Grand jury investigates lenders: LAT reports that Countrywide, New Century and IndyMac have been issued subpoenas that seek e-mails, phone bills and bank records. It's hard to know the context of the subpoenas - the FBI has been looking at more than 20 companies for some months - although the Times story suggests that the grand jury investigation in L.A. is at an early stage. One area of focus is the mortgage breaks that Countrywide CEO Angelo Mozilo gave to members of Congress and other influence-makers. But it sounds like they're looking at a lot of stuff.
Officials have said they are beginning to investigate whether securities investors were defrauded about the value of subprime mortgages they purchased, as well as other possible crimes such as insider trading by corporate officials who sold stock knowing their holdings were about to deflate in value.
Last month, officials created a multi-agency task force to address mortgage crimes; it includes representatives of agencies such as the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Department of Housing and Urban Development and the Federal Deposit Insurance Corp.
Oil back up: Crude prices nudged a bit higher this morning, to over $125 a barrel, as analysts tried figuring out whether the recent plunge in prices is real. For what it's worth, Hugh Johnson, chairman at Johnson Illington Advisors, told CNBC that the price of oil, if based on global supply and demand, should be around $83 to $85-a-barrel. He didn't say when that might happen.
Stocks down: Some weak economic reports and only so-so earnings have the Dow off more than 100 points the last I checked.
L.A. sues financial firms: The City Attorney's office accuses Merrill Lynch, Morgan Stanley and Bank of America, among others, with defrauding the city and other public entities to the tune of tens of millions of dollars. The Superior Court complaint alleges a bid-rigging scheme involving what are known as municipal derivatives, where money thatís raised from selling muni bonds winds up. Essentially, the system is set up so that the public entities don't always get the best possible rate of return. From the LAT:
A second suit filed by [City Attorney Rocky] Delgadillo on Wednesday targets a number of bond insurers. It alleges that the city needlessly bought insurance from the companies for holders of L.A.-issued bonds in the event of a default by the city. Cities and other issuers of municipal bonds typically buy such insurance to boost the credit ratings on their bonds, making them more attractive to investors and lowering the interest rate the issuers need to pay. But in recent years, municipal bond insurers began insuring bonds backed by subprime mortgages. As those mortgages have gone bad, the insurers' own credit ratings have fallen, causing a drop in ratings on insured municipal bonds. According to Delgadillo's suit, bond insurers never told the city that they had exposure to subprime mortgages.
Bratz trial, part 2: They're back in a Riverside federal court arguing about how much Bratz-owner MGA Entertainment owes Mattel. Last week, a jury found that former Mattel designer Carter Bryant made scores of concept drawings for Bratz while he was still employed by Mattel. From Reuters:
While Mattel's attorneys tried to convince the 10-member jury that the giant toymaker deserved all profits from Bratz and related accessories, company Chairman and Chief Executive Bob Eckert appeared to try to manage expectations. "Regardless of the amount of damages award against MGA and its CEO in this phase of the trial, this has been a moral victory for Mattel employees worldwide," Eckert said in a statement handed out to reporters at the trial. A big damages award could compensate for sagging sales of Mattel's iconic Barbie doll, whose U.S. sales slipped 21 percent last quarter in the face of competition from Bratz, and could also prove a crippling blow to family-owned MGA.
Southwest making money: Who says the airline business is in the tank? Fuel-hedging helped Southwest report a 15 percent profit in the second quarter, though the airline's fuel prices still rose 35 percent during the period. There's been speculation that Southwest will pick up a bunch of routes dropped by other carriers, but so far nothing is planned. (WSJ)
Cities go after Comic-Con: The annual pop culture extravaganza is outgrowing its long-time San Diego locale (tickets are being scalped on the Internet for hundreds of dollars), so cities with larger convention venues are sniffing around. Those include L.A. and Vegas. Variety sums things up thusly: "From fire-code violations to body-odor issues, overcrowding is the complaint on everybody's lips."
Selling out may be a positive thing in the entertainment industry, but not for a mixed trade show and fan event like this. Between attendance caps and lack of space, the event's board is faced with flat revenue while operating costs continue to increase. According to Glanzer, raising booth and ticket prices would be a last resort. Instead, he says, "We are trying to creatively enhance revenue, and one of those ways is to sell sponsorship signage, something we have done on a very limited basis in the past." That means Comic-Con may have to embrace the marketing mayhem that became a fixture of E3 before it downsized a year ago. So, even with the convention locked into San Diego for the next four years, cities such as Las Vegas and Los Angeles are actively trying to lure Comic-Con away.
Leland Wong trial winds down: In final arguments, Deputy D.A. Max Huntsman says the former city commissioner became an inside man in a "pay to play" corruption scheme. Prosecutors have charged Wong with taking $100,000 in bribes from a Taiwan-based company to help sweeten a port deal. But Wong's attorney, Janet Levine, said that prosecutors built a case out of selective facts and witnesses who were given immunity. Wong has pleaded not guilty to 21 felony counts of bribery, conflict of interest, perjury and embezzlement. (Daily News)