Countrywide to be sued: The Illinois attorney general's office is getting lots of buzz this morning with its plans to file a civil suit against the mortgage lender and its CEO, Angelo Mozilo. The state will allege that Countrywide engaged in lax underwriting standards and incentivized mortgage brokers to push loans on homeowners who didnít have the bucks to repay them. AG Lisa Madigan wants Mozilo to contribute personally to the damages (now that would be something). Here's the WSJ story. From the NYT:
The lawsuit adds to the considerable legal risks facing Bank of America as it prepares to absorb Countrywide in a takeover announced in January. Countrywide and its executives have been named as defendants in shareholder lawsuits, and the companyís practices are the subject of investigations by the Securities and Exchange Commission, the F.B.I. and the Federal Trade Commission, which oversees loan servicing companies. The United States Trustee, a unit of the Justice Department that monitors the bankruptcy system, has also sued Countrywide, contending that its loan servicing practices represent an abuse of the bankruptcy system.
Loan brokers investigated: The FBI and securities regulators in California and Pennsylvania are looking into allegations that millions of dollars were swindled when a brokerage collected upfront fees without seriously trying to obtain financing for its clients. The firm is Remington Financial Group; a related outfit, BlueStone Real Estate Capital, is also allegedly involved. Both are based in Philly, though it appears that much of the action took place in Socal (Remington is named as a defendant in six civil lawsuits filed in Superior Court). From the WSJ:
Former San Diego Acting Mayor Ed Struiksma says he paid Remington $25,000 in fees, and received no financing from the company for land he wanted to buy for a housing development. A Toronto developer, Greg Heller, says he paid Remington $20,000 and didn't secure financing for a hotel project in Egypt. Both men say the soured deals cost them much more in penalties and delays. Andrew Bogdanoff, Remington's founder and chairman, says he isn't familiar with either deal, but that dissatisfied clients could seek arbitration under their agreements with the company.
Waiting for the Fed: Most everyone expects interest rates to stay in place. But the real market mover will be the Federal Reserve's accompanying statement Ė specifically, any hints on whether rates are headed up this fall. WSJ Economics Editor David Wessel talks about the possibilities this morning on NPR.
Lots more millionaires: The U.S. has over three million of them, which is up 100,000 from 2006. But the fastest growth is coming from places like Brazil, Russia, India and China. India's millionaire population grew 23 percent last year, fastest in the world, according to figures prepared by Merrill Lynch and Capgemini. (Millionaires are defined as those with investable assets of $1 million or more.) From the WSJ:
Mega-yacht makers, once devoted largely to the U.S. and Europe, are now doing a brisk business in Russia, India and Brazil. Burgess, the yacht-brokerage firm, said that emerging markets will probably account for half of its business in five years, compared with about a third today. "When it comes to the very big boats, India is the next Russia," says Jonathan Beckett, chief executive of Burgess. Gulfstream, the private-jet maker, is deriving an increasing share of its growth from outside the U.S. For the first time in the company's 49-year history, orders for jets from North American buyers in 2007 were eclipsed by overseas buyers, even though North American orders were up 30%, a spokesman said.
Supremes reduce Valez damages: The high court this morning cut the $2.5 billion punitive damages award in the 1989 Alaskan oil spill. Victims of the disaster may collect from Exxon Mobil, but only $507.5 million. The justices said the original award, which would have been increased by more than $2 billion with accrued interest, was excessive under federal maritime law. (Bloomberg)
Gloomy outlook: L.A. County is expected to lose almost 16,000 jobs this year and 8,200 in 2009, according to the Chapman University forecasters. That's negative job growth of 0.4 percent and 0.2 percent, which ainít great but somewhat better than the outlook for OC (lots of subprime activity down there is taking its toll). "At a local level, we are in a recession," said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research." The UCLA forecast, released earlier this month, expects bad times but no recession. (LAT)
Cruise bill dies: This would have placed ocean rangers on passenger ships sailing from California ports. The bill was approved by the state Senate but failed to move past an Assembly committee. Cruise industry officials said legislation wasn't needed because crime wasn't a major problem. (LAT)
American tests Internet: Starting today, the carrier will offer online service on a flight from JFK to LAX - and then back again. Broader service begins in a couple of weeks. Like everything on airlines these days, it'll cost you: $9.95 to $12.95, depending on flight length. The test is with Aircell LLC, which is working with other airlines. (AP)