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Economy Briefs

- - Sunday, September 4, 2011

LAWSUIT

Biggest banks sued over risky mortgages

In a sweeping move, the government Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among the 17 targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co. and Goldman Sachs. The lawsuits were filed Friday by the Federal Housing Finance Agency, which oversees Fannie and Freddie.

The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits: $196 billion.

The government didn't provide a dollar amount of how much it seeks in damages. It said that it wants to have the purchases of the securities canceled and be compensated for lost principal and interest payments as well as for attorney fees and costs. The lawsuits allege the financial firms broke federal and state laws with the sales.

OIL SPILL

BP sued over Macondo well blowout

NEW ORLEANS | BP PLC has engaged in a "cover-up scheme" to hide its culpability for the deadly rig explosion that spawned last year's massive oil spill in the Gulf of Mexico, one of the oil giant's partners in the drilling project claims in a lawsuit.

Halliburton Energy Services Inc.'s suit, the latest of several that the project's partners have filed against each other, accuses BP of concealing critical information about the deepwater well that blew out on April 20, 2010.

Halliburton, which did cement work on BP's Macondo well, claims in Thursday's suit that BP provided false information about the location of pockets of oil and gas around the well before the blowout. Halliburton says knowing the location of those zones is critical for a cementing job.

AUTO

General Motors hires Lutz to advise execs

General Motors Co. has hired the ultimate car guy out of retirement to advise its senior leadership.

Bob Lutz, 79, a former GM vice chairman for product development, left the company last year, but never really ended his 47-year career in the auto business. He has been informally advising GM on its new products for the past 16 months from his home near Ann Arbor, Mich.

The move by GM CEO Dan Akerson should help the company because its top-selling new products were conceived and designed under Mr. Lutz's leadership. The new models like the Chevrolet Cruze compact and the GMC Terrain and Chevrolet Equinox midsize crossover SUVs have led GM's recovery from its 2009 bankruptcy.

He also championed the Chevrolet Volt, an electric car that has a small gas generator on board to power it when the batteries are depleted.

CALIFORNIA

Heir apparent turns down $6 million bonus over hacking

LOS ANGELES | News Corp.'s 38-year-old heir apparent, James Murdoch, says he's declining his $6 million bonus for the past fiscal year because of the phone-hacking scandal at the British tabloid he oversaw as an executive.

Even without the bonus, he was awarded a pay package totaling $11.5 million in the fiscal year through June, a 31 percent increase from $8.8 million a year earlier, according to an Associated Press review of a securities filing.

Two-thirds of the bonus for executives is meant to reflect how much the company grew compared with its forecasts, according to the filing. The other third is based on qualitative factors such as contributing to various goals, including non-financial ones.

The $6 million bonus that Mr. Murdoch was supposed to receive would have been 100 percent of the targeted amount. The company said in the filing that he led the success of entertainment company Star India and satellite TV provider Sky Italia, as well as expanding the company's presence in the Middle East.