Receiving Wide Coverage ...
ValueAct buys Morgan Stanley stake: The activist hedge fund ValueAct Capital Management said it has bought a 2% stake, valued at about $1.1 billion, in Morgan Stanley, but said it is not looking for the bank to make major changes. "We are completely supportive of [Morgan Stanley CEO James] Gorman and impressed by his leadership over the past six years," ValueAct founder Jeff Ubben told the Financial Times. ValueAct said the market undervalues Morgan Stanley. Wall Street Journal, Financial Times
AIG to sell mortgage insurer: American International Group is nearing a deal to sell its mortgage insurance unit, United Guaranty, to Arch Capital Group for about $3.4 billion. An agreement could be reached as soon as early this week. AIG had earlier planned to spin off the unit in an IPO, but selling it outright would help it more quickly meet its goal of returning $25 billion to shareholders. United Guaranty has about a 20% market share in the U.S. and recently has been one of the company's top performing units. Wall Street Journal, Financial Times
Student loan reform?: Fidelity, the giant mutual fund company, has been meeting with federal lawmakers and White House officials to urge them to take action over growing student debt. One of the matters being discussed might be the tax deductibility of student loan interest.
"Fidelity continues to educate policymakers who can further policies that empower student loan borrowers to improve their financial lives," the company said. One in three participants in Fidelity's retirement savings plans has student debt, the company says, while 80% said it affected their ability to save for retirement. Earlier this year, Fidelity began offering its employees $2,000 a year to repay student loans, but the amount is subject to income tax, unlike pension contributions. Daniel Pianko, managing director of University Ventures, an investment firm that focuses on higher education, also discusses student loan issues in an opinion piece in the Journal.
Keeping money in the bank — literally: European banks are looking to store more cash in their vaults to avoid the cost of negative interest rates. Banks are currently paying about 0.4% to keep their funds at the European Central Bank.
The practice could have wide economic implications, such as undermining the ECB's ability to control monetary policy. "If banks are not paying central bank interest charges, then they won't be as affected by further official interest rate cuts," the paper said. "They therefore would not be spurred to lend out more money."
New York Times
Homeowners sue HUD: A nonprofit agency representing low-income New York homeowners is suing the Department of Housing and Urban Development and Lone Star Funds, which bought mortgage loans from HUD, alleging that a disproportionate number of the loans are being foreclosed upon.
The suit alleges the government is fueling racial disparities because most of the mortgages HUD sold to Lone Star are in predominantly black neighborhoods in Queens and Brooklyn and that the company provides fewer protections to homeowners. HUD declined to comment and Caliber Home Loans, Lone Star's mortgage unit, said the lawsuit was "without merit."