Morning Business Memo:
Risky lending by banks caused private student loan debt to balloon in the past decade, leaving many Americans struggling to pay off loans they can't afford, according to a new government study. It finds that private lenders gave out money without considering whether borrowers would repay, then bundled and resold the loans to investors to avoid losing money when students defaulted. Those practices are closely associated with subprime mortgage lending, which inflated the housing bubble and helped bring about the 2008 financial crisis. Says Education Secretary Arne Duncan, "subprime-style lending went to college, and now students are paying the price". His department produced the report with the new Consumer Financial Protection Bureau.
She's in the money… The compensation package for Yahoo's new CEO, Marissa Mayer, could be more than $60 million. In a regulatory filing, Yahoo says Mayer will receive an annual salary of $1 million, relatively modest by recent measures of CEO pay. Mayer is also eligible for millions more in stock options and a huge one-time bonus if she sticks around for five years. Mayer is already very wealthy. She was the first female Google engineer and one of its earliest employees. Her net worth is said to be as much as $300 million.
Finance ministers from the 17 eurozone nations are holding a teleconference today, and are set to approve a $123 billion bailout for Spain's banks. The final size of the package has yet to be worked out, but the key terms and conditions of the deal are expected to be approved. This comes at an extremely difficult time for Spain. Its ten year borrowing rate broke through 7 percent this morning. The Spanish economy has fallen into a deep recession.
The price of corn pushed through $8 a bushel for the first time, mostly because of the devastating US drought. The ethanol industry could be hit. It uses about 40 percent of the annual corn crop to make animal feed and fuel for cars.
For the first time as a public company Microsoft announced a quarterly loss. The number one software company says it lost $492 million. The reason: a big write down from an online ad company Microsoft purchased five years ago…
Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc