Dow, S&P slip from recent records; World Bank cuts forecast

NEW YORK: US stocks dropped on Wednesday, with the Dow and S&P 500 pulling back from recent record highs, following the World Bank's reduction of its global growth forecast. 

Losses were broad with every sector except energy down for the day. The S&P 500 was on track for its biggest daily percentage loss since May 20. 

Recent sessions have been marked by low volume and low volatility, leaving indexes to trade in a narrow range while still hitting records. The Dow ended at a fourth straight record high on Tuesday, while the S&P 500 finished lower after four days of record closing highs. 

"It doesn't surprise me to see the markets cool off. It feels like we're in the middle of the summer where we have a complacent market with a lot of people on vacation," said Fred Dickson, chief market strategist at DA Davidson & Co in Lake Oswego, Oregon. 

But he said that could set the market up for bigger moves, especially with stocks trading near record highs. 

A lower World Bank growth forecast gave investors a reason to sell some stocks. Late Tuesday, the World Bank cut its global economic growth forecast for 2014 to 2.8 per cent from 3.2 per cent due to the impact of the Ukraine crisis and a harsh US winter. 

Investors viewed the surprising primary election defeat of Eric Cantor, the No. 2 Republican in the House of Representatives, by an upstart candidate from the Tea Party movement as a signal to be cautious. 

The biggest drag on the S&P 500 was Bank of America Corp, which has reached an impasse in negotiating a multibillion-dollar settlement with the US Department of Justice relating to the bank's mortgage investments, according to The New York Times. The bank's stock dropped 2 per cent to $15.59. 

The Dow Jones industrial average fell 108.21 points or 0.64 per cent, to 16,837.71. The S&P 500 slipped 7.81 points or 0.40 per cent, to 1,942.98. The Nasdaq Composite dropped 12.24 points or 0.28 per cent, to 4,325.75. 

The CBOE Volatility Index rose 6.6 per cent to 11.71 on Wednesday but remained well below its historical average of 20. In a sign of the market's low volatility, the 14-day Average True Range on the S&P 500 hit 10.09, the lowest since February 2013. 

Orexigen Therapeutics Inc shares sank 16.3 per cent to $5.70 after the US Food and Drug Administration delayed a decision on the marketing application for its obesity drug by three months.

Source:
timesofindia.indiatimes.com

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BofA could pay at least $12B to settle US probes: Report

Bank of America could pay more than $12 billion to settle probes by the U.S. Justice Department and a number of states into the bank's alleged handling of shoddy mortgages, the Wall Street Journal said on Thursday, citing people familiar with the negotiations.

At least $5 billion of that amount is expected to go toward consumer relief consisting of help for homeowners in reducing principal amounts and monthly payments, and paying for blight removal in struggling neighborhoods, the paper said, citing people with knowledge about the issue.

A BofA spokesman declined to comment on the issue. The Department of Justice also declined to comment on the matter.

The second-largest U.S. bank faces multiple government probes over the underwriting, sale and securitization of residential mortgage bonds before the financial crisis.

Source:

www.cnbc.com

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Spring Bank of America Small Business Owner Report Finds Boston Small Business Owners Struggle With Work-Life Balance

Boston small business owners struggle with work-life balance more than their counterparts in the rest of the country, according to the spring 2014 Small Business Owner Report, released today by Bank of America. The report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Boston and around the country, found that nearly three-quarters (74 percent) of small business owners in Boston say they have made significant sacrifices in their personal life for their business.

Small business owners in Boston indicate they have a more difficult time reaching a desired work-life balance compared to the rest of the country. Forty-eight percent say they are effective at balancing work and personal life (versus 56 percent nationwide), and10 percent admit to being ineffective at juggling work-life balance, which is 5 percent higher than the national average.

Boston small business owners typically work 50 hours per week, slightly more than their counterparts across the country. Thirty-four percent of Boston respondents say their biggest regret is not spending enough time with loved ones.

"Small businesses play a fundamental role in Boston's economy and Bank of America is on the ground to help this important group meet their goals," said Anna Colton, Small Business Banker National Sales executive for Bank of America. "Boston small business owners are growing their businesses, and we are committed to helping these entrepreneurs achieve success in the years ahead."

Confidence in local economy lower than in other cities

Confidence in the economy is low compared to other markets, with 41 percent believing the local economy will improve over the next 12 months, one of the lowest percentages of the nine major markets surveyed. However, Boston small business owners are more confident when reflecting on their own businesses. Fifty-four percent plan to grow their business in the next five years, and 59 percent expect revenue to increase in the next year.

Boston small business owners are also pessimistic about the economy beyond their backyard -- only 39 percent believe the national economy will improve, and just 22 percent feel the global economy will improve over the next 12 months. Boston entrepreneurs are concerned about a number of economic factors that may affect their business, including:

   -- Health care costs (68 percent). 
 
