Former IndyMac officers found liable for $168 million in negligent loans

NEW YORK (Reuters) - Three former officers of IndyMac Bank FSB's homebuilder division were found liable by a jury on Friday for more than $168 million for negligently lending to developers who were unlikely to repay millions of dollars in loans. The Federal Deposit Insurance Corp brought a civil lawsuit against the officers in 2010 in its capacity as receiver for the now-defunct IndyMac. The agency alleged that the officers of "significant departures from safe and sound banking practices" in an attempt to rev up IndyMac's loan production despite warnings about an imminent market decline. Following a 16-day trial in California federal court, jurors found three former officers - Scott Van Dellen, Richard Koon and Kenneth Shellem - liable for negligence and breach of fiduciary duty in connection with 23 loans, according to the verdict sheet. Jurors found that all three men should pay $168.1 million in damages. A fourth defendant, William Rothman, settled the claims against him in October for $4.75 million. FDIC general counsel Richard Osterman said in a statement that the agency was pleased with the verdict. "While most of our cases have settled short of trial, we remain committed to pursuing actions where necessary to maximize recoveries and hold those responsible for losses to failed financial institutions accountable," he said. Attorney Kirby Behre, who represented Shellem and Koon, called the verdict the "result of a deliberate effort by the government to scapegoat a few men for the impact that the unforeseen and unprecedented housing collapse in 2007 had at IndyMac and many, many other financial institutions." California-based IndyMac, which specialized in a type of mortgage that often required minimal documentation from borrowers, was seized by banking regulators in July 2008 as the financial crisis gathered steam. Its failure cost the FDIC, which stands behind bank deposits, an estimated $12.8 billion. Lawyers for Van Dellen could not be immediately reached for comment Friday evening. The case is FDIC v. Van Dellen et al, in the U.S. District Court for the Central District of California, no. 10-4915.

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Chinese group in talks to buy AIG air lease arm

HONG KONG/NEW YORK (Reuters) - A group of Chinese companies, including Industrial and Commercial Bank of China (ICBC), is in talks to buy nearly all of American International Group Inc's aircraft leasing unit for about $5.5 billion, AIG said on Friday. The deal is expected to be announced as soon as early next week, a source familiar with the matter said on condition of anonymity. AIG, which has been selling assets to pay back a $182 billion U.S. government bailout from 2008, had long been hoping to float its ILFC aircraft leasing unit through an initial public offering, but poor market conditions forced it to delay those plans. An IPO was expected to value the company at $6 billion to $8 billion, according to previous reports on the plans. AIG Chief Executive Robert Benmosche said last month that he was waiting for markets to improve to take ILFC public. AIG said it is in talks to sell a 90 percent stake in the unit to a consortium including trust company New China Trust Co Ltd, China Aviation Industrial Fund, and an investment arm of ICBC , China's largest bank. New China Trust is 20 percent-owned by British bank Barclays Plc . "The talks are reasonably far along," a second source said. An ILFC spokesman declined comment. A spokesman for ICBC declined to comment. Reuters was unable to reach New China Trust and China Aviation. Shares in AIG rose 2.6 percent to $34.13 on the New York Stock Exchange, after touching their highest level in more than five weeks earlier in the day. "We view this news positively, since we think a sale of ILFC is the last large transaction AIG needs to do as it continues its turnaround," S&P Capital IQ analyst Cathy Seifert said in a research note. The capital may come at a good time for AIG. Late Friday, it said it expects after-tax losses of at least $1.3 billion from Superstorm Sandy. It said it would contribute $1 billion to its U.S. property insurance units to help cover the losses. INDUSTRY LEADER According to AIG's third-quarter earnings report, ILFC's net book value as of September 30 was $7.9 billion. In the past, Benmosche had been adamant about not selling ILFC for less than book value, although the fact that the IPO process has languished for 15 months may have changed his thinking. ILFC reported total assets of $39.6 billion and $39 million in operating income in the third quarter, compared with an operating loss of $1.3 billion a year earlier, when it took $1.5 billion of impairment charges and fair value adjustments. Founded by aircraft leasing legend Steven Udvar-Hazy, who sold the company to AIG and eventually formed his own group, ILFC is one of the world's largest leasing companies and among the world's biggest owners of passenger jets. Its main rival is GECAS, an arm of General Electric Co . ILFC's customers include most of the world's major airlines. Since it was founded almost 40 years ago, ILFC has bought a combined total of more than 1,500 passenger jets from Boeing Co and Airbus , according to manufacturer figures. ILFC has a portfolio of more than 1,000 owned or managed aircraft. It has on order 239 new fuel-efficient planes, including Boeing 787s and Airbus A320neos, and has the rights to purchase an additional 50 such aircraft. The leasing company has been looking for areas of growth and beefed up its presence in the Asia Pacific region by opening offices in Singapore and Beijing this year. CHINESE BUYING SPREE China has shown interest in buying aircraft leasing businesses before. China Development Bank, the country's policy lender, was among the short-listed bidders for Royal Bank of Scotland Group Plc's aviation business earlier this year, according to a previous Reuters report. That business was bought by a consortium led by Japan's Sumitomo Mitsui Financial Group . Analysts say China tends to balance its orders between Airbus and Boeing, the world's two dominant aircraft manufacturers, partly for political reasons. As a result, the manufacturers may not need to compete as heavily for orders as in the rest of the world, so China is paying a premium for aircraft, industry experts say. The order books of ILFC could mean cheaper planes for China. Chinese companies have launched about $51.3 billion worth of overseas acquisitions this year, making the country Asia's second-biggest spender on outbound transactions, according to Thomson Reuters data, behind Japan. Credit Suisse is among the banks advising the buyers, while Goldman Sachs is among AIG's advisers. (Additional reporting by Denny Thomas, Michael Flaherty, Vikram Subhedar, Kelvin Soh, and Elzio Barreto in Hong Kong, Tim Hepher in Paris and Ben Berkowitz in New York; Editing by Mark Potter, Lisa Von Ahn, John Wallace, Tim Dobbyn and Leslie Adler)

