In brief: Banks’ guidance to raters probed
New York – New York’s attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the inquiry.
Attorney General Andrew Cuomo is trying to figure out if banks provided the agencies with false information in order to get better ratings on the risky securities, said the person, who asked not to be identified because the investigation has not been made public.
Cuomo’s office is investigating Goldman Sachs Group Inc., Morgan Stanley, UBS AG, Citigroup Inc., Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch, which is now part of Bank of America Corp.
During the housing boom, Wall Street banks often packaged pools of risky subprime mortgages together. The securities were then typically given top-notch ratings and investors purchased them, in part, because of their high ratings.
The ratings, issued by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, are used as a guide for investors to assess how risky an investment might be.
Online advertising increases
New York – Internet ad sales are on the mend as first-quarter revenue rose 7 percent, marking the second straight quarter of increase, according to the Interactive Advertising Bureau.
The revenue of $5.9 billion marks the highest for a first quarter, which is typically a slower period following high ad spending over the holidays.
Thursday’s study by the IAB and PricewaterhouseCoopers says retailers are spending more on Internet ads as Americans go back shopping. Retailers accounted for 20 percent of all online marketing in 2009.
The rebound came after online ad revenue slumped for the first three quarters of 2009.
Mortgage rates below 5 percent
Washington – Mortgage rates fell this week to the lowest level of the year, as rates fell on U.S. government securities. Fixed mortgage rates closely track interest rates paid on long-term Treasury bonds.
The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from 5 percent a week earlier, Freddie Mac said Thursday. It was the lowest level since mid-December, when rates averaged 4.81 percent.
The drop came as investors shifted money from risky European debt to safer U.S. securities. Bond yields fell as a result, and that lowered mortgage rates.
“In times of nervousness, everybody seeks the safe haven,” said Greg McBride, senior financial analyst at Bankrate.com
This week, the average rate on a 15-year fixed-rate mortgage was 4.3 percent, down from 4.36 percent last week.
Boeing loses six 787 orders
Seattle – Boeing has lost another six 787 Dreamliner orders, the company revealed Thursday in the weekly update to its order website. The customer was not identified.
That brings to a round 100 the total number of Dreamliner cancellations after more than two years of delays and the downturn in the aviation business since 2008. The new jet still has a big order backlog of 860 jets.
The canceled order is worth about $1 billion at list prices, though market data from airplane valuation firm Avitas pegs the actual value after standard discounts at about $670 million.
Boeing also announced Thursday a new order for two 777s, again without identifying the customer. This new order is worth about $300 million after discounts.
The cancellation and the new order together reduce total Boeing sales so far this year to 108 jets.