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U.S. House panel lambastes Wells Fargo boss over phantom accounts

WASHINGTON/NEW YORK U.S. lawmakers called on Thursday for Wells Fargo Co chief John Stumpf to resign and a top House Democrat demanded the bank be broken up because it is too big to manage.

Stumpf’s second trip to Capitol Hill on Thursday went no better than his first as lawmakers from both parties rebuked his handling of sales abuses and said the bank had damaged customer trust as well as the broader banking system.

Wells Fargo staff opened checking, savings and credit card accounts without customer say-so for years to satisfy managers’ demand for new business, according to a $190 million settlement with regulators reached early this month.

U.S. Representative Maxine Waters, the committee’s senior Democrat, faulted the bank for identity theft in the fraud and called for Wells Fargo to be dismantled because it was too big to manage.

She called the sales abuses “some of the most egregious fraud we have seen since the foreclosure crisis.” After the hearing, the California lawmaker told reporters she would introduce legislation to break up Wells Fargo.

The bank has said as many as 2 million accounts may have been wrongly opened and Stumpf promised to undo any harm to customers.

The chief executive said, however, that Wells Fargo did not expect to see disgruntled bank customers in court.

Wells Fargo is offering arbitration for its unhappy clients, Stumpf said. Pushed about whether he would waive that mandatory arbitration rule and allow customers to sue, Stumpf said: “No.”

Members of the House Financial Services Committee blasted Stumpf over the bank’s culture, his compensation and whether the right people were being punished for opening fee-generating, phantom accounts.

The episode has been a stunning reversal for Stumpf, long regarded as a safe pair of hands in the industry for navigating Wells Fargo successfully through the financial crisis. Stumpf again heard lawmakers calling for him to step aside.

Jeb Hensarling, the Republican chairman of the committee, said in his opening statement he had lost faith in Wells Fargo, which does some of his banking.

“Mr. Stumpf, I have a mortgage with your bank,” Hensarling said. “I wish I didn’t. I wish I was in the position to pay it off because you have broken my trust as you have broken the trust of millions.”

Wells Fargo shares fell 2.07 percent to $44.37. Since Sept. 7, the last trading day before the scandal broke, its stock has lost 11 percent, or about $27 billion in market value, based on Reuters data. The stock is trading at its lowest since early 2014.


Republicans on the committee have often advocated easing Wall Street regulations, but they were among Stumpf’s strongest critics at Thursday’s hearing.

Asked by Representative Sean Duffy, a Republican from Wisconsin, about whether Wells Fargo employees ‘stole,’ Stumpf said: “In some cases, they did.”

“I am deeply sorry that we didn’t do the right thing,” Stumpf said in response to a lawmaker who said the scandal had eroded the bank’s market value.

Representative Steve Pearce, a Republican from New Mexico, faulted Stumpf for saying the company’s board could eventually be relied on to sanction the executives responsible.

“I, sir, think you ought to submit a resignation and your board cannot hold off action on that,” he said.

Representative Brad Sherman, a Democrat from California, asked the committee to summon other Wall Street chiefs, including from Citigroup Inc and Bank of America Corp, to determine if they had imposed sales demands and quotas on their employees.

“I don’t think, Mr. Stumpf, that you should be alone in this joyous experience,” Sherman said.

Stumpf said the bank was strengthening oversight of sales tactics, changing procedures for issuing credit cards and had paid back past and current customers for any fees incurrent on the ghost accounts.

Earlier this week, the bank took back $41 million in stock awarded to Stumpf, an unprecedented rebuke to a major U.S. bank chief executive officer.

Democratic Representative Carolyn Maloney of New York raised questions about $13 million in stock sales by the CEO in 2013 after he learned about the abuses. Stumpf said he sold stock with proper approvals and added the sales were made “with no view about what was going on.”

The affair has triggered lawsuits, more investigations and wiped more than $20 billion from the bank’s market value.

While Wells Fargo may be shielded from some customer actions, the bank may just be starting to face heightened regulatory scrutiny.

On Thursday, the bank agreed to pay the Justice Department $4.1 million to resolve allegations it illegally repossessed cars owned by U.S. service members. In a separate settlement of similar allegations, the bank will pay a $20 million settlement with the Office of the Comptroller of the Currency.

