Morning Money Memo…
Incredible but true. The courts are still dealing with the fallout from five year old mortgage mess. The U.S. government has accused Bank of America of civil fraud, saying the company misled investors and failed to disclose risks in the sale of $850 million of mortgage bonds during 2008. The complaints suggest regulators are still going through evidence about the banks' behavior leading up to the financial crisis. The Justice Department and Securities and Exchange Commission filed related suits in federal court in Charlotte, N.C. - the bank's headquarters city. Authorities say BoA failed to tell investors that more than 70 percent of the mortgages backing the investment were written by mortgage brokers outside the banks' network. That made the mortgages more vulnerable to default, they allege. The bank is disputing the allegations.
Are 15 and 30 year fixed-rate mortgages in danger of becoming extinct? President Obama says there's still a role for the government to play in the mortgage market, but he wants to "wind down" Fannie Mae and Freddie Mac, the firms that purchase mortgages from banks. Unlike most nations, the U.S. system allows for fixed-rate home loans. Nearly 9 out 10 mortgages are guaranteed by the government. The president says that taxpayers should never again be left "holding the bag" because of bad bets by banks and other financial firms. But he did not give many details of proposed reforms.
The TV and cable industries are watching the bitter fees dispute between CBS and Time Warner Cable very closely. The chairman of Dish Networks, Charlie Ergen, says pay TV distributors may have to merge to even the playing field if the government doesn't curb the power of TV networks in fee disputes. Ergen spoke to investors after Dish announced a second quarter loss. His comments came after CBS programming was cut off to 3 million Time Warner Cable subscribers in New York, Los Angeles and Dallas. Ergen complained about the power of major entertainment companies, calling them "essentially monopolies" because they can raise rates dramatically and distributors have little choice but to pay. He said customers are losing out because programming costs are rising faster than inflation.
The outlook is anything but sunny for the solar industry. First Solar reported weak quarterly earnings and revenue. The company slashed its outlook for this year. Its share price plunged 10 percent in pre-market trading. First Solar has been building large sites in the western U.S. General Electric is permanently scrapping plans to build the largest U.S. solar factory near Denver. The Denver Post reports that GE blamed the cancellation on a glut of solar panels on the market and falling prices. The factory was to have been bigger than 11 football fields and have an annual capacity of 400 megawatts.
The stock market is coming off its biggest set of losses in five weeks. Futures are down this morning. The S&P 500 index lost 0.6% yesterday - its biggest drop since June 24.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc