May 27, 2018
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Bank of America posts worst showing in Dow average

By From wire service reports

NEW YORK — Bank of America is on track to be this year’s worst performer in the Dow Jones Industrial Average as concern about mounting mortgage losses and a global economic slowdown weighed on the second-biggest U.S. lender.

The 59 percent decline through Thursday erased almost $80 billion of shareholder value at Charlotte, N.C.-based Bank of America. It’s the firm’s largest drop since a 66 percent plunge in 2008, when a U.S. bailout staved off a collapse. The bank probably will also end 2011 last in the Standard & Poor’s 500 Financials Index and the KBW Bank Index.

“What you have is like a three-ring circus, and in all the rings for Bank of America, the show isn’t any good,” said Greg Donaldson, chairman of Evansville, Indiana-based Donaldson Capital Management, which oversees $500 million including Bank of America shares. He cited new regulations, mounting costs of bad loans and a lack of confidence in management. “You just got one surprise aft er another this year,” Donaldson said.

Chief Executive Officer Brian Moynihan, 52, told his staff in a year-end progress report last week that his effort to boost the company’s value “is not yet translating into returns for our shareholders.” Moynihan said he has prepared for turmoil ahead by selling assets, reducing mortgage and credit-card loans and pledging to lower annual costs by $5 billion, including about 30,000 job cuts.

The Dow Jones Industrial Average gained 6.1 percent this year through Thursday, led by McDonald’s Corp.’s 31 percent advance, while the 80-company S&P Financials slid 18 percent and the 24-member KBW Bank Index lost 24 percent. Larry DiRita, a Bank of America spokesman, declined to comment.

Some of Bank of America’s biggest peers also made the list of laggards, with Citigroup, the third-biggest U.S. bank, dropping 43 percent. JPMorgan Chase, the largest lender, slid 21 percent. American International Group, the insurer owned mostly by the government after its near-collapse in 2008, fell 52 percent for the second-worst showing in the S&P Financials, and Goldman Sachs lost 46 percent.

In a first, gas and other fuels are top US export

NEW YORK — For the first time in at least 21 years, the top export of the world’s biggest gas guzzler, is — wait for it — fuel.

Measured in dollars, the United States is on pace this year to ship more gasoline, diesel and jet fuel than any other single export, according to U.S. Census data going back to 1990. It will also be the first year in more than 60 that America has been a net exporter of these fuels.

Just how big of a shift is this? A decade ago, fuel wasn’t even among the top 25 exports. And for the last five years, the top U.S. export was aircraft.

The trend is significant because for decades the U.S. has relied on huge imports of fuel from Europe in order to meet demand. It only reinforced the image of America as an energy hog. And up until a few years ago, whenever gasoline prices climbed, there were complaints in Congress that U.S. refiners were not growing quickly enough to satisfy domestic demand; that controversy would appear to be over.

On 10th anniversary, euro takes blame for economy

PARIS — Just three years ago, the euro was being praised as the can-do currency that had delivered unprecedented prosperity in Europe.

Now, it’s widely derided as a hugely flawed experiment in the wake of a debt crisis that’s threatening its very existence — an uncomfortable backdrop as the currency’s notes and coins hit their first decade in circulation on Jan. 1.

The question is: Will it get to its 11th birthday, let alone 20th? In the euro’s tumultuous short history, it has already been heralded as the ultimate mark of a peaceful, united Europe; it’s been scoffed at as a giant act of hubris by a distant political elite; and it’s been credited with giving Europe a more influential voice in the world.

These days, as it faces its biggest crisis yet, the euro is a daily reminder to more than 330 million people of the dismal state of the economy in the 17-nation eurozone. Many countries seem headed back into recession, and policymakers are grappling with a spiraling debt crisis.

CDR Financial Products pleads guilty in municipal bond indictments

WASHINGTON — A politically connected financial firm and its founder have pleaded guilty to taking part in fraud and bid-rigging conspiracies related to the municipal bond business.

The Justice Department said CDR Financial Products Inc. of Beverly Hills, Calif., and owner David Rubin entered guilty pleas Friday in federal court in Manhattan. The department said they acknowledged their roles in schemes designed to win contracts to invest the proceeds of municipal bonds issued by state, county and local governments.

Rubin faces up to 20 years in prison.

Two other CDR executives are scheduled to go on trial in New York next week.

CDR also was investigated for its ties to former New Mexico Gov. Bill Richardson and business the company won in that state. No charges grew out of that investigation.

GM recalling Chevrolet Sonics to check brake pads

DETROIT — General Motors Co. said on Friday that it is recalling more than 4,000 of its 2012 Chevrolet Sonic subcompact cars to check for missing brake pads.

The possibility that some Sonics could be missing an inner or outer brake pad was discovered during warranty service for a rental vehicle customer. GM said the problem “is expected to exist in very few cars,” and there are no known crashes or injuries related to the issue. The lack of a pad could lengthen stopping distance or contribute to a crash.

The recall involves 4,296 of GM’s 2012 Sonics sold in the U.S. The affected models are from the Orion Township, Mich., assembly plant, where the Sonic is built for sale in the U.S. and Canada.

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