(Additional reporting by Ross Kerber in Boston and Lisa Lambert in Washington; Writing Nick Zieminski in New York; Editing by Alan Crosby and Peter Cooney)

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Judge takes over questioning ex-AIG chief Hank Greenberg

NEW YORK The New York judge weighing whether ex-AIG chief Maurice “Hank” Greenberg should be liable for accounting fraud on Thursday pressed the 91-year-old executive about why AIG had created an offshore entity for losses from a failed automotive warranty program.

Greenberg was on the stand for the third day for allegedly engineering the offshore entity, known as Capco, to hide $200 million in underwriting losses from shareholders.

The transaction is one of two at the heart of a 2005 case against Greenberg that finally went to trial two weeks ago after years of legal wrangling.

Justice Charles Ramos of New York state court in Manhattan, who is presiding over the non-jury trial, took over questioning Greenberg from Assistant Attorney General David Nachman in an effort to cut to the chase.

“There is no one in this room who doesn’t think you’re a brilliant business manager and a rational person,” the judge said, noting there were no clear financial benefits to the company from the Capco transaction. “Why would AIG go through the Capco transaction in the first place? What was the motivation for that?”

Greenberg responded that the transaction was designed to help AIG managers by taking off their books so-called run-off – years of leftover claims from a shut-down auto warranty program. “They were arguing they shouldn’t be held accountable for the runoff,” he testified.

“They didn’t want this negative?” Ramos asked.

“Right. That was the only reason,” said Greenberg.

Because the exchange was hard to hear, Ramos summarized Greenberg’s testimony to the courtroom.

“And if the shareholders are deceived, that’s their problem?” Nachman interjected, drawing an objection from David Boies, Greenberg’s attorney.

Nachman then went back to questioning Greenberg, while Ramos urged him to move more quickly.

New York Attorney General Eric Schneiderman is seeking to recoup some $50 million in bonuses paid to Greenberg and his co-defendant, former AIG Chief Financial Officer Howard Smith. He also wants to bar them from the securities industry and from being officers and directors of public companies.

Greenberg still heads C.V. Starr, a private insurance company.

The trial is adjourned until Tuesday, when Greenberg is expected to testify about the other transaction in the case: a $500 million deal that allegedly inflated AIG’s reserves.

Greenberg led AIG for four decades before he was ousted in 2005. The following year, the insurer paid $1.64 billion to settle federal and state probes of its business practices.

(Reporting by Karen Freifeld; Editing by Dan Grebler)

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Oil prices down on profit-taking after two-day jump

TOKYO Oil prices dropped on Friday on profit-taking, after rising 7 percent in the past two sessions, amid doubts that OPEC’s first planned output cut in eight years would make a substantial dent in the global crude glut.

London Brent crude for November delivery LCOc1, which expires after the settlement later in the day, was down 8 cents at $49.16 a barrel by 0023 GMT. It settled up 55 cents, or 1.1 percent, on Thursday, adding to a 5.9 percent gain in the previous session.

NYMEX crude for November delivery CLc1 was down 8 cents at $47.75. It settled up 78 cents on Thursday, after touching a one-month high of $48.32 earlier.

Both Brent and NYMEX crude are on course for a weekly gain of around 7 percent.

The Organization of the Petroleum Exporting Countries (OPEC) agreed on Wednesday to cut output to 32.5-33.0 million barrels per day (bpd) from around 33.5 million bpd, estimated by Reuters to be the output level in August.

OPEC said other details will be known at its policy meeting in November, leaving unanswered when the agreement will come into effect, what new quotas for member countries will be and for what periods, and how compliance will be verified.

OPEC officials said their plan will remove around 700,000 bpd from the market. Analysts estimate the global crude oversupply at between 1.0-1.5 million bpd.

Analysts at Goldman Sachs said higher crude prices will spur non-OPEC output, particularly U.S. shale oil. The U.S. oil drilling rig count has risen in 12 of the 13 past weeks. [RIG/U]

The market awaited weekly data on U.S. oil rig count issued by energy services firm Baker Hughes Inc due out later in the day.

(Reporting by Osamu Tsukimori; Editing by Michael Perry)

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Goldman feels the heat in Asia as IPO engine slows

HONG KONG Goldman Sachs (GS.N) failed to make it to the upper echelon of Asia’s equity market fee earners for the first time in more than a decade, hit by a squeeze in fees that is prompting the U.S. bank to cut back jobs in the region.

