Morning Business Memo
Another big push to help troubled homeowners may be in the works. The acting director of the Federal Housing Finance Agency has softened his stand against allowing Fannie Mae and Freddie Mac to reduce mortgage debt for struggling borrowers. Edward DeMarco says his agency is considering whether this change would lower losses by Fannie and Freddie and help stabilize home prices. Taxpayers have already spent $170 billion to bail out the mortgage giants. Principal forgiveness could be offered to 700,000 borrowers at risk of foreclosure. In a CSPAN interview last week, President Obama’s Housing Secretary Shaun Donovan said he believes there is a “compelling” case for principal forgiveness.
Is it merely a correction or a true change of direction? Stocks have been in their biggest losing slide of the year. But the worst might be over. European stock averages rose this morning. US stock futures were up after five straight days of losses. Both the Dow Jones Index and S&P 500 lost more than 4 percent in value over the past week. The real trigger was last Friday’s relatively weak US jobs report. Then came fresh concern about the weak state of Spain’s economy and debt problems.
Italy’s borrowing costs on short term debt more than doubled in today’s bond auctions. The interest rate demanded by investors for 1 year bonds rose to 2.84 percent from 1.4 percent last month.
Earnings season began with Alcoa reporting a sharp drop in profits. But its first-quarter report still came in stronger than analysts expected. Alcoa sales rose with a rise in demand from car makers, commercial transportation and aerospace companies
Big oil benefits from high crude prices. Chevron says the price bump will help push first-quarter profits higher than the prior quarter. Chevron also benefited from higher refining profit margins, lower operating costs, and gains from selling assets.
When Brian Dunn quit abruptly as CEO of Best Buy it appeared to be related to the firm’s crumbling business model as a big-box retailer. Now a statement says Dunn resigned as the company looks into his personal conduct. It’s not clear what this involves.
Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc