Thursday, April 17, 2008
Mortgage Fraud Cases Strain FBI
FBI Director Robert Mueller said the agency's mortgage fraud caseload has surged because of the subprime loan meltdown, and he expects it to grow further.
There are now 19 investigations of Wall Street banks, mortgage lenders and other financial institutions, Mueller told a Senate Appropriations subcommittee. The inquiries have strained the FBI's resources and the agency has shifted agents from other duties to help out, he said.
Most of the bureau's mortgage fraud cases, about 1,300, focus on individuals such as brokers and loan buyers, he said. The 19 corporate investigations, up from 14 in January, involve possible securities fraud and insider trading by executives.AIRLINES
Bumping Penalties to Double
Payments to airline passengers bumped from their flights will double next month. The Transportation Department ordered that carriers pay passengers $400 each if they arrive within two hours of their original schedules and $800 if they don't. The penalties haven't been increased since 1978. The rate of involuntarily bumpings reached an 11-year high in 2007, 1.12 per 10,000 passengers, as airlines flew fuller planes to gain efficiency as fuel prices rise.
Separately, American Airlines and other carriers that serve LaGuardia International Airport in New York would have as many as 20 percent of their slots auctioned over five years, under a proposal the department plans to make final by year's end.RETAIL
Credit Cut, Talbots Shares Fall
Shares of Talbots plunged after two banks decided to cut off their flow of credit to the women's apparel retailer. The stock dropped $3.69, to $9.16.
Talbots is trying to rebound from recent financial losses and store closures. The company issued a news release saying it has enough cash to fund its business initiatives this year, but the statement did little to ease the sell-off.
In January, Talbots said it would close its 78 children's and men's stores to focus on its core middle-aged female customer.AUTOMOTIVE
GM Puts Brands Into 4 Divisions
General Motors is organizing its eight brands into four divisions in order to streamline product development and sales and further differentiate the brands, the automaker announced.
The Chevrolet and Saturn brands will continue to stand alone, but there will be a new premium division containing Cadillac, Hummer and Saab and another division for Buick, Pontiac and GMC.EARNINGS
AMR, the parent of American Airlines, lost $328 million in the first quarter as high fuel costs offset an increase in revenue. It made a profit of $81 million the corresponding quarter a year earlier. Revenue rose 5 percent, to $5.7 billion. Average occupancy hit a record 79.1 percent in the first quarter, up 1 percentage point from a year earlier. Average fares paid rose 5.1 percent. But spending on fuel jumped 45 percent, wiping out the revenue gains.
IBM posted a 26 percent gain in first-quarter profit, to $2.32 billion, after winning more orders overseas. Total revenue rose 11 percent, to $24.5 billion. Sales in Europe, the Middle East and Africa climbed 16 percent, to $8.8 billion, as IBM won contracts with companies such as Transalliance, a French freight hauler. IBM gets almost two-thirds of its sales outside the Americas. The technology company also increased its earnings forecast for the year.
BlackRock, the biggest publicly traded asset manager in the United States, said first-quarter profit rose 24 percent, to $241.7 million. Revenue rose 29 percent, to $1.30 billion. Assets under management rose 1 percent, to $1.36 trillion. Investors put $35.1 billion into cash funds and $3.3 billion into so-called alternative investments such as hedge funds and real estate. They pulled $3.2 billion from stock and bond funds.
EBay said its first-quarter profit climbed 22 percent, to $459.7 million, on increased selling fees and higher revenue from its PayPal payment service. Revenue climbed 24 percent, to $2.19 billion. More than half of eBay's business takes place overseas, and a weak dollar helped the company's performance.
Coca-Cola said first-quarter profit rose 19 percent, to $1.5 billion, from $1.26 billion in the comparable period a year earlier. Revenue rose 21 percent, to $7.4 billion. The company said earnings rose on a declining U.S. dollar and increased soda sales in Mexico and India.
Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.