What's Important in the Financial World (2/9/2012) A Mortgage Deal With Banks, Yahoo! to Sell Alibaba?

As one set of government suits against America’s largest banks is settled, another is about to begin. Media reports say that federal regulators and state attorneys general have set a $25 billion deal with Ally Financial, Bank of America (NYSE: BAC), Citigroup (NYSE: C), JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC). These lenders have been accused of abusing the foreclosure process for their own financial advantages. States and the federal government would receive payments, along with thousands of people whose homes were foreclosed on from 2008 to 2011. Just as this home mortgage matter is settled, the government means to sue banks that misrepresented the value of mortgage backed securities that they sold to other large institutions. The Wall Street Journal reports that the banks that are part of the second investigation include Ally Financial, Bank of America, Citigroup, Deutsche Bank (NYSE: DB) and Goldman Sachs (NYSE: GS). Between mortgages and mortgage instruments, the housing collapse will cost major banks tens of billion of dollars.

Greeks in Brussels

The Greeks have departed for Brussels, where they will plead with the European Union, International Monetary Fund and European Central Bank for the money needed to cover the nation’s financial needs next month. The parties have until February 15 to reach a settlement. The Greeks say they have given in to all austerity requests but have no deal to cut some government-controlled pensions. So, after all of the negotiations, that single issue may drive Greece into default.

Luxury Car Sales

At least some rich people around the world do not think their wealth will be entirely stripped away by taxes. Daimler said it had a 39% increase in fourth-quarter profits. It said the primary driver was an upswing in sales of high-end Mercedes, particularly the car company’s M-Class SUV. Daimler is not alone. BMW posted similarly impressive earnings, as did Volkwagen’s Audi division.

Yahoo! and Alibaba

Yahoo! (NASDAQ: YHOO) may finally get some tangible value from its 39% holding in large China e-commerce company Alibaba. Rumors suggest that Alibaba is close to securing bank loans of as much as $3 billion. Wall St. thinks the Alibaba stake is worth closer to $5 billion, so the firm may have to use some of its own money. Now, investors will have to wait to see what Yahoo! does with the cash. There is almost no optimism that Yahoo! has the management and prospects to use the billions to rebuild its troubled businesses. Yet, with a new CEO and newly constituted board, a turnaround is at least a long shot.

Douglas A. McIntyre