JPMorgan in talks to settle mortgage probes for $11 billion

JPMorgan has faced a cascade of legal problems in the last few months.

NEW YORK (CNNMoney)

The proposed deal would include $7 billion in penalties and $4 billion in consumer relief of some kind, according to the source, who was not authorized to speak publicly on the matter. Those numbers aren't final, however, and it's unclear if or when the two sides may come to an agreement.

The deal would come under the auspices of a joint federal-and-state task force announced by the Obama Administration last year to investigate the packaging and sale of mortgage-backed securities, which became a key cause of the financial crisis when they failed in droves as the housing market cratered.

"The talks are ongoing, we don't anticipate that there will be an announcement today," Lauren Horwood, a spokeswoman for the U.S. Attorney in Sacramento, said in an email Wednesday.

Related: Three ex-ICAP employees indicted in Libor scandal

JPMorgan -- America's largest bank by assets -- is fresh off of a settlement last week in which it agreed to pay $920 million in connection with the "London Whale" trading debacle. Also last week, regulators ordered the firm to refund $309 million to customers and pay $80 million in fines over alleged unfair credit-card billing practices.

Spokespeople for the Justice Department and JPMorgan (JPM, Fortune 500) declined to comment. The Securities and Exchange Commission did not immediately respond to a request for comment.

First Published: September 25, 2013: 6:44 PM ET

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Hertz now renting Tesla Model S cars in California

NEW YORK (CNNMoney)

Hertz (HTZ, Fortune 500) announced Wednesday that it was adding Tesla's (TSLA) signature model to its rental fleet as part of its "Dream Cars" line, which also offers high-end rentals from companies like Ferrari and Aston Martin.

Unfortunately for most of the U.S., the Model S will only be available for rental in San Francisco and Los Angeles.

"[S]hould customer demand warrant it, we will consider expanding availability to other locations," Hertz spokeswoman Paula Rivera said in an email.

Rental rates start around $500 per day, plus $0.49 a mile after the 75-mile mark, Rivera said.

Related: Tesla superchargers take over America

The plug-in Model S has garnered rave reviews in recent months. It aced its first crash test last month, and Consumer Reports called the Model S the best car it had ever tested.

A Tesla spokeswoman said the automaker had "seen interest from rental car companies and fleet buyers who want to provide their customers access to a high-performance sedan, which also happens to be electric."

First Published: September 25, 2013: 4:15 PM ET

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Early Twitter employees to miss out on millions

NEW YORK (CNNMoney)

But not all members of Twitter's founding team will cash in. Like many Silicon Valley startups in their infancy, Twitter's original team changed quickly. Ideas evolved, and some of the people who played an integral part in the early days soon found that they were no longer needed.

"Your position has been eliminated": Such was the case for Dom Sagolla, or @Dom, the ninth Twitter user and one of the original employees at the social network.

In 2006, Sagolla was head of quality at Odeo, the podcasting company that would eventually spin off into Twitter. As Odeo grew rapidly, Sagolla's role grew more important. But when Apple (AAPL, Fortune 500) decided to launch podcasting in iTunes in 2005, Odeo knew it was in trouble. The company decided to reinvent itself.

The employees at Odeo decided to hold a hackathon, an event where everyone splits into teams and comes up with new ideas. Jack Dorsey created the idea for what would eventually become Twitter. He teamed up with Sagolla and German engineer Florian Weber to pitch it to the Odeo crew. The idea was a hit. Odeo co-founder Noah Glass joined in four days later.

But Sagolla's role in Twitter was short-lived. Twitter's other co-founders took him for a walk in a San Francisco park. They told Sagolla they were eliminating his position.

"It was clear that they were just cutting headcount," Sagolla told CNNMoney. Sagolla was one of four people who lost their jobs that day.

Though he potentially lost out on a fortune, Sagolla is good-natured about his dismissal.

Related story: Who'll be getting rich off Twitter

"I call it my billion dollar MBA, because I got nothing," he joked. "I don't know what I would have deserved. If I had stuck around and contributed more maybe I could feel like I deserved more."

Since being let go, Sagolla worked at Adobe (ADBE) and set up an iPhone developer camp.

Can't get a visa: Weber, or @florian, stuck around for a bit longer. He played an integral role in Odeo's transition to Twitter, and, along with Dorsey, Weber built the first prototype of Twitter.

"I still remember the time Jack and I were sitting in the conference room at Twitter and discussing the concept of 'following,' whether it implies obedience," Weber told CNNMoney.

But after working on Twitter for six months after it had launched, Weber was unable to obtain a visa to move to the United States. He had difficulty working with the team while in another time zone.

"Everybody was in the office, and I'm not," he recalled. "I'm nine hours ahead."

Weber left the company soon after.

Since Weber started his work at Odeo as an independent contractor, he never received stock options in Twitter. But Weber said he doesn't regret his decision to leave.

Weber went on to co-found a Berlin-based startup that wound up being acquired.

Hard feelings: Not everyone who left the company in the early days took their departure as well as Sagolla and Weber did.

According to multiple sources, Odeo's co-founder Glass (@noah) has since fallen off the grid. Known in Silicon Valley circles as the forgotten founder of Twitter, Glass admitted to Business Insider years ago that being left out of the founding story was "hard to swallow."

Glass' Twitter bio, presumably a reference to the company, remains "I started this."

The day after Twitter's plans to go public were revealed, Glass tweeted for the first time in months.

"I wish the twitter team the best of luck and trust that they will be successful in continuing to develop this important communication tool."

First Published: September 26, 2013: 3:36 AM ET

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How to compete against a corporate giant - and win

Arch Angel's main competitor was Dr. Scholl's, which has been around for more than 100 years. But that didn't deter them.

NEW YORK (CNNMoney)

On the plus side, you've signed with a national distributor and have your product on shelves in Wal-Mart (WMT, Fortune 500), RiteAid, CVS, Sears (SHLD, Fortune 500) and Walgreens (WAG, Fortune 500). Yay! Now, the bad news: A huge, well-known rival has been there for years. How do you compete?

That's the challenge Arch Angel Brands has faced as it's rolled out its products into national chains. Started by Steve Llorens and Paul Mazzanobile in 2008, Arch Angel makes orthotic supports called Strutz, designed to relieve the pain of fallen arches, flat feet, sports injuries and other foot problems. Their main competitor is (you guessed it) Dr. Scholl's, which has been around since 1906 and spends millions annually on marketing and advertising.

"We're the new kid on the block," said Llorens. "We use different technology, so our goal has to be educating shoppers on how we're different." Instead of an insole that slips into a shoe and comes off when the shoe does, Strutz uses arch support wraps that go around the foot and stay put when the wearer changes shoes or goes barefoot.

Related: What I look for in a new hire

Llorens and Mazzanobile started by going door to door selling their product to podiatrists, orthopedists and sports trainers, who were accustomed to taping patients' feet for a similar effect. It was easy to sell them on Strutz because it doesn't come off in the shower and has a shock absorber built in.

To get the word out, Arch Angel Brands largely relies on word of mouth, with social media playing a big role. Among Strutz's biggest boosters are servers, bartenders and nurses who spend long hours on their feet. "Our website and Facebook page are full of endorsements from people who are already fans," Llorens noted. "Sometimes customers post pictures of themselves wearing Strutz while they're hiking or training for an Iron Man competition."

They also joined forces with Team Red White & Blue, a veterans' organization that sponsors athletic events and other activities for returning military personnel. Arch Angel is now a corporate sponsor, which "helps build a sense of community," said Llorens. "It gets your name out there in a very positive way."

Related: Want funding? Here's how to pitch to angel investors

Arch Angel has just four full-time employees -- including the founders. But that can be an advantage, said Llorens.

"When you call the 800 number on a Dr. Scholl's product, you don't get the CEO or the president of the company on the phone," he says. "But when you call us, you do." Llorens and Mazzanobile also read, and respond to every email and Facebook post.

"People are impressed with that," said Llorens. "It's a level of customer service you don't get from a big national brand.

