U.S. new home sales remain moderate
Purchases of new U.S. homes rose in August, capping the weakest two months this year, showing the fallout from mortgage rates at a two-year high is cooling the real estate rebound. Sales increased 7.9 percent to a 421,000 annualized pace following a 390,000 rate in the prior month that was less than previously estimated, figures from the Commerce Department showed. Demand slumped 14.1 percent in July. The median forecast of 77 economists surveyed by Bloomberg News called for 420,000. The data highlight the risk that the run-up in borrowing costs pose for the housing rebound, which has boosted growth the past two years. Federal Reserve policymakers last week refrained from reducing the $85 billion pace of monthly bond buying, saying the tightening of financial conditions, if sustained, could slow the pace of improvement in the economy.
Citigroup to pay $395M over mortgage loans
Citigroup Inc., the third-largest U.S. bank, agreed to pay Freddie Mac $395 million to resolve potential future repurchase claims tied to mortgages. The accord covers about 3.7 million loans sold to Freddie Mac between 2000 and 2012, New York-based Citigroup said. The $395 million sum was covered by repurchase reserves as of June 30, Citigroup said. The biggest U.S. home lenders, including Bank of America Corp. and Citigroup, faced pressure to resolve claims on mortgages sold to Fannie Mae and Freddie Mac, the U.S.-owned firms that took a $187.5 billion bailout. Citigroup announced a deal in July to pay Fannie Mae $968 million. The deal doesn’t release the bank from liability tied to servicing the loans.
Three charged in LIBOR manipulation case
U.S. prosecutors charged three former ICAP employees in a scheme to manipulate the London Interbank Offered Rate, or LIBOR, as the interdealer broker was fined $88 million in a five-year international probe of rigging of benchmark interest rates. The brokers were charged with two counts of wire fraud and one count of conspiracy to commit wire fraud for allegedly colluding with traders at UBS AG to manipulate yen LIBOR, according to a complaint unsealed in federal court in New York. London-based ICAP, the world’s largest broker of transactions between banks, was fined $65 million by the U.S. Commodity Futures Trading Commission and $22.5 million by Britain’s Financial Conduct Authority, the regulators said. The three men face as long as 30 years in prison if convicted.
Stryker to buy Mako Surgical for $1.65B
Stryker Corp., the second-largest seller of orthopedic devices, agreed to buy Mako Surgical Corp. for $1.65 billion to add technology for robot-assisted surgery. Investors in Mako will receive $30 a share from Kalamazoo, Mich.-based Stryker, the companies said. The offer carries an 86 percent premium over Fort Lauderdale, Fla.-based Mako’s closing price Tuesday. Mako, founded in 2004, pioneered the use of robotic-assisted surgery in orthopedics. It sells the Rio Robotic Arm, which enables surgeons to precisely cut through bone. The incisions are designed for the company’s Restoris implants, including partial knee resurfacing in people with osteoarthritis.
Household wealth up 1.8 percent, Fed says
Household wealth climbed in the second quarter while household debt barely budged, continuing a seesaw pattern as outstanding mortgage obligations declined while auto and student debt mounted, according to data released Wednesday. Household net worth grew by $1.3 trillion, or 1.8 percent, to $74.82 trillion, owing to gains in prices that boosted house values by about $525 million as well as a boost of nearly $300 billion from gains in the stock market and mutual funds. Household debt meanwhile rose a seasonally adjusted annual rate of 0.2 percent in the second quarter, the Federal Reserve said in its voluminous “financial accounts of the United States” report.