Bailouts: Fannie and Freddie keep losing
Fannie Mae and Freddie Mac, the government-controlled companies that own or guarantee more than half of all U.S. mortgages, continue to lose money, said Nathan Becker in The Wall Street Journal. Fannie Mae last week said it had lost $3.1 billion in the second quarter, its smallest loss in three years, “amid signs the wave of souring loans that brought it down may be easing.” Freddie Mac followed this week with a $6 billion loss. Both companies, which have been under federal conservatorship since 2008, have requested additional aid from the Treasury to stave off insolvency. Freddie is seeking $1.8 billion, Fannie $1.5 billion.
Fannie and Freddie are also losing friends in Washington, said Zachary Goldfarb in The Washington Post. Liberals and fair-housing advocates “want the government to do less to foster home ownership and more to support rental housing for low-income people,” while conservatives favor getting the federal government out of the housing market altogether. Responding to the emerging consensus, the Treasury Department will host a conference next week, inviting industry players to generate ideas for a new mortgage-finance system “that doesn’t rely as much on taxpayers.”
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Computers: Intel settles federal antitrust complaint
Intel has agreed to play nice, prompting an end to a federal investigation into its allegedly anti-competitive marketing practices, said Mark Hachman in PCmag.com. The giant chipmaker has agreed to sharply limit rebates to customers who agree to deal exclusively with Intel and to refrain from retaliation against customers doing business with Intel’s rivals. The terms of the deal mirror Intel’s settlement last November with its archrival, AMD. In that case, Intel agreed to change its marketing practices and to pay AMD $1.25 billion.
Autos: Chrysler’s near-profit
Chrysler said this week it had earned its second consecutive operating profit, despite posting a $172 million second-quarter loss, said Nick Bunkley in The New York Times. Company officials said factors unrelated to building and selling cars, including the cost of servicing the automaker’s $25 billion in government loans, accounted for the loss. Second-quarter sales climbed to $10.5 billion, an 8.2 percent increase from a year earlier. “A little more than a year after its bankruptcy, Chrysler has shifted from shedding thousands of jobs and closing plants to hiring workers and increasing production.”
CEOs: Sara Lee’s Barnes steps down
Sara Lee CEO Brenda Barnes resigned this week, ending speculation about her tenure after suffering a stroke, said Emily Fredrix in the Associated Press. Barnes, 56, has been on medical leave since mid-May. She led the company, known for its namesake baked goods and brands such as Hillshire Farm and Jimmy Dean, through a restructuring, dumping its apparel and air-freshener units “to focus on its core food business.”
Retailing: Mega-mall may never open
Xanadu, a $2 billion enclosed shopping and entertainment complex under construction in northern New Jersey, may never be completed now that its developer has turned the property over to creditors, said Jeffrey McCracken in Bloomberg.com. Colony Capital, a private-equity group, took over Xanadu in 2006 after its original developer, Mills Corp., ran out of money. But after sinking $500 million into the project, Colony missed an Aug. 9 deadline to raise additional financing.
