Shares of Fiat soar, but its workers fret; Regulator details bank mortgage settlements

January 2
AUTOMOTIVE
Shares of Fiat soar, but its workers fret

Fiat shares soared 16 percent on the Milan exchange Thursday on news that the Italian automaker will take full ownership of Chrysler, but some Italian unions worried what the deal will mean for jobs and investments in the country.

In a New Year’s Day announcement, Fiat said it will buy a 41.5 percent stake held by a United Auto Workers union trust fund for $1.75 billion in cash and another $1.9 billion in extraordinary dividends. The deal is due to close by Jan. 20.

The move was greeted in Italy, where Fiat is the largest private employer, with a mixture of anxiety and excitement.

Italian unions have long fretted that the global reach of Fiat could come at their expense in terms of production, job security and contract conditions. Their leaders immediately pressed for guarantees, appealing to the government to help safeguard their situation.

“It is indispensable that Fiat say what it intends to do in our country,” Susanna Camusso, leader of the nationwide, left-leaning CGIL labor confederation, said in a statement.


Fiat has a total of 215,000 employees, almost a third of whom are in Italy.

While praising the deal as important for Fiat to keep up with rivals, Camusso insisted that the company’s “strategic direction and planning remain Italian” and that it “keep a significant presence in Italy.”

Allied with CGIL is the FIOM metalworker’s union, which has a reputation as a hard-liner in labor negotiations. Its leader, Michele De Palma, said he will ask the premier’s office to summon all sides to talks about the future of the Italian plants.

“Before celebrating, we contend it is fundamental to understand the deal’s terms,” De Palma said.

— Associated Press

MORTGAGES
Regulator describes banks’ settlements

Citigroup paid $250 million to taxpayer-owned Fannie Mae and Freddie Mac to settle a lawsuit over soured mortgage securities, the regulator of the two housing finance firms said.

General Electric paid $6.25 million to settle a similar suit, the Federal Housing Finance Agency said in a statement. Ally Financial, the former parent of bankrupt Residential Capital, paid $475 million.

Citi, GE and Ally settled the claims in 2013, but none had disclosed the financial terms.

The banks are among 18 financial institutions that were sued in 2011 for allegedly misleading Fannie Mae and Freddie Mac, the biggest provider of housing finance in the United States, into buying more than $200 billion in mortgage-backed securities.

Six institutions have since settled the accusations. GE and Citi were the first two to resolve the claims in early 2013, but the FHFA kept the terms confidential as they negotiated additional settlements.

In October, JPMorgan agreed to pay $4 billion to resolve its lawsuit, and in December, Deutsche Bank entered a $1.9 billion accord with the agency.

In total, the United States has recouped nearly $8 billion through the settlements, the housing regulator said. The lawsuits accused the firms of violating securities laws and, in some cases, committing fraud.

— Reuters

Also in Business

Mortgage buyer Freddie Mac said the average for the 30-year loan rose to 4.53 percent from 4.48 percent last week. The average for the 15-year mortgage increased to 3.55 percent from 3.52 percent.

Applications for U.S. unemployment benefits fell by 2,000 to 339,000 last week, Labor Department data showed. The four-week average of claims, a less-volatile measure than the weekly figure, increased to 357,250 from 348,750 in the prior week. The number of people continuing to receive jobless benefits dropped by 98,000 to 2.83 million in the week ended Dec. 21.

Wal-Mart Stores said it’s considering taking legal action against “responsible parties” after DNA testing showed traces of fox meat in the donkey meat it sold in China. Wal-Mart had recalled the donkey meat — which it said is considered a delicacy in parts of China — after DNA testing by a government agency. The company said it withdrew all products from the supplier, Dezhou Fujude Food, and that affected customers were offered compensation.

BlackBerry is parting ways with Alicia Keys after the R&B singer failed to rekindle a consumer love affair with the company’s smartphones. Keys, who was hired as global creative director in January 2013, will be leaving the company after the yearlong collaboration, according to a statement. The Grammy-winning artist came on board as the smartphone maker was unveiling its BlackBerry 10 operating system, a product rollout that flopped with shoppers.

Macy’s and Martha Stewart Living Omnimedia settled litigation over whether Martha Stewart breached a contract by selling certain goods at J.C. Penney. The terms of the settlement weren’t disclosed. Macy’s said the pact doesn’t affect its outstanding claim against J.C. Penney. Martha Stewart and Macy’s both said the terms of the settlement aren’t material to their businesses.

— From news services

Coming Today

2:30 p.m.: Speech by Fed Chairman Ben S. Bernanke on how the Federal Reserve has changed over the years, at the American Economic Association meeting in Philadelphia.

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