Business, Featured

Wells Fargo faces $1 billion fine to settle loan abuses

(Reuters) – Wells Fargo & Co (WFC.N) has been offered a penalty of $1 billion by regulators to resolve outstanding investigations related to auto insurance and mortgage lending abuses, the third-largest U.S. bank by assets said on Friday.

Reuters reported on Monday that the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency were preparing a fine of up to $1 billion for Wells Fargo’s auto insurance and mortgage lending abuses.

The bank said it may have to revise its quarterly results to reflect the final settlement.

“The CFPB and OCC have collectively offered to resolve for an aggregate of $1 billion in civil money penalties,” the bank said in a statement.

“At this time, we are unable to predict final resolution of the CFPB/OCC matter and cannot reasonably estimate our related loss contingency.”

Wells Fargo is reeling from heavy costs and penalties related to the sales practices scandal, which came to light in 2016 and led to the ouster of ex-CEO John Stumpf and other senior management. Executives were grilled in several appearances before the U.S. Congress.

The U.S. Federal Reserve has also imposed restrictions on the bank’s growth, forbidding it to expand its balance sheet beyond 2017 levels until it makes internal changes that addressed its board and risk management.

The restrictions on balance sheet growth will cut its annual profit by $300 million to $400 million this year, Wells Fargo said.

Chief Executive Officer Tim Sloan has sought to reassure investors that the bank was stable despite the regulatory restrictions.

“I’m confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us,” Sloan said in the bank’s first-quarter results statement on Friday.

The bank recently said it was examining its wealth and investment management business for possible customer abuse, including overcharging and inappropriate referrals, after inquiries from government agencies.

Despite its ongoing woes, the bank reported a 6 percent jump in profit, saying net income applicable to common stock rose to $5.53 billion, or $1.12 per share in the quarter ended March 31, from $5.23 billion, or $1.03 per share a year ago.

Analysts on average were looking for $1.06 per share, according to Thomson Reuters I/B/E/S.

Wells Fargo’s shares were up 0.9 percent at $53.16 in premarket trading.

Total revenue fell 1.4 percent to $21.93 billion.

Total loans slipped 1.2 percent to $947.3 billion, hurt most by a decline in average loans in its community banking unit, which includes consumer banking, the area most closely tied to the sales practices scandal.

Noninterest income from mortgage banking, an area where the bank supersedes its peers, fell 23.9 percent due to rising interest rates.

Total noninterest expenses rose 3.3 percent to $14.24 billion.

Reporting By Aparajita Saxena in Bengaluru; Editing by Patrick Graham, Bernard Orr

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Private: China says ‘it is only polite to reciprocate’ to US tariffs
Business, Featured

China says ‘it is only polite to reciprocate’ to US tariffs

Containers are stacked at a port on March 1, 2016 in Lianyungang, Jiangsu Province of China
China Foto Press | Getty Images

Containers are stacked at a port on March 1, 2016 in Lianyungang, Jiangsu Province of China

China on Tuesday condemned the U.S. announcement of tariffs on $50 billion worth of Chinese imports and said it would “take corresponding measures of equal scale and strength against U.S. products.”

“The Chinese side strongly condemns and firmly opposes the unfounded Section 301 investigation and the proposed list of products and tariff increases based on the investigation,” a Chinese embassy statement said.

“As the Chinese saying goes, it is only polite to reciprocate. The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against U.S. products in accordance with Chinese law.”

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Walmart in talks to buy insurer Humana: report
Business, Featured

Walmart in talks to buy insurer Humana

New York (AFP) – US retail behemoth Walmart is in preliminary talks to acquire health insurer Humana, the Wall Street Journal reported, the latest in the recent wave of health care mergers.

The terms of the possible deal were not clear and there is no guarantee an agreement would be reached, the newspaper reported late Thursday.

The transaction would link the world’s biggest retailer with one of the largest US health insurers, and based on Humana’s market capitalization of $37 billion, a takeover would be Walmart’s biggest ever.

Walmart, already a giant in pharmacy sales and with health care clinics in some stores, reported revenues of $500.3 billion last year.

Humana, which a big presence in US Medicare program, had revenues of $53.8 billion last year.

The talks come amid a wave of consolidation in US health care driven by runaway costs and disruption from online retailers, as well as growing signs Walmart’s archrival Amazon plans to expand into the business.

Earlier this month, health insurer Cigna announced a $67 billion purchase of pharmacy benefits manager Express Scripts.

That came on the heels of the December announcement that retail pharmacy chain CVS Health would buy insurer Aetna for $69 billion.

In January, Amazon, along with Warren Buffett’s Berkshire Hathaway and JP Morgan Chase, announced the creation of a nonprofit to address skyrocketing costs that Buffett said have become a “hungry tapeworm on the American economy.”

GlobalData Retail noted the “considerable” risks for Walmart of becoming too enmeshed in health care, including myriad challenges of integrating an insurer into a retailer.

At the same time, a transaction would broaden the retailer’s relationship with consumers, deepen its trove of consumer data, give Walmart a bigger presence in a growing part of the US economy and offer a strong foundation to counter Amazon, GlobalData said in a research note.

