The Week in Headlines: BofA, AIG, and iWhat?
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These things happened in business this week.
The Story: Bank of America will pay more than $10 billion to Fannie Mae to settle allegations that mortgages weren’t handled properly during the financial crisis. Ya think? In a separate deal, 10 banks settled with federal regulators and agreed to pay $8.5 billion for foreclosure abuses.
The Why (Do I Need to Skimm?): BofA’s settlement with Fannie, which will definitely reduce the firm’s earnings, is a big ol’ step in the bank’s recovery to put its debt in the past and get Fannie off its back for good. Both deals are a nice little reminder of how much of a role banks played in the excesses of the credit boom. Boomz indeed.
Thanks For Your Help, Sucker
The Story: Insurance firm AIG, which received a huge bailout from the government, has finally decided how to really say thank you to America. And it’s one giant middle finger. Or maybe 25 billion of them.
The Why (Do I Need to Skimm?): AIG is said to be deciding whether or not it will join shareholders in a $25 billion lawsuit against the government for cheating shareholders out of money during the bailout. A thank you note would have been fine.
iWant But Do iNeed?
The Story: Apple has heard the people's cries and is said to be developing a lower-end iPhone to go after a wider market. A less expensive version (think hearing plastic, not aluminum when you drop it) could launch as early as this year.
The Why (Do I Need to Skimm?): This marks a big corporate strategy shift, as other companies have taken a bite out of Apple's smartphone supremacy. Steve Jobs liked to make things iXclusive (read: expensive) but Samsung, cough arch rival cough, has given Apple a run for its money by offering a choice of more affordable phones.
United (Hopefully) We Won't Fall
The Story: Boeing's new Dreamliner plane is having a bit of a nightmare. United Airlines found bad wiring in one of its six 787s, just one day after an electrical fire broke out on one owned by a different airline. And then there was a fuel leak, too. No bueno.
The Why (Do I Need to Skimm?): U.S. air safety watchdogs have opened a formal investigation into the fire. Boeing is also working with airlines, as well as U.S. and overseas regulators, to ensure the friendly skies stay just that. Meanwhile, Boeing has been boosting production of its new flier, so a slowdown would mean time and money, which is hard to come by when building a plane that costs $244 million (before discounts that is). Shares of the company have dropped this week. Luckily, planes haven't.
I Can See Clearly Now
The Story: Dish Network has one-upped Sprint in an unsolicited bid to buy Clearwire, the wireless network operator. Sprint is the majority shareholder in the Wire. The Dish is offering more than Sprint, who called its rival's bid "inferior." Way harsh.
The Why (Do I Need to Skimm?): Sprint says Dish's offer, which it would have to approve, doesn't even matter because of its own deal with Clearwire. Clearwire agreed to Sprint's offer to buy the half of Clearwire it doesn't already own back in December. This whole thing could be a set-up for a takeover battle royale.
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Photo courtesy of Alex E. Proimos.
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