Goldman has shared dominance of the Asia Pacific equity capital market arena with UBS (UBSG.S) and Morgan Stanley (MS.N) since clinching the mandate for China’s first privatisation in 1997.

But increased competition from Chinese rivals and a dearth of the blockbuster deals it has previously relied on to make money in Asia are putting pressure on global investment banking powerhouses such as Goldman, quarterly Thomson Reuters data shows.

“The value, the opportunity in the market has vaporised,” said Keith Pogson, EY Asia Pacific financial services senior partner. “You cannot sustain a big-hitting team with seven-figure salaries if you are not going to hit the ball out of the stadium.”

IPO activity in Asia Pacific fell 13.2 percent in the first nine months of the year to the weakest level since 2013.

While maintaining its leadership in terms of volumes in MA advisory in Asia Pacific, excluding Japan, Goldman slipped to No. 4 in the equity capital market (ECM) Thomson Reuters league table in the first nine months of the year, from first in 2015.

The New York-based bank saw a 73 percent slump in the volume of Asia Pacific ECM deals it worked on, the sharpest fall among the top 10 equity underwriters in the region, closely followed by UBS with a 71 percent tumble.

China’s CITIC Securities Co Ltd (600030.SS) clinched the top slot in the ECM rankings, followed by Morgan Stanley and UBS.

In terms of fees, a key gauge of investment banks’ revenue prospects, Goldman sank to No. 11, the first time it has been out of the top 10 rankings since at least 2000, earning an estimated $83.8 million in the first nine months of this year, according to Thomson Reuters/Freeman Co estimates.

CITIC Securities also topped the fee table in the period, pocketing an estimated $216 million, followed by Morgan Stanley with $195 million. Seven Chinese players, including GF Securities (000776.SZ) and Guotai Junan Securities (601211.SS), muscled into the top 10 group, while UBS receded to No. 8.

Reuters reported last week that Goldman was considering cutting nearly 30 percent of its investment bankers in Asia.

Other investment banks may follow suit with staff reductions in the region, senior bankers said.

By moving first with the big job cuts, Goldman will however turn itself into a more nimble player and could keep its powder dry for when the market eventually rebounds.

“It’s just a matter of prioritising and deciding where the revenues are going to be from, and in a way realigning or right-sizing the team accordingly,” one person familiar with Goldman’s Asia business told Reuters.

In the first six months of 2016, Goldman’s revenues in Asia more than halved to $1.7 billion. Its pre-tax earnings plunged 71 percent to $404 million, accounting for 10 percent of global pre-tax profit from 25 percent a year ago, its filings showed.


Equity capital market fee rankings are the most important benchmark for banks operating in Asia.

But the pie for Western banks is getting smaller as they have limited access to a growing number of domestic listings in China and fees are increasingly divided up among an ever larger number of banks.

This week’s listing of state-owned Postal Savings Bank of China (1658.HK) in Hong Kong, at $7.4 billion the world’s biggest IPO in two years, involved 26 banks who earned a combined $118.4 million, or 1.6 percent, in fees.

An average IPO in the United States would have earned 7 percent fees, with far fewer players involved, earning each of them a much larger revenue, according to consulting firm Freeman Co.

The shrinking fee pool is more painful for global banks because there is regulatory pressure on them to deploy less of their own capital, which limits their ability to dabble in IPOs.

Damien Cleris, head of coverage and global transaction banking at France’s Natixis, told Reuters his bank was focusing on select Asian markets such as MA and financing, but not ECM.

“The volumes have decreased this year and as a result people are more aggressive in competing for the transactions. This is driving overall revenues down in Asia,” said Claudio Lago de Lanzos, a partner with Oliver Wyman.

“None of the relevant banks in the region are really thinking of exiting Asia, but they are really thinking hard about where to place resources.”


League table of top MA advisors in Asia Pacific (ex Japan) and fees

GRAPHIC-Asia Pacific equity capital markets


(Reporting by Sumeet Chatterjee and Denny Thomas; Additional reporting by Lisa Jucca; Editing by Alex Richardson)

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Costco quarterly profit beats on lower fees to Visa

Warehouse club retailer Costco Wholesale Corp (COST.O) reported a higher-than-expected quarterly profit as it benefited from paying lower fees to credit card partner Visa Inc (V.N) and shoppers spent more on appliances, electronics and hardware.