"We're still small enough that that level of personal attention is manageable," he adds. "As we get bigger, we want to hire customer-service people and train them to maintain that."

The company may be staffing up soon: Llorens says sales have taken off this year, from $388,000 in 2012 to a projected $1.4 million by the end of 2013.

First Published: September 25, 2013: 6:02 AM ET

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Will Obamacare increase my insurance tab?

NEW YORK (CNNMoney)

Myth: My health insurance premiums will increase under Obamacare.

Reality: Some people may pay more, and some people may pay less. It really depends on who you are and where you live.

For those buying their own insurance, we won't know the full array of premium prices until the state-based insurance exchanges open for enrollment on Oct. 1.

But here's what's clear:

People who currently pay little for a bare bones policy with a very high deductible will likely see their monthly insurance tab rise. Young men, who often pay little for insurance since they rarely go to the doctor, will also likely see a bump in their premiums.

But many older Americans will probably end up paying less. That's because Obamacare mandates that older enrollees can't pay more than three times the amount of younger participants. Nowadays, it's typical for them to pay five times more than younger members.

People with chronic conditions are also paying through the roof today, if they can even get coverage at all. Their rates will go down because younger, healthier residents will enter the risk pool. And lower-income Americans will be entitled to federal subsidies that could greatly lower their monthly burden.

Where you live will also have an impact on rates. In New York, for instance, average premiums for 2014 will fall by half since the state already requires many of the Obamacare provisions, which keeps insurance pricey in the Empire State today.

But in lightly-regulated states, such as Ohio and Florida, premiums will likely soar since insurers there will no longer be able to exclude the sick and will have to offer more comprehensive policies.

Related: Is a $2,000 deductible 'affordable?'

While few insurers have revealed their full selection of plans and prices, CNNMoney took a look at the plans provided by one insurer, Physicians Health Plan of Northern Indiana, to give consumers a better idea of how things will change.

Our analysis found that 21-year-old men will pay a lot more for an exchange plan, but 42-year-old women and 62-year-old men will shell out less for a silver-level plan that comes with a $2,500 deductible and a roughly $25 co-pay for office visits.

Under this scenario, a young man's monthly rate will rise to $214 on the exchange next year, up 63% from today. The woman, however, will pay $284, a drop of more than 7%, while the older man will be charged $615, a nearly 6% decrease. This is because Obamacare requires that women pay the same amount as men and limits rate hikes on older participants.

A recent Kaiser Family Foundation report of 18 state exchanges found that premiums were running lower than the Congressional Budget Office had predicted. But since there's a wide variation of what people pay for individual insurance today, it's hard to know how Obamacare will affect you until you sign up.

Related: Employers play Obamacare blame game

It's a little more complicated if you get your insurance through your job. The law doesn't actually call for any changes to existing employer-based plans for 2014. But some big companies are choosing to make changes to their plans as a result of increasing costs under Obamacare, such as extra taxes and fees. Some are dropping coverage for spouses who can get insurance elsewhere. Others are funneling part-timers to the exchanges.

As for employee premiums, Obamacare is not having a direct effect right now. Employees are contributing nearly 6% more for health insurance for their families in 2013, according to the annual survey conducted by the Kaiser Family Foundation and the Health Research & Educational Trust. But the rate of growth has actually been slowing in recent years.

First Published: September 25, 2013: 6:07 AM ET

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Federal workers: Hand over BlackBerry during shutdown

If the government shuts down next week, Blackberries and iPhones may be turned in.

WASHINGTON (CNNMoney)

That's because if the government shuts down next Tuesday, furloughed federal workers could be violating the law if they do something as simple as check their work e-mail.

The Antideficiency Act, passed by Congress during Chester Arthur's administration, prevents non-working federal employees from doing any job-related functions during a shutdown if the government cannot pay for it.

The White House budget office made clear last week that employees on furlough during a shutdown can't touch their government-issued mobile devices, or even use home computers or laptops to access work email.

Related: How a government shutdown hurts Main Street

But in the age of ubiquitous communication, how do you even enforce a no-cell phone ban?

