On Friday April 16, 2010, 5:44 pm EDT
SEC accuses Goldman Sachs of civil
fraud
WASHINGTON (AP) -- The government has
accused Goldman Sachs & Co. of defrauding investors by failing to disclose
conflicts of interest in mortgage investments it sold as the housing market was
collapsing.
The Securities and Exchange Commission
said in a civil complaint Friday that Goldman failed to reveal that one of its
clients helped create -- and then bet against -- subprime mortgage securities
that Goldman sold to other investors.
The SEC said the fraud, a blow to the
reputation of Wall Street's most powerful firm, was orchestrated in 2007 by a
Goldman vice president then in his late 20's. The employee, Fabrice Tourre, has
since been promoted to executive director of Goldman Sachs International in
London.
Senators blast regulators for ignoring
WaMu risks
WASHINGTON (AP) -- Arguing that bank
regulators played a crucial role in creating the conditions for financial
crisis, a Senate panel Friday blasted officials for lax oversight, infighting
and inaction before the largest bank failure in U.S. history.
Lawmakers on the Permanent Subcommittee
on Investigations directed withering criticism at officials from the Office of
Thrift Supervision, the main regulator of Washington Mutual Inc. They demanded
to know why OTS leaders gave executives at WaMu years to correct glaring
problems.
The executives never addressed
regulators' concerns about risky lending and weak management, but the
regulators took no formal action until the global financial crisis already was
taking shape, documents show.
Stocks tumble as Goldman charged with
civil fraud
NEW YORK (AP) -- Financial shares led
the stock market sharply lower Friday after federal regulators filed civil
fraud charges against Goldman Sachs over its dealings in subprime mortgages.
The Dow Jones industrial average lost
about 125 points, having been down as much as 170. At times, it fell below
11,000 after closing above that level Monday for the first time in more than a
year and a half.
Analysts say the market was poised to
fall after a steady run of gains the past two months, and the Goldman Sachs
news gave investors a reason to sell and take some profits.
Bank of America sees signs of economic
improvement
CHARLOTTE, N.C. (AP) -- Even as the
nation's big banks report more losses from mortgage loans, they're seeing signs
of an economic recovery.
Bank of America Corp. on Friday
followed JPMorgan Chase & Co. in reporting a big first-quarter profit and
that it sees a healing economy. Bank of America said its earnings rose 0.7
percent to $2.83 billion from $2.81 billion a year earlier. Strong revenue from
trading in securities including bonds, currencies and commodities helped the
bank offset its losses from failed consumer loans.
Still, both companies added money to
their reserves against loan losses loans during the January-March period.
Treasury pay czar releases 2010 pay
guidelines
WASHINGTON (AP) -- The Treasury
Department said Friday that five big companies still living on federal bailout
money will see cash salaries for some of their top earners limited in 2010 so
that only five of those executives in this group will be making cash salaries
above $500,000.
The Treasury Department said that would
be a reduction from 65 officials in this group who sought cash compensation
above $500,000 in 2009.
The five firms involved are General
Motors and its financing arm GMAC, Chrysler and its financing arm Chrysler
Financial and insurance giant American International Group.
Housing starts up on gains in
multi-family sector
WASHINGTON (AP) -- Housing construction
posted a better-than-expected performance in March, rising to the highest level
in 16 months. The gain was due solely to multifamily homes, which account for
less than 20 percent of the market.
The Commerce Department report Friday
said construction of single-family homes, the most important segment of the
market, fell 0.9 percent to an annual rate of 531,000 units. But permits for
single-family construction, a gauge of future activity, were up.
The increase in housing starts tempered
news this week from RealtyTrac Inc. that a record number of U.S. homes were
lost to foreclosure in the first three months of the year. The low selling
prices of those foreclosed homes have put builders at a disadvantage, held back
hiring in the construction industry and helped restrain the broader economic
recovery.
GE 1Q earnings fall 32 percent as
revenue slips
General Electric Co. on Friday reported
a 32 percent drop in its first-quarter earnings, but the industrial and
financial bellwether said it saw signs of improvement in its own results and
the broader economy.
The results from GE, one of the world's
largest companies and an operator in most major segments of the economy, signal
that some sectors may be recovering from the deep recession.
"We saw encouraging economic
signs," said CEO Jeffrey Immelt, pointing to increased airline traffic and
freight loads, less bad debt and more local advertising growth. He noted that
GE's backlog of equipment and services held steady from the prior quarter at
$174 billion.
IG report: SEC knew of Stanford scheme
since 1997
WASHINGTON (AP) -- The Securities and
Exchange Commission knew since 1997 that R. Allen Stanford likely was operating
a Ponzi scheme and an agency enforcement official who helped quash
investigations of his business later represented the billionaire, according to
a new report by the SEC inspector general.
The SEC didn't bring charges against
Stanford until February 2009, when it alleged a $7 billion fraud. The SEC
inspector general also said in a report released Friday that
"institutional influence" in the enforcement division was a factor in
the agency's repeated decisions not to conduct a full investigation.
Oil settles near $83, stocks slump on
Goldman news
NEW YORK (AP) -- Oil prices settled
near $83 a barrel on Friday after the government accused Goldman Sachs of
fraud, earnings from some top companies disappointed investors and data on
single-family home construction declined.
Benchmark crude for May delivery fell
$2.27 to settle at $83.24 a barrel on the New York Mercantile Exchange. Earlier
it dipped as low as $82.52.
The Securities and Exchange Commission
said Goldman Sachs & Co. defrauded investors by failing to disclose key
information about mortgage investments it sold as the housing market was
collapsing in 2008.
33 states saw jobs rise in March, 17
had losses
WASHINGTON (AP) -- Maryland, Virginia
and Pennsylvania recorded sizable gains in employment in March and were among
33 states posting increases.
In its monthly look at state job
trends, the Labor Department said Friday that Maryland led the country with a
gain of 35,800 payroll jobs last month. Virginia and Pennsylvania also posted
increases that topped 20,000 in the month.
By contrast, Michigan continued to have
the nation's highest unemployment rate at 14.1 percent, and also led the
country in job losses in March with a decline of 9,500. Nevada and Florida also
posted sizable job losses and were among 17states recording job losses during
the month.
By The Associated Press
The Dow fell 125.91, or 1.1 percent, to
11,018.66.
The Standard & Poor's 500 index
dropped 19.54, or 1.6 percent, to 1,192.13, while the Nasdaq composite index
fell 34.43, or 1.4 percent, to 2,481.26.
Benchmark crude for May delivery fell
$2.27 to settle at $83.24 a barrel on the New York Mercantile Exchange.
In other Nymex trading in May
contracts, heating oil fell 3.54 cents to settle at $2.2169 a gallon, and
gasoline dropped 4.92 cents to close at $2.2770 a gallon. Natural gas rose 5.4
cents to settle at $4.039 per 1,000 cubic feet.
In London, Brent crude was down $1.60
to settle at $85.99 on the ICE futures exchange.