BUSINESS BRIEFS
Fannie Mae eases on home sales
Associated Press
WASHINGTON — Fannie Mae will allow more struggling homeowners to sell their homes for less than they owe on their mortgages in a gambit that could hit the mortgage finance company with upfront losses but stave off a massive hemorrhage from foreclosures.
The program, by the largest U.S. financier and guarantor of home mortgages, addresses the issue of homeowners with "upside-down" loans, who owe more than their homes are worth. There are now an estimated 9 million U.S. homeowners in that predicament, according to Moody's www.Economy.com.
Encouraged by regulators and politicians intent on keeping more homeowners from defaulting, Fannie Mae and its smaller government-sponsored sibling Freddie Mac have expanded their roles in the stricken housing market.
The companies together must provide as much as $200 billion in new funding for home loans in exchange for getting their risk cash cushions reduced. The government requires them to keep a certain amount on reserve to guard against risk.
GE PROFIT PLUNGE RATTLES MARKETS
HARTFORD, Conn. — Normally reliable General Electric Co. shocked investors with a nearly 6 percent decline in its first-quarter profit and slashed its earnings forecast for the full year.
That sent its own shares down 10 percent and the broader market sharply lower on renewed worries about the weakening economy.
GE blamed disruptions in its financial business late in the quarter for its inability to advise Wall Street ahead of time about the deterioration in its earnings. But analysts unaccustomed to being surprised by the industrial, financial and media conglomerate were rattled by the magnitude and breadth of the decline.
Net income fell 6 percent to $4.3 billion, or 43 cents per share, from $4.57 billion, or 44 cents per share, a year ago.
Earnings from continuing operations came to $4.4 billion, or 44 cents per share, down 8 percent year-over-year. That was well below the 51 cents per share expected by analysts in a Thomson Financial survey. The company itself had forecast a profit of 50 to 53 cents per share.
PERKS TO DOCTORS TO BE DISCLOSED
WASHINGTON — For years, the nation's largest drug and medical device manufacturers have courted doctors with consulting fees and free trips to exotic locales and by sponsoring the educational conferences that physicians attend.
Those financial ties in most cases need not be disclosed and can lead to arrangements that some say improperly influence medical care.
Now, under the threat of regulation from Congress, the two industries are promising to be more forthcoming about their spending.
A dozen of the nation's leading drug and device makers have told congressional leaders that they have plans or are working on plans to publicly disclose grants to outside groups. The details will be provided on each company's Web site.
SALLIE MAE DROPS LOANS TO GRADS
WASHINGTON — Sallie Mae, the nation's largest student lender, said yesterday it will stop offering lower-cost consolidation loans to college graduates, saying the federally backed business has become unprofitable.
In a letter sent to colleges, Sallie Mae, formally known as SLM Corp., said it will concentrate instead on making new loans to students entering college. The suspension of the company's participation in the federal consolidation loan program took effect yesterday.
Federal consolidation loans accounted for nearly 70 percent of Sallie Mae's portfolio of government-backed student loans last year.
As a result of the credit crunch stemming from the subprime mortgage crisis, 46 other student lenders — accounting for 12 percent of the federally backed student loan market — have stopped making government guaranteed loans, either temporarily or permanently, in recent months.
