Buyout Group Lowers Offer For Sallie Mae
WASHINGTON-The buyout group that had made an offer to buy Sallie Mae has lowered its offering price to $50 a share, down from $60 per share. However, the same group said it would improve the offer in the form of warrants to buy Sallie shares, which it said could eventually be worth as much as $10 a share if Sallie hits earnings expectations.
The buyout group is led by J.C. Flowers and includes JPMorgan Chase, Bank of America, and Friedman Fleischer & Lowe. It is seeking to renegotiate its deal for the student lender now that credit has crunched and there's new legislation that cut subsidies to student lenders. Sallie Mae is objecting to the attempt to renegotiate.
Home Sales Decline Even Worse Than Forecast
WASHINGTON-Not too surprisingly, the National Association of Realtors is reporting that during August the number of Americans signing contracts to buy previously owned homes fell even more than forecast. The NAR said signed purchase agreements dropped 6.5% from July to the lowest level since it began keeping records in 2001.
The drop followed an 11% decline in July. Analysts are predicting that stricter lending guidelines and higher borrowing costs resulting from the credit crisis that emerged during August will serve to push sales down even more when that data is reported, and that the real estate market slump will continue into 2008. "The housing market has yet to reach bottom," Jeffrey Roach, chief economist at Horizon Investments LLC in Charlotte, told the American Banker. More than 10% of signed contracts fell through in August because buyers could not secure financing.
TJX Settlement Offer is Examined
OTTAWA, Canada-The data breach at TJX Cos. Inc. that the company disclosed in January after account information for approximately 45 million people was put at risk was the result of sloppy encryption at two Marshalls stores in Miami, according to a report by Jennifer Stoddart, Canada's privacy commissioner.
Separately, Computerworld reported the settlement offer made by the company in response to litigation against it would offer victims three years of credit monitoring services and ID theft insurance, and would reimburse for any related costs, such as obtaining a new driver's license. But the consumer advocate website Mouseprint.org said only shoppers who made returns without a receipt-and therefore would have had to give TJX their driver's license information-would be eligible for the compensation described in the offer. That would include about 455,000 people, or just 1% of those affected by the breach. The remaining 99% would be entitled to a merchandise credit of $30 to $60 if they incurred a loss of $5 or more, the site said.
MasterCard Offers Versatile Points
PURCHASE, N.Y.-MasterCard's advisory unit has begun promoting a service it says lets consumers earn rewards for using a variety of financial products and services, not just payment cards.
The company said Fifth Third Bancorp, Cincinnati, has been using the service to pool rewards points earned by its customers on credit and debit cards. MasterCard said the service incorporates technology that can integrate several banking products, such as brokerage services, mortgages, and savings and checking accounts. Jon Groch, SVP with Fifth Third's card division, told American Banker it is using the MasterCard service to ease the "clutter" of rewards programs for consumers and to solidify relationships with them.
Start-Up Targets The Underserved
DESOTO, Texas-A start-up company offering payment services is targeting unbanked consumers with a product that has been tried in various forms in the past: charging purchases to a phone bill. The company, Etelcharge.com Inc., is targeting consumers who do not carry credit cards or who do not want to use them online. Several payments analysts told the American Banker phone companies and consumers have become accustomed to charging purchases such as ringtones to phone bills in the past few years, but they warned Etelcharge may be aiming at a small pool of potential users, many of whom may have other options.
The service is available to AT&T Inc. landline customers in Texas, Oklahoma, Arkansas, Kansas and Missouri, though the company has not yet announced any deals with merchants to accept the service as a payment option. That announcement is expected this month. The company is expected to expand into other states over the next six months.
