Tag Archive | "1 billion"

Bank of America Pays $8.5 Billion Mortgage Settlement

Bank of America has agreed to pay $8.5 billion to resolve claims that the financial and insurance company sold mortgage-backed securities that are of low-quality before the collapse of the housing market.

The deal came after a group of investors insisted that the North Carolina-based company repurchase $47 billion worth of mortgages that the Countrywide unit sold in bonds. The agreement between parties was announced Wednesday morning.

The investors argued that Countrywide, which was bought by Bank of America for $4 billion in 2008, expanded itself at the investor’s price by servicing bad loans and continuing servicing fees. Bank of America has denied such allegations.

The mortgage settlement would reduce future uncertainty in the banking industry and resolve the issues caused by their acquisition of Countrywide, said Brian Moynihan, chief executive officer of Bank of America, on Wednesday.

The settlement, which covers 530 trusts with $424 billion principal balance, is subject to the approval of the court.

According to Keith Horowitz, a Citi analyst, the settlement that is equivalent to only 2% of the original principal balance, eliminates one of the biggest risks of investors for Bank of America.

Also, the settlement puts Bank of America to a second-quarter loss between $8.6 billion and $9.1 billion. The bank is expected to release a quarterly loss between $3.2 billion and $3.7 billion, not including the settlement and other charges.

The Bank of America Corp had a 4 percent increase in shares to $11.30 before the market opened. The investors are glad that the bank can place huge uncertainty behind it.

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Obama Announced Himself as a Candidate for 2012 Re-election

President Barack Obama announced himself as a candidate for the next year’s re-election through video and mail sent to his supporters on Monday. He hopes economic recovery will increase his chances for a new term.

The announcement sets the plan to gather about $1 billion donations, which would break off the campaign finance record of $750 million he had previously acquired for the 2009 elections.

Obama appears to be in a fairly good shape against his potential challengers from the Republican field. However, many believe it is early to tell yet. The U.S economy is picking its pace to recovery. Yet, there are still various instances that could affect Obama’s chances, which include increasing prices of gasoline and unexpected extension of the conflict in Libya.

Also, the high unemployment rate in the United States became a huge factor in the victory of Republican field in November. Most Americans consider this factor when they vote. But the unemployment rate decreased to 8.8 percent in the last few months.

In 2009, Obama became the first ever black president in the United States. He scored big when reforms of healthcare, as well as financial regulation laws were approved by the Congress last year.

Obama’s fate in the 2012 re-election will highly depend on how he scores with the independent voters, which were an important part of his victory in 2008.

Although President Obama tries to distance himself from actions which can be viewed as ‘politicking,’ each of his moves will be viewed now as re-election plots by the media. In his email, Obama said to his supporters that he will be filing papers to begin his re-election bid in a formal way.

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JP Morgan Considers a $50 Roof on Purchases via Debit Cards

JP Morgan debit card limitsYour spending habits may soon be changed after a reliable source disclosed that JPMorgan Chase, one of the largest banks in the nation, will consider capping transactions using your debit card at $100 or even $50. This decision is due to interchange fees.

At the moment, retailers pay around 44 cents for every debit card transaction. Those little charges sum up to $16 billion annually; this goes directly into your bank’s profits. However, the Wall Street reform
submitted in 2010 proposed that those fees be slashed to 12 cents beginning July of this year.

This could cost JPMorgan Chase, and all other major issuing banks, more than $1 billion annually. Joe
Price said that this overwhelming decrease in interchange fees will force banks nationwide to increase
their debit card transactions fees and possibly limiting their payment.

On top of the $100 to $50 limit on debit card transactions, Chase is also considering imposing a $3
monthly debit card fee. Also, the bank has stopped issuing debit reward cards since November of 2010.
However, the spokesperson of Chase Banks refused to comment on this issue.

Major Banks said that the interchange fees help them make up for fraudulent transactions. If banks
cannot find a way to cover that cost, they will need to pass on the charges to their consumers by issuing
additional charges.

If this pushes through on July, people will be forced to issue checks or withdraw from ATMs. This will
greatly affect those who have bad credits and are not eligible for a checking account or a credit card

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