UBS, Switzerland’s largest bank, has agreed to pay $885 million to Fannie Mae and Freddie Mac to settle claims that it violated federal and state laws when it sold them mortgage-backed securities during the years of the housing bubble, a U.S. regulator said.
UBS disclosed on Monday that it had reached an agreement in principle to settle the suit.
“The satisfactory resolution of this matter provides greater clarity and certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers,” Edward J. DeMarco, acting director of the Federal Housing Finance Agency, said in an e-mailed statement.
The FHFA sued UBS and 17 other banks in 2011, seeking to recover losses on a total of $200 billion in mortgage-backed securities sold to the two government-sponsored enterprises.
UBS is the third bank to reach an agreement with the FHFA. Citigroup and General Electric have both paid undisclosed amounts to settle the regulator’s claims.
In November, U.S. District Judge Denise Cote, who is overseeing the UBS suit and most of the other FHFA suits, denied a request by Citigroup, Bank of America and two other banks to dismiss them.
— Bloomberg News
Amazon.com reported a second-quarter net loss and issued cautious third-quarter forecasts Thursday.
The world’s largest Internet retailer reported a second-quarter net loss of $7 million, or 2 cents a share, compared with a profit of $7 million, or a penny a share, a year earlier. Revenue rose to $15.70 billion from $12.83 billion in the same period last year. Analysts had expected Amazon to earn 5 cents a share on $15.73 billion in revenue.
Amazon is trying to turn itself from an online retailer into a broader technology company, offering consumer gadgets such as tablets and cloud computing services to corporations and governments. It is doing this while expanding in competitive overseas markets such as China.
Amazon is spending billions of dollars on this expansion, which has taken a toll on its earnings. However, investors have so far trusted that founder and chief executive Jeff Bezos can pull it off and produce big profits in the future. That’s pushed Amazon shares to records in recent weeks.
They closed Thursday at $303.40, up 1.5 percent, but fell 2 percent in extended trading, after the earnings announcement.
For the third quarter, Amazon forecast revenue of $15.45 billion to $17.15 billion and operating results ranging from a loss of $100 million to a profit of $275 million. Wall Street was looking for third quarter revenue of $17 billion and operating profit of $390 million.
l Mortgage rates fell for the second straight week, a welcome sign for home buyers hoping to lock in lower rates that had spiked earlier this month. Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan fell to 4.31 percent. That’s down from 4.37 percent last week but nearly a full percentage point higher than in early May. The rate reached a two-year high of 4.51 percent two weeks ago. The average on the 15-year fixed loan declined to 3.39 percent, down from 3.41 percent last week
l GlaxoSmithKline appointed a new executive to head its China pharmaceuticals business amid a bribery investigation by Beijing officials. Herve Gisserot, formerly senior vice president of London-based Glaxo’s European business, replaces Mark Reilly, who will remain part of the company’s senior executive team in London, Glaxo spokesman Simon Steel said Thursday. Reilly will help Glaxo respond to the investigation and support Gisserot during a transition period, Steel said.
l Facebook scored its biggest daily percentage gain ever a day after reporting a huge jump in mobile advertising revenue. Shares of the online social network company soared 30 percent, a record one-day gain, to $34.36, the highest level since May 2012.
l The Federal Aviation Administration on Thursday instructed airlines to remove or inspect emergency beacons in Boeing’s 787 Dreamliners after a fire earlier this month that was traced to one of the units, made by Honeywell International. The airworthiness directive goes further than the guidance from the FAA last week, when it said airlines should inspect the units on 787s for pinched wires in the casing and for evidence of heat or moisture. The agency is now aligned with Boeing, which advised airlines last week to inspect or remove the device, known as an emergency locator transmitter.
l General Motors posted a higher-than-expected second-quarter profit Thursday as aggressive cost-cutting helped the U.S. automaker narrow its losses in Europe. GM’s net income in the second quarter fell to $1.2 billion from $1.5 billion a year earlier, hurt by higher costs related to the rollout of its redesigned full-size pickup trucks and losses in Asia outside of China. Excluding one-time items, mostly related to the acquisition of preferred shares in GM Korea, the automaker earned 84 cents a share, 9 cents above the average forecast of analysts. Second-quarter revenue rose 4 percent to $39.1 billion.
— From news services
l 9:55 a.m.: Reuter’s/University of Michigan’s consumer sentiment index for July released.