Washington policymakers are bracing for a wave of corporations to renounce their U.S. citizenship, depriving the government of billions of dollars in tax revenue and stoking public outrage ahead of the Nov. 4 congressional elections. ¶ So far this year, about a dozen U.S. companies — including Medtronic medical devices and Chiquita bananas — have merged with foreign firms and shifted their headquarters offshore to avoid U.S. taxes. Dozens of additional deals are in the works. ¶ There are other benefits to inversion: In many deals, the foreign “parent” makes a big loan to its new U.S. partner, which in turn makes large interest payments that can be deducted from the company’s U.S. tax bill.
Bank of America, the nation’s second-largest bank, reached an agreement with the Justice Department to pay $16 billion to resolve allegations that it sold faulty mortgage securities that contributed to the financial crisis. It is the largest penalty ever paid by a single company, topping the $13 billion settlement that JPMorgan Chase reached last year over similar charges.
Eleven of the biggest U.S. banks have no viable plan for unwinding their businesses without rattling the economy, federal regulators said, ordering the firms to address their shortcomings by July 2015 or face tougher rules. The Federal Reserve and the Federal Deposit Insurance Corp. called the banks’ resolution plans, or “living wills,” “unrealistic or inadequately supported.” They said the plans “fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for” an orderly resolution. The banks, all with more than $50 billion in assets outside of traditional banking, are: Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and UBS.
Rupert Murdoch’s 21st Century Fox dropped its $80 billion offer to buy Time Warner.
Walgreen will not do an overseas reorganization that would have trimmed its U.S. taxes but that drew political scorn. The nation’s largest drugstore chain — which bills itself as “America’s premier pharmacy” — said that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots in a cash-and-stock deal valued at more than $15 billion, but it will not follow through with a tax inversion.
Credit unions reached a new milestone in June when membership topped 100 million.
Fiat chief executive Sergio Marchionne blamed overblown news media reports and a “lack of understanding” of the merger with its U.S. unit, Chrysler, for a share sell-off. Marchionne wants to incorporate the two carmakers into Dutch-registered entity Fiat Chrysler Automobiles, paving the way for a U.S. listing key to help fund an ambitious investment plan at the world’s No. 7 auto group. But the merger could fall through if enough investors decide to exercise a right to sell their Fiat shares triggered by the automaker’s decision to move its headquarters and fiscal domicile away from Italy, its home for the past 115 years.
International banks are looking to put together a group of investors to buy disputed Argentine debt and resolve a U.S. lawsuit that is blocking the country from servicing any of its foreign bonds. The banks are seeking investors willing to purchase bonds left over from the nation’s 2001 default held by firms led by Elliott Management Corp., said Eduardo Eurnekian, an Argentine billionaire who has been approached by bankers.
Target added its name to a legal defense of gay marriage, four years after the retailer was criticized for supporting a strident opponent of same-sex unions.
Malaysia’s state investment company plans to remove struggling Malaysia Airlines from the stock exchange, making it fully state-owned before a far-reaching overhaul of its business.
Russia announced the suspension of billions of dollars in food imports from Norway, Canada, Australia, the United States and the 28-nation European Union in retaliation for sanctions imposed on it. The measure, which targets meat, fish, fruit, vegetable and milk products, and will last a year, is expected to hit food supplies and drive up Russian food prices.
General Motors’ auto financing arm was subpoenaed by the Justice Department for documents related to subprime auto loans.
Hyundai will pay a $17 million fine for failing to promptly report a brake problem in its Genesis cars.
U.S. District Judge Jed Rakoff reluctantly approved a $285 million fraud settlement between Citigroup and the Securities and Exchange Commission, two months after an appeals court voided his decision to reject it. The deal did not require the bank to admit to any wrongdoing. But Rakoff said he feared the decision by the U.S. Court of Appeals would rob such settlements of any “meaningful oversight.”
Apple has scheduled a “big” media event related to the iPhone for Sept. 9, technology Web site Re/code reported. Apple has often launched the newest version of its iPhone in September.
Capital One Financial received subpoenas from the New York district attorney’s office as part of a money-laundering probe. It is cooperating with the investigation and said it is exiting the business of providing services to check cashers and related companies.
The average retail credit card now charges an annual percentage rate of 23.23 percent, up more than 2 percentage points from 2010, according to CreditCards.com. Among the cards surveyed, Zales had the highest rate with an APR up to 28.99 percent.
Foursquare has redesigned its mobile app from the ground up with a new layout and a new logo, removed its “check-in” feature, and added a “hidden” feature to collect users’ GPS coordinates any time their phone is powered on.
Fannie Mae and Freddie Mac said their quarterly profits will enable them to send $5.6 billion to the Treasury.
News Corp., publisher of the Wall Street Journal, had profits of $13 million, compared with a loss of $1.12 billion a year ago. Completing its first full year as a stand-alone company, its quarterly earnings missed analysts’ estimates for the first time as it struggled in its transition from print to digital.
Time Warner profit rose 10 percent, to $850 million, on strong results from its HBO and Turner properties.
U.S. stocks rebounded Friday, with the Standard & Poor’s 500 Index erasing declines for the week, as signs tensions are easing in Ukraine outweighed concern over crises in the Middle East.
The average 30-year fixed-rate mortgage bumped up to 4.14 percent with an average 0.7 point. It was 4.4 percent a year ago. The 15-year fixed-rate average climbed to 3.27 percent with an average 0.6 point, its highest level since June 19. It was 3.43 percent a year ago.
U.S. consumers expanded their borrowing by $18.3 billion in June to a total of $3.17 trillion, the Fed said. Auto and student loans drove the gains.
U.S. services sector activity hit an
81 / 2-year high in June and factory orders surged, bolstering expectations of solid economic growth in the third quarter.
Most top federal government agencies have not complied with regulations requiring them to report contractors’ performance to a central database used by government purchasers, according to the Government Accountability Office.
Almost 20 percent of people near retirement age have no retirement savings, the Federal Reserve study said. Overall, 31 percent of people said they have zero money saved for retirement.
Washington-area utilities say low-flow toilets and other environmentally friendly fixtures are hurting their bottom lines, leading to higher water rates.
As imports dropped sharply, the trade deficit fell 7 percent, from $44.7 billion in May, the Commerce Department said. Exports rose 0.1 percent to $195.9 billion, a record high. Imports fell 1.2 percent, the most in a year, to $237.4 billion.