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Dow, S&P rise on jobs, but Apple bites Nasdaq again

NEW YORK (Reuters) - The Dow and the S&P 500 advanced modestly on Friday, though another sell-off in Apple depressed technology shares and kept the Nasdaq negative, overshadowing a sharply better-than-expected jobs report. Trading was light, continuing the week's trend of slight moves and anemic volume. The S&P 500 ended up a mere 0.1 percent for the week, following several volatile sessions that repeatedly pushed it in and out of positive territory. The benchmark index is just 3.8 percent below the 2012 intraday high of 1,474.51 reached in mid-September. Equities opened higher after the non-farm payrolls report, which showed 146,000 jobs added in November, far more than had been expected, while the U.S. unemployment rate dropped to 7.7 percent. A sour reading on consumer sentiment caused an erosion of those gains, though markets rebounded going into the close. The Thomson Reuters/University of Michigan's consumer sentiment index for early December fell to its lowest level since August. Sentiment fell on growing concerns over the "fiscal cliff" debates in Washington, which have been a major factor preventing broader moves as well. "We're not as concerned as we were a few months ago because of improvement like you can see in the employment number, but there's such a wild card over the cliff," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. "There are such concerns about what could happen that markets will be overhung until a resolution is more certain." One of the biggest drags on the Nasdaq was Apple which fell 2.6 percent to $533.25, extending its losses for the week to 8.9 percent. This was the worst week for the stock since May 2010, and with the losses, the stock of the largest U.S. company by market value is now down 24.4 percent from an all-time intraday high reached in late September. In Friday's session, Apple's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38. The weakness drove the S&P information technology sector <.gspt> lower. The index fell 0.6 percent and was the weakest of the S&P 500's 10 major industry sectors on Friday. The Dow Jones industrial average <.dji> gained 81.09 points, or 0.62 percent, to 13,155.13 at the close. The Standard & Poor's 500 Index <.spx> rose 4.13 points, or 0.29 percent, to 1,418.07. The Nasdaq Composite Index <.ixic> slipped 11.23 points, or 0.38 percent, to close at 2,978.04. For the week, the Nasdaq is down 1.1 percent, hurt largely by the decline in Apple. The Dow, which does not count Apple as a component, rose 1 percent for its third straight week of gains. The S&P 500 is also up for three straight weeks, rising 4.3 percent over that period. The equity market has regained most of the ground it lost following President Barack Obama's re-election as markets turned their focus to the coming "fiscal cliff." Market response to the macroeconomic data remained muted as negotiations continued to command investor attention. U.S. House Speaker John Boehner said that talks this week with President Barack Obama produced no progress, and he renewed his demand that the president provide a new offer to avert the series of tax increases and spending cuts that are likely to hurt economic demand in 2013. Material shares <.gspm> were the strongest performers of the day, with that index up 0.8 percent. Freeport-McMoRan Copper & Gold Co gained 2.9 percent to $31.70 while Dow Chemical added 2.2 percent to $30.30. Amarin Corp fell 18.9 percent to $9.69 after the biopharmaceutical company raised $100 million in financing to help it launch its heart drug, Vascepa, but disappointed investors, who had hoped for a sale or partnership. CombiMatrix Corp shares more than quadrupled, soaring 336.6 percent to $8.60 after the company said two studies published in a medical journal favored technology it uses for prenatal diagnosis of genetic abnormalities over traditional technologies. About 52 percent of shares listed on the New York Stock Exchange closed higher while slightly more than 50 percent of Nasdaq-listed stocks closed lower. Volume was light, with about 5.47 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