The lower payments helped offset falling prices of grocery and fresh food in the quarter, Chief Financial Officer Richard Galanti said on a post-earnings call.

Margins at grocery retailers have taken a hit due to lower prices and companies such as Wal-Mart Stores Inc (WMT.N) and Dollar General Corp (DG.N) further cutting prices to win market share.

Costco completed the switch to Visa from American Express Co (AXP.N) during the fourth quarter.

The retailer is also likely to have benefited from higher fees from new credit card sign-ups, Deutsche Bank analyst Paul Trussell wrote in a pre-earnings note.

Consumer spending in the United states rose 4.3 percent in the fourth quarter, according to data released by the Commerce Department on Thursday.

The bump in spending is likely to have helped Costco, which mainly caters to high-income customers.

Net income rose to $779 million, or $1.77 per share, in the fourth quarter ended Aug. 28, from $767 million, or $1.73 per share, a year earlier.

Analysts on average had expected earnings of $1.73 per share, according to Thomson Reuters I/B/E/S.

The retailer reported a 2 percent rise in quarterly sales to $35.73 billion.

For the fourth quarter, it also reported a 1 percent drop in sales at U.S. stores open more than a year. Excluding the impact of fuel and currency fluctuations, sales at U.S. comparable stores rose 2 percent.

Shares of the company rose 2.1 percent after the bell. Up to Thursday’s close, the stock had fallen 8.7 percent compared to a 15.4 percent rise in Wal-Mart’s shares.

(Reporting by Sruthi Ramakrishnan and Abhijith Ganapavaram in Bengaluru; Editing by Shounak Dasgupta)

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Google rebrands cloud business, adds more artificial intelligence

Alphabet Inc’s Google said on Thursday it renamed its business-to-business cloud computing brand and enhanced some enterprise applications using artificial intelligence, the company’s latest gambit to better compete with and Microsoft Corp. in the lucrative cloud business.

Discussing the rebranded Google Cloud, Diane Greene, senior vice president of Google’s enterprise business, said the company has made good progress courting customers and improving its technology.

Cloud computing uses remote internet servers to store, manage and process data, and Google offers a range of apps like word processing and email, as well as the ability to host data and offer resources for developers. The new name replaces the Google for Work brand.

“We are closing the gap incredibly fast” with competitors, Greene, a former CEO of VMware who joined Google last year to ramp up its cloud business, told experts and journalists at an event.

Analysts say Google trails Amazon and Microsoft in market share but is gaining under Greene. Although the business is not big enough to break out separately in its quarterly earnings statement, Google reported a 33 percent surge in “other revenue” in its most recent quarter, which analysts said was probably due largely to gains in cloud computing.

Greene has moved quickly to streamline engineering and appointed new leadership to beef up the company’s cloud business. This has helped improve sales, Google Chief Executive Officer Sundar Pichai said during the company’s latest earnings call.

Earlier this month, Google acquired cloud software company Apigee Corp in a deal valued at about $625 million.

The company on Thursday also announced a partnership with consultant Accenture to develop cloud services for clients in industries such a retail, healthcare and finance.

In addition, the company said it had woven more artificial intelligence into its apps to help employees work more efficiently. Using machine learning to crunch troves of data, Google says its apps will prompt users to, say, open files at certain times of day or propose meetings based on their habits.

Google recently added a U.S. data center in Oregon in order to speed up service and next year will open more in Virginia, Mumbai, Singapore, Sydney, São Paulo, London, Finland and Frankfurt.

(Reporting by Julia Love, editing by Peter Henderson and Alden Bentley)

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If elected, Clinton under pressure to appoint tough Wall Street sheriffs

WASHINGTON Democratic Party progressives intent on reining in Wall Street are pushing Hillary Clinton to choose people to head the Treasury, SEC and other agencies who will crack down on big banks if she wins the White House on Nov. 8.

“Do they have a proven track record of challenging corporate power?” asked Adam Green of the Progressive Change Campaign Committee, a grassroots group aligned with U.S. Senator Elizabeth Warren, the party’s liberal firebrand.

In meetings with Clinton’s team, progressive groups are urging that she break sharply with the centrist, pro-business bent of some of the economic leaders who served her husband, former President Bill Clinton, and President Barack Obama.

Big U.S. banks are voicing concern about both Clinton and Donald Trump, her Republican rival who has accused corporate America of buying influence in Washington.


