Consumer borrowing grows for eighth straight month
WASHINGTON – Americans took on more debt in May and used their credit cards more for only the second time in nearly three years. Consumers stepped up their borrowing just as the economy began to slump and hiring slowed.
The Federal Reserve said Friday that consumer borrowing rose by $5.1 billion in May, the eighth straight monthly increase. It followed a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans.
The overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion in May. That was just 1.7 percent higher than the nearly four-year low of $2.39 trillion hit in September.
Borrowing is a sign of confidence in the economy. Consumers tend to take on more debt when they feel wealthier. That boosts consumer spending. Ultimately, it gives businesses more faith to expand and hire. An increase in credit card debt can also be a sign of people falling on harder times.
Wholesale inventories up, but sales take dip in May
WASHINGTON – Wholesale companies added to their stockpiles for a 17th straight month in May but their sales declined for only the second time in the past 11 months, providing further evidence of the economy’s spring slowdown.
The Commerce Department said Friday that wholesale inventories rose 1.8 percent in May, the biggest gain since October. Some of that increase reflected an unwanted buildup of goods because sales declined.
Sales at the wholesale level fell 0.2 percent, the report said. The sales drop was led by a big decline in auto sales and the inventory buildup also reflected a large rise in auto stockpiles.
Wells Fargo & Co. will pay $125 million in mortgage suit
NEW YORK – Wells Fargo & Co. has agreed to pay $125 million to a group of pension funds and other investors to settle allegations the bank failed to warn investors of the risks of the poorly-written mortgage backed securities.
The proposed settlement was filed Wednesday in a California federal court and represents lawsuits filed by the pension funds of Detroit, Alameda County, New Orleans, Guam and other plaintiffs. The settlement is subject to court approval.
The mortgage-backed securities were sold by Wells Fargo in 2005 and 2006. The investors said in their complaint that in its bid to collect fees, the bank misstated and omitted details that show the securities were backed by poor quality mortgages sold to people without proper documentation. The bank denied any wrongdoing.
IMF agrees to give Greece $4.2 billion as part of package
WASHINGTON – The International Monetary Fund has approved providing Greece just over $4.2 billion in the latest installment of a rescue package aimed at helping the country pull back from an impending debt default.
The move by the executive board was expected after a decision last week by eurozone finance ministers to give Greece their portion of a $17.39 billion loan payment that is part of a $259 billion package agreed on last year.
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