   -- Effectiveness of U.S. government leaders (65 percent). 
 
   -- Strength of the U.S. dollar (61 percent). 
 
   -- Commodities prices (59 percent). 

Key differences between men and women

The report also delves into the perspectives of women small business owners in Boston and how they compare to their male counterparts. Men and women express differences in opinion on how their businesses impact their personal lives: 42 percent of women small business owners feel like they should be spending more time taking care of household responsibilities, while just 21 percent of men feel this way. Thirty-nine percent of men say running a small business has no impact on the amount of time they spend with their families, compared to 30 percent of women.

Women are more likely than men to give up time for themselves (73 percent versus 62 percent) and vacation/leisure time (68 percent versus 45 percent). Furthermore, men in Boston are more likely than women to sacrifice relationships; one-third of men say they have sacrificed a relationship with a spouse/partner, compared to 25 percent of women. More than one-third (36 percent) of men have sacrificed spending time with children while 26 percent of women say the same.

Small business owners delaying retirement

The report also looks at retirement plans among small business owners, and finds that small business owners in Boston are not giving up work any time soon. Sixty percent plan to keep working until they are over 65, or until they can physically no longer work. Just over half (52 percent) say they will do so because they enjoy running their business and do not want to stop working. In conjunction, only 50 percent of respondents have a succession plan in place.

Lending activity to small businesses strong

Bank of America has a nationwide network of banking centers and professionals that are committed to its more than 3 million small business clients and their local communities. In 2013, Bank of America extended nearly $387 million in new loans to small businesses in Massachusetts -- a 38 percent increase over 2012. This has helped enable Bank of America to exceed its national small business lending pledge to the White House and the U.S. Small Business Administration.

For an in-depth look at the attributes of the nation's small business owners, read the full spring 2014 Bank of America Small Business Owner Report, and for additional Boston-based insights, download the Small Business Owner Report Boston infographic here.

About the Bank of America Small Business Owner Report

Braun Research conducted the Bank of America Small Business Owner Report survey by phone between March 4 and March 31, 2014, on behalf of Bank of America. Braun contacted a nationally representative sample of 1,000 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between 2 and 99 employees. In addition, 300 small business owners were also surveyed in nine target markets: Los Angeles, Dallas, Washington, D.C., New York, Boston, Chicago, San Francisco, Atlanta and Miami. The margin of error for the national sample is +/- 3.1 percent; the margin of error for the oversampled markets (where n=300) is +/ 5.7 percent; and the margin of error for the oversampled markets (where n=301) is +/ 5.6 percent, with each reported at a 95 percent confidence level.

The Braun Research survey results conducted on behalf of Bank of America and interpretations in this release are not intended, nor implied, to be a substitute for the professional advice received from a qualified accountant, attorney or financial advisor. Always seek the advice of an accountant, attorney or financial advisor with any questions you may have regarding the decisions you undertake as a result of reviewing the information contained herein. Nothing in this report should be construed as either advice or legal opinion.

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, small businesses, middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 49 million consumer and small business relationships with approximately 5,100 retail banking offices and approximately 16,200 ATMs and award-winning online banking with 30 million active users and more than 15 million mobile users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Visit the Bank of America newsroom for more Bank of America news.

www.bankofamerica.com

Source:

online.wsj.com

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Bank of America negotiating multibillion-dollar settlement with Justice Department

Chuck Burton/AP - Bank of America’s multibillion settlement could top the $13 billion agreement Justice reached with JPMorgan Chase.

Bank of America’s legal battles may be nearing an end as it negotiates a multibillion-dollar settlement with the Justice Department to cover a range of probes, a deal that may surpass the $13 billion that JPMorgan Chase paid to the government last year, people familiar with the talks said Friday.

The Justice Department made an initial offer of $20 billion to resolve several investigations, including allegations that Bank of America packaged and sold troubled mortgage securities to investors. The bank rejected that offer and has yet to counter, said the people, who were not authorized to speak publicly.

If the agreement lands close to the initial offer, it would easily trump the department’s landmark deal with JPMorgan over similar allegations. The deal could also go a long way to quell public criticism over the government’s struggle to hold Wall Street accountable for sins of the financial crisis.

It is unclear whether any Bank of America executives are at risk of criminal prosecution. People familiar with the talks say they are in the early stages and expect the sides to meet a few more times before a deal is reached.

Officials at Bank of America and Justice declined to comment.

A person familiar with the talks said the initial offer included money set aside for a settlement with the Federal Housing Finance Authority, which regulates Fannie Mae and Freddie Mac. The bank reached a $9.5 billion deal with the agency in March, which includes the repurchase of soured mortgage securities sold to the mortgage-finance twins.