The truth is, no one really knows yet. In the last shutdown of 1996, the Palm Pilot was about as advanced as handheld devices got.

The Office of Management and Budget has left it up to the various federal agencies to figure out how to carry out its edict.

In 2011, when the government came close to a shutdown, the Department of Housing and Urban Development said it would allow employees to keep government-issued BlackBerries (BBRY) and laptops on the condition they didn't use them. But the House of Representatives had planned to order furloughed employees to turn in their BlackBerries, laptops, and even cell phones, and to turn on "out of office" messages.

Now, with a shutdown looming just a week a way, the HUD, House, and the IRS have said they're still crafting their contingency plans, including how to handle websites and mobile phone use.

Federal worker union representatives say it doesn't matter what the government decides on BlackBerry use.

"When a federal employee gets furloughed because of a government shutdown, the last thing they're worried about is whether they can turn on their laptop or Blackberry; they're worried about paying the mortgage and putting food on the table," said Randy Erwin, director of the legislative affairs at the National Federation of Federal Employees.

Shutdown expert John Cooney said a short shutdown lasting a few days may have little impact and agencies may not require staff to turn phones in.

"If it's a long shut down, the agency could collect cell phones from employees," said Cooney who helped craft the modern day shutdown plan for the Reagan White House.

Related: Are Social Security payments at risk?

One potential problem: The budget office says agencies can't rely on work email to alert employees to go back to work, when a shutdown ends. The agencies will have go back to old-fashioned communication to get furloughed employees to return to the office via unconventional tools like calls to personal phones, television, radio, Facebook and Twitter.

Of course, federal employees in critical jobs will continue to work, and also use their smartphones to carry out their "essential functions." They include some senior managers, lawmakers and workers who are needed to protect life and property.

They also include the President, also known as the E-mailer-in-chief, and a government employee with a critical job.

First Published: September 25, 2013: 6:09 AM ET

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China stocks rebound as economy improves

HONG KONG (CNNMoney)

Whether the rally can continue through the end of the year may depend on big policy decisions expected in November.

For much of the first half of the year, China's main indexes took a beating as investor appetite soured over concerns about the prospects for the world's second-biggest economy.

Only the tiny Shenzhen market managed to buck the trend, thanks to the predominance of small technology firms with high growth potential.

But Hong Kong's Hang Seng and the Shanghai Composite bottomed out in late June and have surged by about 18% and 12% respectively since then. And the Shenzhen Composite has continued its push higher, gaining 20% over the same period.

"Market sentiment has been recovering slowly from its trough in late-June," said Barclays economist Jian Chang. "Economic data has been stronger than expected."

Related story: China's underdog market surges

The latest sign of a recovery came Monday, when HSBC's "flash" measure of manufacturing purchasing managers' sentiment hit a six-month high.

That followed a slew of positive economic data, including strong industrial output, robust trade and moderate inflation, raising confidence that China is back on track to meet its 7.5% growth target for the year.

Chinese stocks also got a boost when the U.S. Federal Reserve unexpectedly announced last week that it would continue its $85-billion a month bond-buying program, putting off the moment when it will start pumping less money into markets.

Despite the third quarter rally, Chinese stocks are still lagging other major world markets so far this year. The Hang Seng is up about 2%, while the Shanghai Composite is still in negative territory. By comparison, the S&P 500 is up 19%, and Germany's DAX almost 14%.

And some experts are reluctant to predict further gains in China this year, given uncertainty about future economic policy.

Related story: China's $8 billion plan to rival Hollywood

Right now, China has "a window to perform" said Joseph Tang, an investment director at Invesco.

Whether or not growth is sustained -- and stocks continue to rally -- may well depend on the kind of reforms adopted at a meeting of China's Communist Party leadership in November.

Nomura economist Zhiwei Zhang said new monetary policies could slow China's building economic momentum as the government moves "to shift its focus away from the speed of growth, towards efforts to rebalance the economy and improve the quality of growth."

China's recovery is unlikely to be sustained going into next year, he said.

