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UPI NewsTrack Business

May 16, 2012 at 8:06 PM   |   Comments

Early stock gains slip away

NEW YORK, May 16 (UPI) -- U.S. stock market gains faded Wednesday as worries over the Greek economy continue to shake investor confidence.

Talks to create a coalition government in Athens have failed, forcing Greek President Karolos Papoulias to appoint a caretaker government that would hold the reins until mid-June, when a second national election would take place.

In Washington, the Commerce Department said U.S. housing starts rose 2.6 percent in April, but permits issued -- a predictor or future construction activity -- were down 7 percent in the month compared to March.

By close of trading on Wall Street, the Dow Jones Industrial Average gave up 33.45 points, or 0.26 percent, to 12,598.55. The tech-heavy Nasdaq composite index turned from positive to negative with the index down 19.72 points or 0.68 percent, to 2,874.04. The Standard & Poor's 500 index shed 5.86 points, 0.44 percent, to 1,324.80.

On the New York Stock Exchange, 990 stocks advanced and 2,051 declined on a volume of 4.1 billion shares traded.

The benchmark 10-year treasury note rose 2/32 to yield 1.759 percent.

The euro fell to $1.2716 from Tuesday's $1.273. Against the yen, the dollar rose to 80.36 yen from Tuesday's 80.19 yen.

In Tokyo, the Nikkei 225 index fell 1.12 percent, 99.57, to 8,801.17.

In London, the FTSE fell 0.6 percent, 32.37, to 5,405.25.


Shareholders file suits against JPMorgan

NEW YORK, May 16 (UPI) -- JPMorgan Chase shareholders reacted to the bank's recent $2 billion in trading losses by filing lawsuits in New York Wednesday, court papers indicate.

The bank "misrepresented losses and risk of loss to the Company arising from massive bets on derivative contracts," say papers filed by financial management firm Saratoga Advantage Trust.

"These derivative bets went horribly wrong," the court papers say.

The bank declined to comment on the suits, which name Chief Executive Officer Jamie Dimon and Chief Financial Officer Douglas Braunstein as defendants, ABC News reported Wednesday.

The bank announced last week it had lost about $2 billion in bad bets on the market in a 15-day period. The losses provoked investigations by regulators in Britain and the United States.

The FBI has opened a file on the case and U.S. Sen. Bob Corker, R-Tenn., the ranking Republican on the Senate Banking Committee, has called for a hearing on the matter.

The losses provoked a series of apologies from Dimon, who has called them "self-inflicted."

However, Saratoga Advantage Trust Chief Executive Officer Bruce Ventimiglia told ABC News, "We believe that [Dimon] made false and misleading statements and omissions quite frankly."

While the bank has called the losses part of a hedging strategy to protect it from other losses, Ventimiglia said they were not.

"We think they were outright bets," he said.

Despite the debacle, shareholders voted Tuesday to approve Dimon's remuneration package for the year.

In London, the trader known as the London Whale, who is at the center of the losses, is leaving the bank, colleagues said.

The New York Times reported Bruno Iksil, also known as "Voldemort," is still working at the bank but is expected to tender his resignation soon, with a departure timed before the end of the year.

Ina Drew, one of the bank's chief investment officers and one of Wall Street's most successful women, resigned from JPMorgan Monday as a result of the losses.


Delinquent mortgage loans drop

WASHINGTON, May 16 (UPI) -- The delinquency rate for U.S. mortgage contracts dropped to 7.4 percent at the end of the first quarter of 2012, a national trade group said.

The Mortgage Bankers Association said the rate of homes with payments 30 days past due improved from 8.3 percent, the delinquency rate at the end of the January through March period of 2011.

Homes involved in foreclosure at the end of the quarter was 4.39 percent, up one basis point from the fourth quarter of 2011 and down 13 basis points from the first quarter a year earlier.

Contracts with payments 30 days late or in foreclosure came to 11.8 percent, down from 12.8 percent in the first three months of 2011 and down from 14.7 percent in the same period of 2010.

Homes in serious delinquency with mortgage payments 90 days or more past due was 7.44 percent in the quarter, the MBA said.

"Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve," said Michael Fratantoni, MBA's Vice President of Research and Economics.

"Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future," he said in a statement.

While delinquency rates are falling, foreclosure rates remain high, however, mostly due to a bottleneck of processing in states that require a court review of a foreclosure.

"The problem continues to be the slow-moving judicial foreclosure system in some of the largest states," Fratantoni said.

Forty-one states had decreases in foreclosure starts and 22 states had declines in the percentage of loans in foreclosure. However, 4.4 percent of homes were involved in foreclosures at the end of the first quarter.

In addition, the MBA said loans originating at the peak of the housing boom "continue to comprise the majority of the problem loans."

The peak of the housing boom correlates with the "low point in credit standards," the MBA said.


Facebook to sell 421 million shares

MENLO PARK, Calif., May 16 (UPI) -- U.S. Internet giant Facebook Inc. is increasing the number of shares it will make available for its public debut, the Los Angeles Times reported.

Citing a CNBC report, the Times said Facebook is expected to put 421 million shares on the market, a 25 percent increase from previous estimates.

The company's initial public offering is expected to take place Friday with large Wall Street firms getting the first crack at company shares, which are expected to sell for $28 to $35.

That would raise about $15 billion and value the company at about $100 billion.

Morgan Stanley, Goldman Sachs and JPMorgan Chase & Co., which helped underwrite the IPO, will be at the head of the line as the shares go on the market, the Times reported.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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