Federal prosecutors are looking into the booming business of subprime auto loans. The investigation raises questions about whether GM and other firms have been selling questionable auto-loan investments to investors. The recent rise in auto sales has been fueled largely by consumer lending. Subprime loans are often made to borrowers who have poor credit histories. GM Finance says it has received a subpoena from the Department of Justice for documents related to subprime auto loans made since 2007. The Justice Department is said to be considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed following the savings and loan crisis in the 1980s.
General Motors says it has made progress in fixing its recall website so that it correctly lists all the cars that need repairs. The company says it expects the site to be fully corrected this week. The government had said Friday that GM’s vehicle identification number look-up system has been incorrectly telling some owners that their cars aren’t being recalled. That happened when the cars’ parts weren’t available. But the government says all recalls should be listed.
Gannett is spinning off its publishing business from its broadcasting and digital operations. The company is also acquiring full ownership of Cars.com for $1.8 billion. The decision follows moves by Tribune, Time Warner and Rupert Murdoch’s News Corp in breaking off print media from their rapidly expanding broadcast operations. Gannett says the publishing business will basically be debt free once spun off, with the broadcasting and digital businesses holding the existing debt.
Sand is the new gold. Prices are going up as mining companies increase fracking at oil and natural gas sites. “Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground,” The Wall Street Journal says. During the fracking process, sand is mixed with water and chemicals. “Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made by energy-consulting firm PacWest Consulting Partners a year ago,” the Journal reports.
Standard & Poor’s rating agency says the rising wealth gap in the United States is complicating the rebound from the recession, and raising the risk of boom-and-bust cycles. S&P has cut its growth forecast for the next decade partially because of the rising concentration of wealth among the top 1 percent of earners. The firm says educational achievement has stalled in recent decades. It advises against using the tax code to try to narrow the gap, however, saying higher taxes on the wealthy could remove incentives for people to work and cause businesses to hire fewer employees. Instead, S&P suggests increasing access to education would help ease wealth disparities.
The networking service LinkedIn has agreed to pay nearly $6 million in unpaid wages and damages to 359 current and former employees, the Labor Department says. According to the government, the employees were not properly paid for overtime work. LinkedIn says the Labor Department investigation focused on a small group of sales workers.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow