The New York Times reports that Bank of America is completing an agreement to pay $8.5 billion to settle claims stemming from troubled mortgage securities that the bank sold as good investments. Citing unnamed sources, the Times said the settlement would wipe out the bank’s earnings for the first half of the year. It may also encourage private investors to seek settlements from other banks that sold tranches of distressed home loans during the housing bubble. The proposed settlement would go to more than 20 investors including Pimco, Metropolitan Life, BlackRock and the Federal Reserve Bank of New York.
The settlement involves mortgages issued by subprime lender Countrywide Financial, which was acquired by Bank of America in 2008. JP Morgan Chase, Citigroup and Wells Fargo are also exposed to legal claims stemming from faulty mortgage bonds.
Lagarde to head International Monetary Fund
Christine Lagarde will become the first woman to lead the International Monetary Fund, Bloomberg News reports. Currently finance minister of France, Lagarde will play a key role in resolving Europe’s debt crisis and deciding whether the IMF will provide additional aid to Greece. The needs of Europe will have to be balanced with those of emerging nations.
Japanese output continues to increase
Industrial production rose for the second straight month in Japan, a sign that the world’s third-largest economy is recovering from the natural disasters that disrupted manufacturing in March. The New York Times reports that industrial output rose 5.7 percent from April to May. Production was up 1.6 percent in April.
Zynga set to file an IPO today
GreenCrest Capital Management has announced that Zynga Inc., a social media gaming company, will file for an initial public offering today, Bloomberg News reports. Morgan Stanley will be the lead underwriter of an offer expected to raise more than $1 billion.
Zynga , the developer of the “FarmVille” and “Texas HoldEm Poker” games, is expected to realize $1.5 billion in sales this year . The company joins LinkedIn Corp., Pandora Media Inc. and Yandex NV, all internet companies that went public in the past two months.
Google faces off with Facebook
Google has launched a social networking service called the Google+ project, which looks much like Facebook but limits sharing to defined groups of users. In addition to enhance privacy protection, the service also offers text messaging and video chat, The New York Times reports. The service could help maintain Google’s value to advertisers as consumers turn increasingly to social networks like Facebook and Twitter for information.
And Microsoft takes on Google
Microsoft Corp. has launched an internet-based version of Office 2010 in an effort to out-compete Google Inc. for business accounts, Bloomberg News reports. The Office 365 suite of programs is now available in 40 markets and takes on Google’s Apps for Business software. Both products cater to companies who want more applications hosted on “cloud” networks rather than high-maintenance hard drives. Microsoft estimates Office 365 can save the average 1,000-person company $350,000 a year over a four-year period.