FINANCE
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FINANCE
Mortgage Firm Out of Cash
American Home Mortgage said it has run out of cash, raising the possibility of a bankruptcy filing and sending its shares down 90 percent. The struggling mortgage lender said its financial backers have essentially pulled the plug. The Wall Street banks that lend American Home Mortgage money for home loans, including UBS, Bear Stearns and J.P. Morgan Chase, would not extend the company any more money, and some have demanded back they money they have lent.
American Home Mortgage specializes in adjustable-rate mortgages and also lends to "Alt-A borrowers," or borrowers between the prime and subprime levels.
REGULATION
Student-Loan Firm Settles Case
Nelnet, a student-loan company, agreed to pay $2 million in a settlement with the New York state attorney general's office. Nelnet agreed to abide by a code of conduct developed by New York Attorney General Andrew Cuomo. The code is similar to one Nelnet announced in April, but it adds prohibitions of two Nelnet services: loan consolidation service agreements with alumni associations and answering financial aid questions on behalf of universities.
INVESTING
Bear Stearns Stopped Investors From Cashing Out of Hedge Fund
Bear Stearns, manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back. The Bear Stearns Asset-Backed Securities Fund had about $900 million invested in asset-backed securities, including mortgage bonds, spokesman Russell Sherman said. The fund was overwhelmed by redemption requests, Sherman said.
The fund had less than 0.5 percent of its assets in securities linked to loans to subprime borrowers, Sherman said. Bear Stearns has no plans to close the fund.
CONTRACTING
3 Firms Chosen for TSA Job
The Transportation Security Administration said it awarded contracts worth a total of $2.3 million to American Science & Engineering, L-3 Communications Holdings and OSI Systems' Rapsican Systems unit to test its passenger screening at airport security checkpoints in Phoenix, Los Angeles and New York. The technologies screen passengers without contact.
LEGISLATION
House Passes Plan on Pay Bias
The House voted to reverse the Supreme Court's decision limiting the time that workers have to sue their employers for pay discrimination. The Bush administration has threatened to veto the legislation. The House voted 225 to 199 to allow employees to sue within 180 days of their last affected paychecks.
