Pending home sales up slightly, Bank of America (BAC) fined and probe into Chrysler recalls

Bourbon & Bayonets / Monday, October 27th, 2014

Markets were heading lower on Monday after news was released that pending home sales data crept up last month. The National Association of Realtors said that their Pending Home Sales Index was up a mere 0.3% in September to 105. The data came in below the 0.8% increase economists were expecting. Despite missing expectations, the data came in over 1% higher than this time last year. This was the first time this has happened in almost a year. Over the last 12-months, the number of contracts placed on previously owned homes have been down below the previous year’s data. Lawrence Yun, chief economist with NAR, said, “Housing supply for existing homes was up in September 6% from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year. Additionally, the current spectacularly low mortgage rates should help more buyers reach the market.”

Shares of Bank of America Corporation (BAC) were falling after news was released that Merrill Lynch was being fined over short-sale rule violations. The banking giant was fined $6 million for breaking several short-sale rules that are in place to prevent market manipulation. The Financial Industry Regulatory Authority (FINRA) said that rules were broken between September 2008 through July 2012. Chief of enforcement with FIRNA, Brad Bennett, said, that a “firm’s failure to establish systems and procedures to properly close out fail-to-deliver position could have potentially negative market impact, which could harm investors.”

Safety regulators have begun a probe into two recalls with Chrysler. The U.S. National Highway Traffic Safety Administration announced that they were investigating two recalls of the Dodge Ram pickup that affected nearly 1 million vehicles. Safety regulators said that they noticed slow execution of the recalls and “poor communication” with the agency over the recalls. In November of 2013, Chrysler reported the recall of both light and heavy-duty Ram trucks to check for a defect with chassis of the truck that could potentially cause steering problems. The investigation came after nearly 1,000 customers had complained that there were lengthy delays in getting replacement parts. NHTSA, said “We have concerns with the administration and the execution of these safety recalls and accordingly have opened an investigation to collect further information from Chrysler about the details of administration and execution of these campaigns and the logic that supporst the strategies used.”

That’s all for today,

Warren Gates, Normandy Research