Tuesday morning headlines

Market takes tumble: Lots of discouraging news, most especially a big drop in home sales. Dow is down about 130 points.

About those home sales: They nosedived 27 percent in July, almost twice as much as analysts had expected. Also, inventories rose to 12.5 months from 8.9 months in June, pressuring already depressed home prices. (Reuters)

Fed split on economy: That's unnerving to some on Wall Street because it shows indecisiveness on where to take monetary policy. From the WSJ:

A decision hinges largely on whether the Fed sees inflation falling much further or if economic growth fails to revive. The Fed and most private forecasters still expect faster growth in 2011, and few economists are predicting outright deflation. Among the other issues: Should the Fed act quickly, or should it wait for firmer evidence that the economy is truly faltering? And if it does decide to act, should it take small, cautious steps or large, dramatic ones?

Union cuts deal with city: The Engineers and Architects Association ratified a contract in which its members pay about five percent of their monthly health-care premiums (up from zero) and in return the city reduces the number of furlough days. (LA Weekly)

Gas prices start dropping: An average gallon in the L.A. area fell about three cents, to $3.137, the government reported. Oil has been dropping (continued worries about the economy), and with the summer driving season drawing to a close, analysts expect gas prices to tumble significantly.

SEC accuses Mozilo: The former CEO of Countrywide Financial allegedly approved loans for VIP borrowers who included public officials. From the WSJ:

"The 'exceptions' culture at Countrywide started at the top" with Friends of Angelo loans made by Mr. Mozilo, argued the SEC in its recent court filings. "In many instances, Mozilo approved loans that were in direct contravention of Countrywide's own credit policies and underwriting guidelines." The SEC didn't specify any loans given to public officials in its filings.

Countrywide data theft case settled: Bank of America, which owns the mortgage lender, will offer free credit monitoring, identity theft insurance and reimbursement for losses to as many as 17 million consumers under an agreement approved by a federal judge. From the LAT:

The accord settles more than 30 lawsuits, including nationwide class actions, filed after the August 2008 arrest of Rene L. Rebollo Jr. of Pasadena, who worked for Countrywide's subprime division, Full Spectrum Lending. Federal authorities said at the time that he downloaded customer files, including Social Security numbers, from the company's computers onto thumb drives and sold the information to employees of other mortgage lenders for use as sales leads.

Guilty plea in Disney insider case: Yonni Sebbag, who was charged with a daffy scheme to peddle Mouse House financial secrets, faces a prison sentence of 27-to-33 months. (NY Daily News)

Lloyd Blankfein scores: The Goldman Sachs CEO swam 134 laps in an hour during a charity event at the Southampton Bath & Tennis Club. Blankfein is said to have an excellent flip-turn. (NY Observer)