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US consumer borrowing rises to record $2.75T

WASHINGTON (AP) — Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high. The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion. Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months. The strong rise in borrowing came in a month when Americans cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy. Many consumers may also have scaled back because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then. Consumer spending drives roughly 70 percent of economic activity. Economists think that it could bounce back in November. But the underlying trend remains weak because with unemployment remaining high, households don't have the incomes to spend. Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans. Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17 percent lower. During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22 percent higher than in July 2008. That reflects in part the fact that many Americans who have lost jobs decided to go back to school to get training for new careers.

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Why is Wall Street losing its appetite for Apple?

SAN FRANCISCO (AP) — This holiday season is shaping up to be a record-breaking period for Apple as shoppers snap up iPhones and iPads. So, why is the world's most valuable company losing its luster with investors? Apple began selling the iPhone 5 on Sept. 21, the same day the company's stock hit an all-time peak of $705.07 per share. Since then, the stock has plunged nearly 25 percent, trimming the company's market value by more than $150 billion. On Friday, the stock fell almost 3 percent and closed at $533.25. The sell-off has had broad impact. It has reached beyond Apple's own stockholders because the company is the largest component in the Standard & Poor's 500 and Nasdaq composite index — two benchmarks that are tracked by widely held mutual funds and exchange traded funds, or ETFs. Apple comprises 4 percent of the S&P 500 and nearly 12 percent of the Nasdaq, according to FactSet. The Nasdaq has shed 6 percent since Apple's stock price peaked while the S&P 500 has declined 3 percent, the same as the Dow Jones industrial average, which doesn't include Apple in its basket of 30 stocks. Apple's abrupt descent is fueling a debate among market-watchers. Is the stock now a bargain, as some would argue? Or, is the recent markdown in Apple's value justified because the company has entered a phase of less innovation and slower revenue growth? Disagreements over the issue are contributing to unusual volatility in the stock. On Wednesday, Apple's stock fell 6.4 percent, the biggest one-day drop in more than four years. Just two-and-half weeks ago, the stock surged 7.2 percent for its biggest one-day gain in three years. There's no consensus regarding the cause, but one thing is clear: There have been more investors eager to sell Apple's stock than buy it in recent months, despite all the evidence indicating Apple's products have never been more popular. Here are three theories that seek to explain the recent downturn in Apple's stock: Theory: The Competition Conundrum Hypothesis: Apple's grip on the growing mobile computing market is loosening amid a wave of cheaper alternatives to the iPhone and iPad. The iPhone's early lead in the smartphone market already has been surrendered to the more than 500 million devices running on the free Android software made by Google Inc. By comparison, as of the end of September, Apple had shipped 271 million iPhones since its 2007 debut. Nokia phones running on the recently released Windows 8 system from Microsoft Corp. pose a new threat, especially in China, where Nokia has struck a deal with that country's largest wireless carrier. Meanwhile, struggling Research In Motion Ltd. is pinning its comeback hopes on a revamped operating system for the once-iconic BlackBerry to rekindle demand for that device. Now, there are signs the competition is putting pressure on Apple in the booming tablet computer industry that it launched in 2010 with the release of the iPad. In a report that likely contributed to Wednesday's steep drop in Apple's stock, research firm IDC predicted the iPad's share of the worldwide tablet market this year will decline to 54 