Yellen: Fed needs to keep flexibility on interest rates

Federal Reserve Chair Janet Yellen said Wednesday it would be a serious mistake for Congress to require the U.S. central bank to adopt a formal policy rule to guide its decisions on setting interest rates.

Yellen faced a barrage of questions from Republican lawmakers about legislation that they are supporting to make the Fed more accountable and make its policy decisions more transparent. One of the requirements would have the Fed adopt a policy rule that would govern future decisions and would have the Government Accountability Office audit the rule.

Yellen rejected that approach and said the Fed needs the flexibility it now has to make policy decisions.

Costs of litigation crimp Bank of America earnings

Bank of America said Wednesday that its second-quarter earnings were hit by higher litigation expenses.

The Charlotte, N.C.-based bank earned $2 billion in the second quarter after payments to preferred shareholders, compared with $3.6 billion in the same period a year earlier, a decline of 43 percent. Revenue fell 4 percent to $21.9 billion from $22.9 billion.

Per share, the bank’s earnings worked out to 19 cents, compared with 32 cents a year ago.

The bank’s litigation costs of $4 billion crimped earnings by 22 cents a share. The bank said that “substantially all” of the litigation expenses were related to existing mortgage issues that have been previously disclosed.

Home builder confidence rises to highest in months

U.S. home builders’ confidence in the housing market surged this month to the highest level since January.

The brighter outlook suggests construction could pick up in coming months after a sluggish start this year.

The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday rose to 53, up four points from a revised reading of 49 in June.

The latest reading is the first above 50 since January, when it was 56.

– From news service reports