Today’s Money Memo…
The long trail of destruction from the mortgage mess is still working its way through the system. Bank of America has been found liable for mortgage fraud. The bank’s Countrywide unit sold defective mortgages in the lead-up to the housing collapse. A verdict was returned by a New York jury after a monthlong civil trial. The outcome is a victory for government prosecutors who accused the financial firm of urging workers to churn out home loans, accept faulty applications and hide the sharp increase of defaults by borrowers who couldn’t make mortgage payments.
More legal headaches for JP Morgan Chase. America’s biggest bank may face action from federal authorities “suspecting that the bank turned a blind eye” to Bernie Madoff’s massive Ponzi scheme, reports The New York Times. This case comes right after the bank reached a tentative $13 billion settlement with federal prosecutors over the sale of flawed mortgage products. ABC News has confirmed that prosecutors and JPMorgan have held preliminary discussions about a so-called deferred prosecution agreement. This arrangement would suspend criminal charges in exchange for a fine and other concessions.
Starbucks is dipping its toes into the market for high-end tea. The chain opens its first tea bar, Teavana, in Manhattan today. Starbucks purchased Teavana, a chain of tea stores often found in shopping malls, last November, but the concept of a tea bar is new. The difference between a Starbucks coffee shop and a Teavana teahouse “is like night and day,” Starbucks CEO Howard Schultz tells USA Today. “It’s much more Zen-like than anything you’ll find in a Starbucks store.” There is a selection of loose leaf teas and tea blends. The atmosphere at Teavana is far more sedate, with gray walls and soft lighting. There is no mention of the Starbucks brand at the store. The company plans to add tea bars to many existing Teavana stores.
Ford has just reported another solid quarter. The auto maker is raising its full-year profit guidance after a record third quarter that saw improving sales worldwide. Ford earned $1.3 billion, down 14 percent from a year ago. But without one-time items, including a $250 million charge for restructuring in Europe, Ford reported a record pre-tax profit for the summer quarter. Revenue rose 12 percent compared with last year.
A four-day streak of gains ended for the stock market. The S&P 500 fell five tenths of 1 percent yesterday. The Dow gave up 54 points. Stock futures rose this morning. The price of oil fell to a four-month low yesterday – down to $97 a barrel, but there was a modest price increase this morning.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow