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IN BRIEF

Count of ‘underwater’ homeowners may rise

Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.

The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report Thursday.

Seven markets in states with the fastest appreciation during the five-year housing boom — including Las Vegas; Fort Lauderdale and Miami, Fla.; and Merced and Modesto, Calif.; may find 90 percent of borrowers underwater, the report said.

As of March 31, Deutsche Bank said, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties.

NEW YORK

Judge questions SEC settlement with BofA

A federal judge is casting doubt on Bank of America Corp.’s proposed settlement with regulators over undisclosed bonuses paid to Merrill Lynch & Co. shortly before the bank acquired the Wall Street firm.

In a harshly worded order, U.S. District Judge Jed Rakoff expressed concern that the settlement wouldn’t get to the bottom of whether Bank of America, which received federal bailout funds, intentionally misled shareholders about the Merrill bonuses.

“Despite the public importance of this case, the proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint,” Rakoff wrote in the order, filed late Wednesday.

Bank of America and the Securities and Exchange Commission said Monday that the bank would pay $33 million to resolve an investigation into whether it hid from investors $3.6 billion in payments while the acquisition was pending.

NEW YORK

Shopper wallets stay closed during July

Shoppers remained tight-fisted in July, raising concern about the back-to-school and holiday shopping seasons as well as for the broader economic recovery.

The bargain-hunting played out in retailers’ reports, with mall-based apparel stores faring the worst. Among the disappointments were Macy’s Inc. and teen retailers Abercrombie & Fitch Co. and Wet Seal Inc.

The few bright spots were apparel discounters like Ross Stores Inc. and TJX Cos., operator of the T.J. Maxx and Marshalls chains, both of which reported sales gains — a rarity right now — that well exceeded Wall Street estimates.

A monthly compilation of more than 50 retailers’ results by The International Council of Shopping Centers and Goldman Sachs showed overall same-store sales fell 5 percent in July compared with the year-ago period. Michael Niemira, the council’s chief economist, estimates that the tax holiday factor depressed July’s results by 0.5 percentage points and likely will boost August’s sales figures by the same amount.

NEW YORK

Nasdaq stock market to halt flash trading

The operator of the Nasdaq stock market said Thursday it will stop a practice that gives some brokerages a split-second advantage in buying or selling stocks.

Nasdaq OMX Group Inc. is voluntarily ceasing the practice, known as flash order trades, on Sept. 1.

Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to let those members get better prices and profits.

WASHINGTON

Fannie Mae will seek $10.7 billion in aid

Fannie Mae says it needs an additional $10.7 billion in government aid after posting a loss of $15.2 billion in the second quarter as the taxpayer bill from the housing market bust keeps growing.

The mortgage finance company, seized by federal regulators last September, posted a quarterly loss of $2.67 per share. That compares with a loss of $2.6 billion, or $2.54 per share, a year earlier.

The results were driven by $18.8 billion in credit losses due to declining housing market conditions. The request for federal aid is Washington-based Fannie Mae’s third since the takeover. It has received about $34 billion so far.

NEW YORK

Ex-AIG chief said to settle fraud charges

The Securities and Exchange Commission said Thursday that former American International Group Inc. CEO Maurice “Hank” Greenberg agreed to pay a $15 million fine to settle fraud charges.

The charges are tied to an accounting scandal earlier this decade at AIG that led to Greenberg’s ouster in 2005. The following year, AIG paid more than $1.6 billion to settle charges of improper accounting.

The case is unrelated to the government bailout of AIG, which is trying to sell assets to pay off the $182.5 billion in loans it has received since last September.

NEW YORK

Morgan Stanley buys back warrants

Morgan Stanley said Thursday it paid $950 million to buy back warrants from the government that could have eventually been converted to common shares in the bank.

New York-based Morgan Stanley issued the warrants to the Treasury Department as part of the loan package it received under the Troubled Asset Relief Program.

As part of the program, Morgan Stanley received $10 billion in funding from the government to help bolster its balance sheet as credit markets essentially shut down. In exchange, the government received preferred shares in Morgan Stanley and the warrants to purchase common shares.

NEW YORK

FTC issues rule policing oil-price manipulation

The Federal Trade Commission said Thursday it would begin policing the petroleum industry with new penalties for anyone attempting to manipulate energy prices.

The rule, which will go into effect in November, targets anyone dealing with crude oil, gasoline and petroleum distillates. It prohibits market distortions through false or misleading statements about stockpiles, prices or crude and fuel output.

Banker one of nine tapped for committee

Jackie DeLaney, chief executive officer of Sun West Bank, has been selected as one of nine bankers nationwide to serve on the American Banker Association’s community bank solutions task force, the bank said Thursday.

The task force will study community bank problems related to the economic crisis, officials said in a statement.

The task force has selected community banking executives from states such as Nevada that have been hardest hit by the current recession.

The group will serve as an advocacy group to lawmakers, regulators and the Treasury Department.

DeLaney previously was executive vice president and chief operating officer of Sun State Bank; chief executive officer of Nevada Community Reinvestment Corporation; and vice president of First Interstate Bank.

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