Issue link: https://www.epageflip.net/i/89866
8B Daily News – Thursday, October 25, 2012 Furniture Depot 235 So. Main St., Red Bluff 527-1657 SAT. 9:00-5:00 • SUN. 11:00-5:00 MON.-FRI. 9:00-6:00 NEW YORK (AP) — The steep losses stopped Wednes- day as the stock market turned calm, a day after one of its biggest sell-offs of the year. Indexes ended with slight losses after the Federal Reserve said the U.S. economy still needs support. The Dow Jones industrial average closed down 25.19 points at 13,077.34, a day after one of its worst drops this year. Furniture Depot would like to introduce the 10 Stop by and see how affordable owning a Tempur-pedic can be Stocks stabilize on Wall Street after a sell-off WALL STREET The Standard & Poor's 500 index fell 4.36 points to close at 1,408.75 while the Nasdaq composite index fell 8.76 points to 2,991.70. "Today we're assessing the damage," said Mark Luschi- ni, chief investment strategist at Janney Montgomery Scott. "Everybody just got clobbered yesterday." Lower corporate revenue and expectations for the rest of the year drove the Dow down 243 points Tuesday, its third- biggest drop this year. DuPont, 3M, UPS and Xerox all reported lower sales than a year ago. "It seemed out of the blue, but what we were seeing was stock prices adjusting to corporate profitability," Luschini said. May. The company said late Tuesday that 14 percent of its advertising revenue came from mobile devices, allaying some investor concerns. The social network's stock soared $3.73 to $23.23, a jump of 19 percent. Facebook has swung widely since its IPO at $38, and has traded as low as $17.55. AT&T, which is part of the Dow average, said it added Facebook had its best day since its stock market debut in the fewest wireless customers since 2003, far behind Verizon Wireless. AT&T's results still managed to beat the estimates of financial analysts. AT&T slid 29 cents to $34.71. A measure of manufacturing in China, the world's sec- The market flitted between small gains and losses for much of the day. Indexes started to fade after 2 p.m., after the Fed repeated its assessment that the U.S. economic recovery remains modest at best. At the end of its latest two-day meeting, the Fed said the economy is still expanding at just a "moderate pace" and that it needs time to see whether a new bond-buying effort launched in September will spur economic growth and new hiring. investors. The Dow has risen just one day in the last five, a gain of two points on Monday. It lost 205 on Friday follow- ing poor results from Microsoft, General Electric and McDonald's. Third-quarter earnings reports have mainly disappointed The latest batch of earnings reports wasn't as dire, and there was the occasional piece of encouraging news. ond-largest economy after the United States, improved this month to a three-month high. China's white-hot economic growth has been slowing. Homebuilder stocks gained after the Commerce Depart- ment reported that sales of new homes jumped last month to the highest level in more than two years. Toll Brothers rose 70 cents to $35.25 and D.R. Horton rose 32 cents to $21.41. A drop in profits for Norfolk Southern hit other railroad stocks. Norfolk Southern reported a 27 percent slump in quarterly earnings late Tuesday, as falling coal prices led to lower revenue. Many utilities have favored using cheap nat- ural gas instead of burning coal this year, pushing down coal prices and weighing on railroad operators. Norfolk Southern fell $4.92 to $61.09. Union Pacific lost $2.35 to $120.87. Prices for U.S. government bonds inched lower, sending yields up. The yield on the benchmark 10-year Treasury note edged up to 1.79 percent from 1.76 percent late Tuesday. Netflix dropped $8.10, or 12 percent, to $60.12. Late Tuesday, it slashed its prediction for how many U.S. video- streaming subscribers it would add this year to 4.7 million to 5 million. It had predicted it would add as many as 7 million. US suit alleges 'brazen' fraud at Countrywide NEW YORK (AP) — The latest federal lawsuit over alleged mortgage fraud paints an unflattering picture of a doomed lender: Execu- tives at Countrywide Finan- cial urged workers to churn out loans, accepted fudged applications and tried to hide ballooning defaults. The suit, filed Wednes- day by the top federal pros- ecutor in Manhattan, also underscored how Bank of America's purchase of Countrywide in July 2008, just before the financial cri- sis, backfired severely. The prosecutor, Preet Bharara, said he was seek- ing more than $1 billion, but the suit could ultimately recover much more in dam- ages. "This lawsuit should send another clear message that reckless lending prac- tices will not be tolerated," Bharara said in a statement. He described Countrywide's practices as "spectacularly brazen in scope." He also charged that Bank of America has resist- ed buying back soured mortgages from Fannie Mae and Freddie Mac, which bought loans from Country- wide. spokesman Lawrence Grayson said the bank "has stepped up and acted responsibly to resolve lega- cy mortgage matters." He called the allegation that the bank has failed to buy back loans "simply false." "At some point," Grayson said, "Bank of America can't be expected to compensate every entity that claims losses that actu- ally were caused by the eco- nomic downturn." Countrywide was a giant in mortgage lending, but was also known for approv- ing exotic, even risky, loans. By 2007, as the market for subprime mortgages col- lapsed, Countrywide was Bank of America anxious for revenue. The lawsuit alleged that the company loosened its standards for making loans while telling Fannie Mae and Freddie Mac, which were buying loans from Countrywide, that standards were getting tighter. Fannie and Freddie, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses. To churn out more mort- gage loans, Bharara said, Countrywide introduced a program called the "Hustle," shorthand for "High-Speed Swim Lane." It operated under the motto, "Loans Move Forward, Never Backward." The program eliminated checks meant to ensure that mortgages were being made to borrowers who could afford them, according to the lawsuit. For example, loan processors no longer had to complete worksheets that helped them assess whether income levels that borrow- ers entered on their loan applications were reason- able. borrower's information into a computerized underwrit- ing program and the pro- gram raised flags, employ- ees had incentives to change the numbers, the suit said. It also said that bonuses If processors entered a were awarded based solely on the number of loans that an employee could generate, not on their quality. In early 2008, for exam- ple, Countrywide offered bonuses for employees who could "rebut" the high rate of defaults. The standards were low, according to the lawsuit: If a review found that the income a borrower listed on his application seemed unreasonable, an employee could rebut the finding "simply by arguing that the stated income was reasonable." The lawsuit gives seven months, the suit said. A loan application for a home in Birmingham, Ala., failed to disclose $81,000 in debt that the borrower was carrying. That borrower defaulted within a year, the suit said. The process led to "wide- spread falsification" of mortgage data, Bharara charged. And when Coun- trywide executives became aware of the dangerously high number of borrowers defaulting, it hid the prob- lem, according to the law- suit. examples of mortgages made for homes in Califor- nia, Alabama, Florida and Georgia in which the bor- rowers' income and other qualifications were falsified. For example, one loan application, for a home in Miami, said that the borrow- er was an airline sales repre- sentative earning $15,500 per month, when the bor- rower worked for a temp agency and earned $2,666 per month. The borrower defaulted within seven The lawsuit accused Countrywide, and later Bank of America, of selling thousands of Hustle loans to Fannie and Freddie. The lawsuit says that that the Hustle program continued through 2009. Fannie and Freddie don't review loans before they purchased them. Instead, they relied on banks' state- ments that the loans met cer- tain qualifications. Bharara said the lawsuit was the first civil fraud suit brought by the Justice Department concerning loans later sold to Fannie and Freddie. When Fannie and Freddie collapsed, investors were wiped out. According to the lawsuit,