Among Democratic progressives, a favorite for Treasury secretary is Sarah Bloom Raskin, now deputy Treasury secretary and a backer of strict enforcement of the Volcker Rule that prohibits banks from making some types of speculative investments.

“I view proprietary trading as an activity of low or no real economic value that should not be part of any banking model that has an implicit government backstop,” Raskin, then a Federal Reserve governor, said in a 2012 speech.

Democratic activists, who believe Obama did not go far enough at the height of the 2007-2009 financial crisis to punish bankers and tighten regulation, want to make sure Clinton keeps her campaign promises to defend the 2010 Dodd-Frank reforms and build on them to curb Wall Street’s excesses.

Progressive priorities include ensuring the U.S. Justice Department pursues criminal cases against bankers, not just institutions.


Some Democratic activists are wary of two potential Treasury candidates – Sheryl Sandberg, Facebook’s chief operating officer, and Federal Reserve Governor Lael Brainard – because of links to the Bill Clinton and Obama administrations.

Sandberg was chief of staff to Treasury Secretary Larry Summers in Bill Clinton’s administration and Brainard was a top lieutenant to Timothy Geithner, Obama’s first Treasury secretary.

Locked in a tight race with Trump, Clinton has said little about any future appointments. Her spokesman, Brian Fallon, said any speculation about personnel is “entirely premature” as Clinton is focusing on winning the election.

She has no obligation to heed the advice of progressives like Warren or Bernie Sanders, who challenged Clinton for the Democratic nomination. But Clinton risks a damaging intraparty rift early in her White House tenure if she ignores them.

Kara Stein, a commissioner on the Securities and Exchange Commission, and Simon Johnson, a former chief economist at the International Monetary Fund and co-author of a book warning of the dangers posed by big financial institutions, are progressive favorites for SEC chair.

Progressives also favor Gary Gensler, an adviser to Hillary Clinton, for a senior administration role because of his reputation as a tough regulator when he headed the Commodity Futures Trading Commission in the Obama administration.


Jeff Hauser, director of the Revolving Door Project at the Center for Economic and Policy Research, said progressives have a “broad feeling of regret” that they did not exert more pressure on Obama to name officials committed to bold financial regulatory reforms.

“It wasn’t so much that progressives lost, it’s that they didn’t understand the stakes at the time and didn’t get into the game until it was too late,” Hauser said.

Warren, who would have a big microphone in any potential fight over U.S. Senate confirmation of nominees, in a speech last week at the Center for American Progress, warned Clinton against choosing people who work at big investment banks.

“When we talk about personnel, we don’t mean advisers who just pay lip service to Hillary’s bold agenda, coupled with a sigh, a knowing glance, and a twiddling of thumbs until it’s time for the next swing through the revolving door, serving government then going back to the very same industries they regulate,” she said.

The New York-based Roosevelt Institute think tank is seeking lesser-known candidates, some outside Washington, for at least 120 administration jobs. Their potential candidates include state attorneys general who have taken on for-profit colleges and handled large mortgage settlements.

(Reporting by Amanda Becker; Editing by Caren Bohan and Howard Goller)

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Relief arrives for U.S. shale firms as OPEC folds in price battle

HOUSTON It was a moment U.S. shale oil producers have been waiting on for more than two years: OPEC nations finally agreed to cut production on Wednesday in a move that lifted low prices ravaging their budgets.

Two sources in the Organization of the Petroleum Exporting Countries said the group would reduce output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd, by around half the amount of global oversupply.

The agreement effectively establishes a floor on prices near $50 a barrel – around where many U.S. shale oil companies can make money and drill new wells. The floor is twice as high as where oil languished in the depths of the downturn.

“This gives U.S. producers more confidence,” said James West, partner at the investment firm Evercore ISI in New York. “They may become a touch more aggressive than they had planned to be.”

U.S. benchmark crude rose more than 5 percent to $47 a barrel on the news, pending final details about the cut, which won’t be known until after another OPEC meeting in November.

One U.S. shale oil industry veteran likened the results of the prolonged price war to a bruising 12-round boxing match that ended in a technical draw.

After OPEC in mid-2014 let oil prices fall as it sought to regain market share, dozens of small and high-cost U.S. producers fell into bankruptcy.

Meanwhile, budgets of OPEC members from Venezuela to Angola shrank on a 60 percent slide in crude prices. And two days before the deal was announced, Saudi Arabia cut ministers’ salaries by 20 percent and scaled back financial perks for public sector employees.

