Financial crisis: Ex-Fannie, Freddie execs sued
Six former Fannie Mae and Freddie Mac executives have been charged with fraud for misleading the public about the companies’ exposure to subprime loans, said David S. Hilzenrath and Zachary A. Goldfarb in The Washington Post. The former executives, who are accused of willfully “concealing the amount of risky mortgages” on the books of the home-loan-financing giants, are the “most prominent individuals” to date to be charged with wrongdoing related to the U.S. mortgage meltdown. The Securities and Exchange Commission alleges that in 2007, Fannie Mae “disclosed less than one tenth” of its exposure to subprime loans, which “robbed investors of the chance to make informed decisions.”
The charges bring the number of executives incriminated in connection with the financial crisis to 45, a statistic the SEC “is promoting as it seeks to rebuff criticism” that it lacks teeth, said Kara Scannell in the Financial Times. The Wall Street watchdog has come under fire recently for its failure to hold more people and banks accountable for financial misdeeds; this month, a judge in New York rejected a settlement the agency had made with Citigroup over mortgage-related fraud that allowed the bank to escape any admission of guilt. The SEC has appealed that decision.
Telecom: AT&T drops T-Mobile merger plans
AT&T this week shelved its plans to acquire the U.S. operations of T-Mobile after being unable to “overcome stiff opposition” from U.S. regulators, said Michael de la Merced in The New York Times. The decision to drop the merger, which would have created the biggest U.S. wireless carrier, is “a major setback for AT&T,” which sought T-Mobile’s cellular spectrum to “relieve its congested network.” The Justice Department opposed the deal on the grounds that it would raise consumer prices and stifle innovation.
Euro debt: European investors flee the euro zone
Investors in southern Europe are stashing more of their cash outside the euro zone, said Deborah Ball in The Wall Street Journal. Worried that their national banks could collapse or that the euro zone could break apart, people in Greece, Portugal, and Italy are converting their holdings to currencies like the Swiss franc, buying real estate abroad, and setting up trusts in locales such as the Bahamas and Singapore. The capital flight could intensify as fears about the euro’s stability persist, say financial experts. “The atmosphere is tense,” says London-based analyst Marcello Zanardo.
Mobile: Apple wins patent victory over Android
Apple got some support this week for its allegation that “devices running Google’s Android system copy the iPhone,” said Susan Decker in Bloomberg.com. The U.S. International Trade Commission ruled that Apple patents protect some smartphone features, including one that allows users to dial a phone number by tapping it. As a result, some Android smartphones from Taiwan-based HTC, which has the largest share of the U.S. smartphone market, will be banned unless their features are changed by April.
Housing: A new wave of foreclosures ahead
The U.S. “is about to be hit by another surge” of home foreclosures, said Diana Olick in CNBC.com. Foreclosure auctions and new default notices were up sharply in November, suggesting that the backlog of 4 million delinquent home loans could begin moving through the pipeline after the holidays. Foreclosures have been backed up for more than a year following the “robo-signing” scandal, which led to new safeguards and procedural delays. A new wave of distressed homes hitting the market could push U.S. home prices still lower.