Tag Archives for " America "

Cash America to Wind Down Online Payday Loans

September 16, 2011 – Pawnshop operator and payday loan provider Cash America International, which is based out of Fort Worth, Texas, announced today that it plans to spin off most of its online lending subsidiary, Enova International.

Enova will now have a common stock in the New York Stock Exchange, signified by the symbol “ENVA.” Cash America will spin off the ownership through a public offering projected at $500 million; however, the company says it plans to maintain 35-49 percent of its stake. Three other companies will be joint underwriters: UBS Investment Bank, Barclays Capital Inc. and Jefferies & Co.

Enova’s services include consumer payday loans of an average of a little over $500, servicing not only the U.S., but also Canada, the U.K. and Australia. Cash America is the world’s largest pawn shop chain, and entered the payday loan business in 1999. Although the company’s focus is the pawn shop business, payday loans made up about 37 percent of Cash America’s income in the first six months of 2011.

Cash America said that problems with the companies’ partnership had arisen because investors were unable to differentiate between the online lending portion and the concrete business. Enova CEO Timothy Ho said separating from Cash America will give Enova its own identity.

Analysts say the move will also help Cash America’s stock ratings, as the harsh regulations associated with payday loans can pose problems for the company. The pawn shop industry is less regulated and is continuing to expand quickly.


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Bank of America Settles with Fannie Mae for $11.6 Billion

On Monday, Bank of America reached an $11.6 billion settlement with Fannie Mae for poor mortgage-backed investments made during the housing crash.

Bank of America will pay Fannie Mae $3.55 billion in a cash settlement and will buy back $6.75 billion in mortgage loans that Bank of America and their 2008-acquired subsidiary, Countrywide Financial, sold to the mortgage giant from Jan. 1, 2000 to Dec. 31, 2008.

Fannie Mae believed Bank of America failed to meet underwriting standards when approving the mortgage loans in question.

About 30,000 loans are included in the buy-back.  

Bank of America is also required to pay $1.3 billion to address servicing issues.

In a released report, Bank of America said it would pay for the settlement with existing reserves and other provisions.  

“These agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” said Bank of America Chief Executive Officer Brian Moynihan in the release.

Fannie Mae said it is pleased to reach an appropriate agreement.

Bradley Lerman, executive vice president and general counsel of Fannie Mae, said the outcome of the dispute between organizations is “in the best interest of taxpayers,” according to a statement.

In addition to the settlement, Bank of America agreed to sell the servicing rights on approximately two million mortgage loans serviced for Fannie Mae, the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mac) and private label groups. The loans are worth a total of $306 billion.

“We are resolving legacy mortgage issues while balancing the needs of our customers, mortgage investors, our shareholders and communities,” Ron Sturzenegger, Legacy Asset Servicing executive for Bank of America, said in the report. “Bank of America will work closely with our customers, buyers and the investors who own the loans to ensure a smooth transition to their new servicer.”


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NY Senator Pushes Made in America Manufacturing Act

One Senator wants to turn America back into the manufacturing juggernaut of years past.

Senator Kirsten Gillibrand (D-NY) is pushing the Made in America Manufacturing Act that will provide commercial loans to businesses that expand domestic manufacturing and promote job growth.

According to a press release from the Senator’s website, her home state of New York has been crippled with over 123,000 manufacturing job losses since 2005; nearly two years prior to the Great Recession.

If implemented, the Made in America Manufacturing Act would award federal funds to states and “manufacturing hubs” that support domestic manufacturers. Awarded businesses would receive low-interest commercial loans that must be used towards the construction of new facilities, the expansion of manufacturing capabilities, the upgrading of equipment, and manufacturing job growth.

Aside from businesses, funds would also be given to programs that partner educational institutions and training centers with manufacturing businesses. The end goal of which is stimulating job growth.

“I believe New York’s great manufacturing communities are well positioned to compete for funding that would help carry out their innovative ideas to spark more growth in high-tech manufacturing sectors, jumpstart new businesses, and create good-paying jobs right here where we need them the most,” said the Senator in the press release.

If passed, the Act would award up to $20 million across the country for high-tech manufacturing companies in emerging industries such as nanotechnology, biotechnology, and aerospace.

The program’s commercial loans offered to businesses would carry interest rates below market rates. Additionally, federal funds could match private lenders.

“The low-interest loans would be used to construct new facilities or to retool, retrofit or expand existing plants, including equipment, infrastructure or energy efficiency upgrades. The federal investment could also help leverage matching funds from the private sector and other non-federal sources,” said Angie Hu, Press Secretary for Senator Gillibrand, in an interview with loans.org.

According to Hu, the Senator is working to make the Act’s success a bipartisan effort. Partnership will be echoed in the partnership boards that will compete for financing. These partnership boards will be composed of alliances between businesses and local development centers that work together in order to submit an application for financing.

Hu continued to explain that the Act has received massive amounts of support from various members of the domestic industry market, including the Manufacturers Association of Central New York, the Center for Economic Growth, the Hudson Valley Economic Development Corporation, and the Long Island Forum for Technology.


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