percent from 56 percent in 2011. IDC said the iPad will dip below 50 percent by 2016. Meanwhile, the market share of tablets powered by Android, including Google's Nexus line and Amazon.com Inc.'s Kindle Fire, has climbed from 40 percent last year to 43 percent his year, according to IDC. Windows 8, which is designed to run on tablets, also is expected to chip at Apple's lead and latch on to 10 percent of the market by 2016, IDC said. The popularity of smaller tablets with seven-inch diagonal screens and retail prices below $200 has already forced Apple to make changes. The company responded by introducing the iPad Mini, which features a nearly eight-inch screen. The iPad Mini sells for $329, which helps Apple protect its profit margins and preserve its reputation for selling top-of-the-line products that merit prices a notch above the competition. Nevertheless, the iPad mini is undoubtedly diverting some sales from full-sized iPads, which sell at prices ranging from $399 to $829. That is one of the reasons BGC Financial analyst Colin Gillis expects the iPad's average selling price to fall by about $50 in the current quarter, which ends this month. That would be a 9 percent decline from the iPad's average price of $535 during the July through September period. Even if it's no longer the market leader, the iPhone remains hotter than ever. Based on figures released by wireless carrier AT&T earlier this week, Jefferies analyst Peter Misek predicts Apple will sell 53 million iPhones this quarter, primarily the newest model. That would be a more than 40 percent increase from Apple's previous one-quarter record of 37 million iPhones set in the period covering last year's holiday shopping season. Theory: The Creativity Contraction Hypothesis: Apple is running out of fresh ideas. Since Apple co-founder Steve Jobs died 14 months ago after a long battle with cancer, the company has mostly been fine-tuning products that were created under his visionary leadership. The former CEO's hand-picked successor, Tim Cook, is well-respected, but some investors are starting to wonder if Apple can conjure up another revolutionary product to catapult the company on another multiyear stretch of breakneck sales growth. Can Apple innovate like a hard-charging startup while maintaining its giant company stature? Smartphones and tablets "are starting to become more like commodities," Gillis said. "And how much upside is left if you are stuck in a commodities business? The question is: What is going to get Apple going again?"Most analysts believe Apple's next breakthrough will be a television that shares the same operating system as the iPhone and iPad. An Apple TV would give the company a prized perch on the biggest screen in most households and open up an array of new business opportunities. Jobs hinted that Apple had figured out how to produce a mesmerizing new TV during interviews he gave with his biographer, Walter Isaacson, before he died. That led many analysts to predict an "iTV" would come this year, only to be disappointed. Cook indicated Apple is still trying to develop the device during an interview that aired on NBC's "Rock Center" Thursday night. "When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years," Cook said. "It's an area of intense interest. I can't say more than that." Theory: The Fiscal Cliff Factor Hypothesis: Many long-time Apple shareholders are selling stock to lock in gains at a lower tax rate. Under laws set to expire Dec. 31, profits on stocks owned for at least a year are taxed at a 15 percent rate — much less than the rate earned income is taxed at. The recent drop notwithstanding, Apple's stock has still enjoyed an incredible run. It has more than quadrupled from about $120 per share since the iPhone's release in June 2007. Even investors who bought Apple's stock a year ago are still sitting on a gain of nearly 40 percent. Gillis, though, points out that savvy investors probably wouldn't be selling their Apple stock just to save some money on taxes if they truly believed the stock is destined to soar higher and make them even richer a year from now. "Sometimes, stocks just take a breather," he said. "And when you get to be as big as Apple, any shift in sentiment can have a material impact on the share price."

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