When Bank of America announced the deal, officials noted that it could face fines from Justice and several state attorneys general for mortgage matters. The bank also highlighted possible penalties from other members of the Obama administration’s mortgage task force — federal and state attorneys assembled in 2009 to go after crimes related to the financial crisis.

The task force launched a working group in January 2012 to investigate misconduct in the mortgage-backed-securities market. The group has filed cases against Citigroup and Credit Suisse for allegedly misleading investors about the quality of the securities they sold.

It has launched similar probes into seven other banks: Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, Royal Bank of Scotland, UBS and Deutsche Bank. And the group was the driving force behind the landmark JPMorgan settlement.

A key figure in the JPMorgan deal, Associate Attorney General Tony West, is also taking the lead in hammering out an agreement with Bank of America, according to a person familiar with the talks. West and his team carved out billions of dollars of mortgage relief for struggling homeowners, as well as aid for investors in JPMorgan securities, a template that could be used in crafting the latest agreement.

In the case of Bank of America, much of the bank’s legal troubles are tied to its $2.5 billion purchase in 2008 of Countrywide Financial, once one of the nation’s largest home lenders. Bank officials have said the ailing lender has cost the bank $40 billion in mortgage litigation and repurchases of soured loans.

Since October, Bank of America has been fighting to have a judgment thrown out that found it liable for fraud over thousands of defective mortgages sold by Countrywide. U.S. District Judge Jed Rakoff must rule on the penalty, which could top $848.2 million.

Not all of Bank of America’s legal headaches are tied to Countrywide. This month, the bank agreed to pay nearly $800 million in penalties for deceiving millions of customers into buying costly and unneeded services when they signed up for credit cards. The Consumer Financial Protection Bureau said the bank and its telemarketers, in an aggressive push to sell credit card add-ons, glossed over the terms or enrolled unwitting customers.

Source:
www.washingtonpost.com

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BofA under probe over US housing program, forex

Bank of America Corp may have a new mortgage problem on its plate, saying on Tuesday that federal investigators are looking into whether the bank violated requirements of a U.S.government housing program.

The second-largest U.S. bank said the civil division of the U.S. Attorney's Office for the Eastern District of New York in Brooklyn is investigating Bank of America's compliance with the rules of the Federal Housing Administration's Direct Endorsement Program. Bank of America made the disclosure in its annual report filed on Tuesday with the U.S. Securities and Exchange Commission.

(Read more: Loan complaints by homeowners rise once more)

Getty Images

Spokesmen for Bank of America and U.S. Attorney Loretta Lynch declined to provide additional details on the probe.

The Charlotte, North Carolina-based bank also said in the filing that government authorities in North America, Europe and Asia are investigating the bank's conduct and practices in foreign-exchange markets as part of a broader industry inquiry.

(Read more: Bank of America details new housing probes)

The FHA program has been at thecenter of cases brought by U.S. Attorney Preet Bharara, who is Lynch's counterpart in Manhattan. In 2012, Citigroup Inc agreed to pay $158.3 million and Deutsche Bank AG agreed to pay $202.3 million to settle cases, while a third case is pending against Wells Fargo & Co.

Under the program, mortgage lenders such as Bank of America are given the authority to approve home loans that the federal government then insures without further review. If the mortgage defaults and it is later determined that the lender did not follow FHA underwriting standards, the FHA can demand to be reimbursed for any losses.

JPMorgan Chase & Coagreed in early February to pay $614 million to settle claims that it defrauded the FHA and the Department of Veterans Affairs by making sub-standard mortgage loans.

In February 2012, Bank of America agreed to $1 billion in payments to the federal government to settle separate claims that its Countrywide home loan subsidiary made FHA-insured mortgages to unqualified borrowers. That settlement covered loans made before April 30, 2009.

Bank of America raised its estimate of overall litigation costs to as much as $6.1 billion above what it has already set aside, up from an estimate of $5.1 billion at the end of the third quarter, according to its SEC filing.

Getting a capital boost

The bank also disclosed in the filing an agreement with Warren Buffett's Berkshire Hathaway Inc that could give it an additional $2.9 billion in capital.

(Read more: Court approves BofA's $8.5B mortgage settlement)

Berkshire acquired a special class of preferred stock in Bank of America in 2011 as part of a larger $5 billion investment. Under international regulatory capital rules that U.S. regulators finalized in 2013, that preferred stock would not have counted toward the bank's capital ratios.

But in exchange for agreeing not to redeem the preferred stock for five years, Berkshire agreed to change the terms of the investment so that it counts for Tier 1 capital purposes. The new terms include a fixed annual dividend of 6 percent and the removal of a provision that would have let Berkshire receive additional payments if the bank missed a dividend.

The deal is subject to shareholder approval. An amendment will be put to a vote at the bank's annual meeting in May.

News Source: www.cnbc.com

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