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Economy Briefs

- - Thursday, May 26, 2011

CURRENCY

Dollar falls as data confirm weak U.S. growth

NEW YORK — The dollar fell Thursday against other major currencies after a report confirmed sluggish U.S. economic growth in the first three months of the year as high gas prices hurt consumer spending.

The euro rose to $1.4140 during late trading in New York, up from $1.4079 late Wednesday. The euro rose as high as $1.4206 earlier in the day.

Investors had been thinking the risk of a debt default in Greece was at least a year away, but recent comments by European officials have led some traders to suspect there could be a default as soon as mid-July, said UBS currency analyst Brian Kim.

FORECLOSURES

Some banks settle military mortgage cases

Units of Bank of America and Morgan Stanley have agreed to pay more than $22 million to settle charges that they improperly foreclosed on active-duty members of the U.S. military, the U.S. Justice Department said Thursday.

The Bank of America unit, which was part of Countrywide Financial, will pay $20 million to resolve allegations it foreclosed on the homes of about 160 service members between January 2006 and May 2009 without court orders, the Justice Department said.

Saxon Mortgage Services Inc., part of Morgan Stanley, will pay $2.35 million to resolve allegations that it did the same to about 17 service members between January 2006 and June 2009, the government said.

Both companies will compensate other members of the military who were foreclosed on without a court order during the period from the end of the settlement time frame through 2010, the Justice Department said.

GREECE

Threat to withhold aid spooks markets

The International Monetary Fund may withhold the next slice of aid to Greece due next month, the head of euro zone finance ministers said Thursday, spooking markets with the prospect of default.

European stocks fell and safe haven bond futures rose after Jean-Claude Juncker said the IMF expected the European Union to step in if it were unable to release the June aid tranche, but that would be impossible.

Mr. Juncker's spokesman later clarified that if European and IMF inspectors were convinced by new Greek austerity measures, there would be no problem with the June aid tranche.

Greece's finance minister said this week that if the next $17 billion payment was not forthcoming, the country would be unable to meet its obligations and would default.

Mr. Juncker told a conference Thursday: "If the Europeans have to acknowledge that the disbursement from the IMF on June 29 cannot be operationally implemented, then the expectation of the IMF is that the Europeans would step in for the IMF and take upon themselves the IMF's portion of the financing.

"That won't work because in certain parliaments - Germany, Finland and the Netherlands and others too - there is no preparedness to do so."

TECHNOLOGY

Google establishes pay-by-phone system

NEW YORK — Google Inc. and four bank and telecommunications partners Thursday unveiled "Google Wallet" and "Google Offers," taking U.S. shoppers a step closer to paying by waving their mobile phones at the checkout counter.

The Internet search company's system lets people pay with phones instead of cards, in a race against rivals including Visa, top U.S. banks and mobile phone companies.

Google, Mastercard, Citigroup, First Data and Sprint will make the service available this summer in New York and San Francisco, Google and its partners said.

If successful, the service will beat rivals to the punch and bring U.S. consumers closer toward the retail experience in Asia, where shoppers already routinely wield smartphones like credit cards.

From wire dispatches and staff reports