get a chance to buy shares of the company if a planned merger with Fiat gets scuttled.
Shareholders of Fiat, the majority owner of Chrysler, overwhelmingly voted last week to merge the two companies. But on Wednesday, Fiat shares fell 5.5 percent in Italy due to concerns that the merger could be derailed by investor flight.
The merger would move the new company's tax headquarters to London and list its shares on the New York Stock Exchange. It could be completed by mid-October.
But one important hurdle remains. Italian law gives dissenting shareholders the right to cash out. If shareholders require the company to buy back stock worth more than 500 million euros, the merger is off.
Samsung, Apple endsome patent suits
Samsung and Apple Inc. have agreed to end all patent lawsuits between each other outside the U.S. in a step back from three years of legal hostilities between the world's two largest smartphone makers.
However, Samsung Electronics Co. said Wednesday that it and Apple will continue to pursue existing cases in U.S. courts. The two companies did not strike any cross-licensing deal.
“Samsung and Apple have agreed to drop all litigation between the two companies outside the United States,” the South Korean company said. “This agreement does not involve any licensing arrangements, and the companies are continuing to pursue the existing cases in U.S. courts.”