The news at a glance
Mortgages: Fannie and Freddie need help; Bailouts: AIG turns a profit; Financial crime: Fraud alleged at Integrity Bank; Publishing: Newsweek goes on the block; Autos: GM’s Whitacre shakes up marketing
Mortgages: Fannie and Freddie need helpGovernment-backed mortgage lenders Fannie Mae and Freddie Mac are looking for more federal help, said Annalyn Censky in CNNmoney.com. Fannie Mae this week asked the government for an $8.4 billion cash infusion to shore up its finances, after it lost $13.1 billion in the first quarter of 2010. Fannie Mae has already received $76.2 billion in federal aid. Last week, Freddie Mac, which during the financial meltdown received a $50.7 billion federal package, requested $10.6 billion to offset an $8 billion quarterly loss. Both companies, which support the mortgage market by buying loans from private lenders, suffered from an increase in delinquencies in the latest quarter.
Despite their difficulties, “Fannie and Freddie are nowhere to be seen in the various financial reform efforts under discussion on Capitol Hill,” said Gretchen Morgenson in The New York Times. Some analysts suspect the firms are intentionally overpaying for home loans “to bolster the operations of mortgage lenders.” If Fannie and Freddie are, in fact, providing lenders with a “backdoor bailout,” that could account for “the government’s reluctance to include them in the reform efforts now being so hotly debated in Washington.”
Bailouts: AIG turns a profitTroubled insurer AIG last week announced it earned $1.5 billion in the first quarter, after losing $4.4 billion in the year-earlier period, said David Goldman in CNNmoney.com. The company attributed the gain to soaring profits in its core insurance operations and the sale of non-core businesses. AIG, which still owes the government $120 billion, made $729 million in the quarter from the sale of its asset management unit and the initial public offering of its reinsurance subsidiary.
Financial crime: Fraud alleged at Integrity BankTwo former officers of Georgia’s “faith-based” Integrity Bank and a hotel developer have been indicted for financial crimes, said John Gittelsohn in Bloomberg.com. Developer Guy Mitchell is charged with borrowing $80 million from Integrity Bank under false pretences, with the alleged connivance of bank executive Douglas Ballard. Another bank officer, Joseph Foster, is charged with insider trading for selling his bank stock when he learned of the fraudulent loans. Integrity Bank, founded on “Christian principles” in 2000, failed in 2008. All three men have denied wrongdoing.
Publishing: Newsweek goes on the blockThe Washington Post Co. has put Newsweek up for sale, but it’s far from clear anyone will buy it, said Keren Blankfeld in Forbes.com. The magazine has been losing money since 2007 and expects more losses this year. Its current issue contains only 60 pages. Nevertheless, there has been speculation that Mexican media mogul Carlos Slim, who owns a piece of New York Times Co., could bid for the magazine, as could entertainment tycoon David Geffen.Autos: GM’s Whitacre shakes up marketingWith sales still lagging, General Motors CEO Ed Whitacre has replaced the automaker’s marketing director, Susan Docherty, only two months after she had assumed the high-profile post, said Justin Hyde in the Detroit Free Press. Her successor is Joel Ewanick, “the highly regarded U.S. marketing chief for Nissan,” who jumped to the Japanese automaker from Hyundai just six weeks ago. Ewanick, 49, devised the “Hyundai Assurance” program, which allows Hyundai buyers to return their cars if they lose their jobs within a year of purchase.