FBI probes possible subprime fraud
The Federal Bureau of Investigation on Tuesday said it is investigating 14 companies for possible fraud or insider trading violations in connection with loans made to risky borrowers and investments spun off of those loans.
Agency officials did not identify the companies under investigation but said the probe, which began in spring 2007, involves companies across the loan industry, from mortgage lenders to financial firms that bundle home loans into securities sold to investors.
The FBI is working with the Securities and Exchange Commission, said Neil Power, chief of the FBI’s economic crimes unit in Washington.
Meanwhile, authorities in New York and Connecticut are investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities that were sold to investors.
Power said federal authorities are looking into the practices of so-called subprime lenders, as well as potential accounting fraud committed by financial firms that hold these loans on their books or securitize them and sell them to other investors.
Referring to certain unnamed bankrupt subprime lenders, Power said there are “some irregularities there that we’re looking into,” including the timing of stock sales by executives.
Feds award grants for biorefineries
The Energy Department awarded $114 million in grants Tuesday to build four small-scale biorefineries in Missouri, Oregon, Colorado and Wisconsin, hoping to demonstrate production of cellulosic ethanol. The government grants will cover about a third of the cost of the projects.
The companies selected are ICM Inc., of Colwich, Kan., which will build a facility in St. Joseph, Mo.; Lignol Innovations Inc., of Berwyn, Pa., which will build in Commerce City, Colo; Pacific Ethanol Inc., of Sacramento, Calif., which will build in Boardman, Ore.; and Stora Enso North America of Wisconsin Rapids, Wis., which will build in Wisconsin Rapids.
Pacific Ethanol Inc. will receive $24.3 million and each of the other three companies $30 million.
Orders rise 5.2 percent for big-ticket items
Orders to factories for big-ticket manufactured goods jumped unexpectedly in December, good news amid signs that the U.S. economy may be tipping toward a recession.
Still, analysts said that the 5.2 percent growth in orders – while potentially boosting industrial output in coming months – likely came from overseas demand and that domestic growth faced continuing threats from tight credit and mortgage markets that have forced consumers to retrench.
The Conference Board report Tuesday that consumer confidence fell sharply in January on worries over deteriorating business conditions, and a weakening job market gave another sign of consumer angst.
The New York-based business research group said that its Consumer Confidence Index dropped to 87.9 in January from a revised 90.6 in December. That put it back to about where it was in November, when it registered 87.8. The January reading was just a tad below the 88 expected by Wall Street analysts, according to Thomson/IFR.
Ford executives pan Taurus’ new look
“D’oh!” What was Ford thinking?
Belittling your product probably isn’t a great marketing tool, but two top Ford Motor Co. executives recently criticized the looks of the new Taurus sedan, with one comparing it to doofus cartoon character Homer Simpson.
While speaking in Detroit this month, CEO Alan Mulally and Derrick Kuzak, head of global product development, took shots at the current Taurus, with Kuzak likening its looks to the portly, balding, doughnut-devouring Simpson.
During a speech to industry insiders, Mulally hinted that a new, nicer-looking Taurus is coming in the next year or so.
– From wire reports