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Private: US Pushes China on Cars and Finance in Tariff Talks
Business, Featured

US Pushes China on Cars and Finance in Tariff Talks

The Trump administration is urging China to lower tariffs on cars and open its market to U.S. financial services as part of talks to resolve a rise in trade tensions that has shaken global markets, according to a person familiar with the matter.

Treasury Secretary Steven Mnuchin called China’s Liu He to congratulate Liu on his appointment this month as vice premier in charge of economic policy, said the person, who spoke on condition of anonymity because the discussions aren’t public. The two discussed the trade deficit between the two countries and committed to finding a mutually agreeable way to reduce the gap, the person said, adding they have exchanged correspondence.

Meanwhile, one of President Donald Trump’s senior trade advisers says the president is seeking a nearly one-third narrowing of the U.S. trade deficit with China.

Trump wants to see a $100-billion reduction in America’s trade deficit with China this year, as well as action on intellectual property, White House trade adviser Peter Navarro told Bloomberg Radio on Monday. The U.S. had a $337-billion trade shortfall in goods and services with China last year.

‘Very Expensive’

“We are already at the negotiating table,” he said. Mnuchin and U.S. Trade Representative Robert Lighthizer “actively engage with the Chinese side,” Navarro said. “The problem is talk isn’t cheap with the Chinese side. It’s been very expensive” for the U.S., he added.

The U.S. push to negotiate a detente with Beijing comes after Trump’s plan to slap tariffs on $50 billion in Chinese imports sparked a selloff in U.S. stocks last week. Economic talks between the two superpowers have been stuck in neutral since a meeting last year through their main vehicle of negotiation, known as the Comprehensive Economic Dialogue, ended without a joint statement.

Trump ordered the tariffs after his officials concluded Beijing engages in a range of policies that violate U.S. intellectual property. The president also asked Mnuchin to come up with restrictions on Chinese investments in the U.S., details of which the Treasury secretary should announce soon, Navarro said.

Tit-for-Tat Cycle

Navarro dismissed warnings the global economy is on the verge of being swept up by a tit-for-tat cycle of retaliation between the world’s two biggest economies.

“Everybody needs to stop talking about trade wars and trying to push up these tensions,” he said. “We are free traders, but what the president has said is we have a structural problem in the global economy, massive trade imbalances that are fueled by unfair and non-reciprocal trade.”

The Trump administration is under growing pressure to explain the details of its trade policies after fears of a trade war between the U.S. and China sent stocks tumbling last week. Equities started bouncing back on Monday morning, with major benchmarks surging the most since early February.

‘Green Lights’

“All I see are green lights for growth,” Navarro said.

China unveiled tariffs on $3 billion of U.S. imports in response to separate U.S. steel and aluminum tariffs, and its ambassador to the U.S. said all options are on the table, though the Asian nation doesn’t want a trade war.

“There remains a huge amount of uncertainty over what happens next,” Capital Economics analysts wrote in a research note on Friday. “But with the protectionists seemingly in the ascendancy in the White House, the possibility of further escalation is high.”

Meanwhile, the U.S. is still negotiating with the European Union, Argentina, Australia, Brazil, Canada and Mexico on whether those countries will be subject to steel tariffs. The White House announced last week the nations would be excluded until May 1.

South Korea says it has negotiated an exemption as part of free-trade talks with Washington.

Read a Bloomberg QuickTake on the Trade Policy Upheaval

The U.S. is scheduled to resume discussions with Canada and Mexico early next month on an overhaul to the North American Free Trade Agreement, adding another potential flash point.

Amid the tumult, the administration is sending mixed signals about how far it is willing to go. Just before the China tariffs were announced, Navarro signaled a break from the diplomatic approach toward China that has defined U.S. economic policy since Richard Nixon visited the Communist nation in 1972.

But on Sunday, Mnuchin said he’s optimistic the U.S. can reach an agreement with China that will forestall the need to impose the tariffs that Trump has ordered.

“We’re having very productive conversations with them,” Mnuchin told “Fox News Sunday.” “I’m cautiously hopeful we reach an agreement.”

It’s not clear when the China tariffs will take effect. Lighthizer has 15 days from March 22 to release a proposed product list, though a USTR fact sheet says he plans to release it as early as this week. After the list is released, there will be a 30-day comment period.

Bloomberg Economics estimates that a global trade war would cost the world economy about $470 billion by 2020

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Business, Featured

Meredith announces more than 1000 jobs cuts, plans to sell Time, others

Meredith Corp. said late Wednesday it plans to axe more than a thousand jobs weeks after it acquired Time Inc. with plans to sell off several publications. Meredith said it plans to save $400 million to $500 million a year starting with the elimination of 200 positions with 1,000 more to be cut over the next 10 months. “We have made significant progress executing on these initiatives since we closed on the acquisition just six weeks ago,” said Tom Harty, Meredith chief executive and president, in a statement. “For example, today we are announcing we have completed our portfolio review and decided to explore the sale of the TIME, Sports Illustrated, Fortune, and Money brands.” Back in November, Meredith said it would acquire Time. Shares of Meredith were unchanged after hours, and were flat in Wednesday trading, closing at $53.80.

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