But in the United States the big shale companies – the ones responsible for the bulk of all new onshore domestic crude output – survived. They confounded OPEC by cutting costs and finding new ways to squeeze more oil from rock.

The likes of Anadarko Petroleum Corp (APC.N), EOG Resources Inc (EOG.N), Apache Corp (APA.N) and more than 25 other companies showed they can weather oil at $40 a barrel and profitably drill new wells as oil ticks toward $60 a barrel.

Many U.S. shale companies, eyeing a rebound, even added acreage this year during a $12 billion land grab in the oil-rich Permian Basin of West Texas.

At least 32 companies raised a record $20.40 billion in equity markets in the first eight months of this year, with half of them doing so to buy oily land.

In July, Pioneer Natural Resources (PXD.N) Chief Executive Scott Sheffield said overhauled shale companies were now cost competitive with Saudi Arabia.

The shale revolution, which fracks rock to coax oil from it, lifted U.S. oil production from 4.9 million bpd in 2009 to a peak of 9.6 mln bpd in June 2015.

The price plunge has since curbed output by more than 1 million bpd, to 8.5 mln bpd in September, according to data from the U.S. Energy Information Administration.

That trend could now change.

“Steadier (prices) is key,” said Ann-Louise Hittle, vice president of macro oils research for Wood Mackenzie. “It would lead to an increase in the rig count … and an increase in production.”

The capitulation by OPEC took far longer than many U.S.

CEOs had forecast.

In October 2014, Harold Hamm, the chief executive of North Dakota oil producer Continental Resources Inc (CLR.N), called OPEC a “toothless tiger.” A month later he scrapped his company’s hedges in a bold bet that prices would recover soon after sliding some 25 percent. Instead, they fell in half.

(Additional reporting by Devika Krishna Kumar and Jessica Resnick-Ault in New York and Nia Williams in Calgary; Editing by Leslie Adler)

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U.S. economy less sluggish in second quarter; companies investing more

WASHINGTON U.S. economic growth was less sluggish than previously thought in the second quarter as exports grew more than imports and businesses raised their investments, hopeful signs for the economic outlook.

Gross domestic product expanded at a 1.4 percent annual rate, the Commerce Department said on Thursday in its third estimate of GDP. That was up from the 1.1 percent rate it reported last month and higher than analysts’ expectations.

The revision incorporated data that showed businesses cut investments in buildings and equipment less than the government previously estimated, while they sank more money into research and development.

That left growth in overall business investment at a 1 percent annual rate, its first gain since the third quarter, and suggests the worst of an energy-sector-led slump in business investment might be over.

The slump, fueled by a sharp drop in oil prices that hit America’s energy industry, has worried policymakers at the Federal Reserve because less investment could hurt economic growth over the longer term.

The economy has struggled to regain momentum since output started slowing in the last six months of 2015 and the overall growth rate for GDP in the second quarter remained below historically normal rates. That could give grist to Republican Presidential candidate Donald Trump’s argument that the economy has sickened under the Obama administration.

At the same time, consumer spending, which makes up more than two-thirds of U.S. economic activity, was robust in the second quarter, rising at a 4.3 percent annual rate, while growth in exports outstripped that of imports enough to boost GDP by the most since the third quarter of 2014.

But companies continued to run down their inventories aggressively, reducing stocks by $50.2 billion and subtracting from GDP growth, while home building also sank.

The U.S. dollar appreciated slightly against a basket of currencies while yields on U.S. government debt edged higher.

The GDP data is unlikely to have much impact on the near-term outlook for monetary policy although it could make Fed policymakers more confident the U.S. economy is resisting weaker growth abroad.

Federal Reserve Chair Janet Yellen repeated on Wednesday that Fed policymakers expect to raise interest rates by the end of the year because they worry that gathering steam in the U.S. labor market could fuel inflation.

New claims for unemployment benefits rose slightly last week but remained at levels consistent with a healthy job market, according to a separate report from the Labor Department.

The Commerce Department is due to release new inflation data on Friday.

The government also reported that after-tax corporate profits fell at a 0.6 percent rate in the second quarter, a smaller drop than initially estimated.

With profits declining, an alternative measure of growth, gross domestic income, or GDI, dropped at a 0.2 percent rate in the second quarter. GDI measures the economy’s performance from the income side.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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