First Published: September 24, 2013: 10:33 PM ET

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China lifts Facebook ban ... a bit - report

China could soon allow access to Facebook in a new free trade zone.

NEW YORK (CNNMoney)

According to the South China Morning Post, the Chinese government has decided to lift a ban on foreign websites deemed politically sensitive, albeit only within the newly developed Shanghai Free Trade Zone.

That means those within the 17-square-mile area will be able to access Facebook (FB), Twitter, The New York Times (NYT) and more. The Free Trade Zone launches on Sunday and is intended to serve as a testing ground for financial and service sector reforms, including increased access to the tightly-controlled yuan. Should Beijing deem the experiment a success over the long run, some of the policies could be implemented in other parts of China.

Currently, Facebook and Twitter are among websites that remain blocked by the government's censorship system, casually referred to as the Great Firewall of China. Attempts to access Facebook result in an error message: "Network Timeout."

Related: It's lights out for BlackBerry

This latest development lets Facebook and Twitter get their feet in the door of the most populous and fastest-growing Internet community in the world. Both companies have acknowledged a desire to tap into the world's largest social media market, with 513 million Internet users -- more than double the size in the United States.

News of the partially lifted ban caught several major players by surprise. A Facebook spokeswoman said the company was only aware of the Post news report.

A spokeswoman at the New York Times had only this to say: "We are hearing the same thing you are." Twitter did not respond to requests for comment.

Lifting the ban would mark the first time in years that people in the mainland will have access to Facebook and Twitter without disruption. Facebook was blocked after the minority Uighur group used the social media site to organize against the government in 2009. The Chinese government was keen to keep strict control over social media after Twitter was widely used to coordinate protests during the 2011 Arab Spring.

Related: BlackBerry's patents could spark a bidding war

Still, some Chinese citizens have managed to get around the censors, according to data compiled by Global Web Index, a research firm. Between 2009 and 2012, the number of those secretly using Facebook in China grew from 8 million to 63 million. During that span, the number of Chinese Twitter users grew from 12 million to 35 million.

Those numbers are still a drop in the bucket compared to those using government-approved social media sites, including Renren, (RENN) Sina (SINA) Weibo and WeChat, whose users number in the hundreds of millions.

Global Web Index estimates 15% of Chinese citizens use Facebook, while 56% or more use Tencent Weibo, Sina Weibo or Qzone.

Facebook is well aware of the competition and government challenges, even noting that in its initial public offering registration document.

First Published: September 24, 2013: 11:09 PM ET

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What killed BlackBerry: Terrible apps

It's too late for BlackBerry to change its fortunes now, but looking back, its approach to apps doomed it from the start.

NEW YORK (CNNMoney)

The sorry state of the BlackBerry App World is one of the primary contributing factors to BlackBerry's (BBRY) rapid demise. The company announced Monday that it plans to go private in a $4.7 billion deal that essentially places no value on BlackBerry's core handset business.

BlackBerry's new hardware has gotten some good reviews, but software is another story. Many of the most popular apps on the iPhone and Android are nowhere to be found. There's no Instagram, Netflix (NFLX), Candy Crush or Google (GOOG, Fortune 500) Maps. Many of the big-brand apps that do exist for BlackBerry, including Facebook, Twitter and WhatsApp, are infrequently updated and have received dismal reviews from users.

Meanwhile, BlackBerry news site BerryReview revealed last month that a single developer is responsible for 48,000, or 40%, of BlackBerry's apps. Some of those apps developed by Hong Kong outfit S4BB many seem legit and functional. But many of them are either generic clones of other apps or possess minimal usefulness.

For example, one app made by S4BB is a "camera scanner" that converts photos to PDF files. Another turns off the sounds in your camera app. There are also hundreds of world factbooks, subway maps and city guides.

Related story: BlackBerry's valuable patents could spark a bidding war

So it's not just that most of BlackBerry's apps are bad -- the majority of million-or-so apps in the iTunes App Store and Google Play Store are also terrible. What makes BlackBerry's app situation so devastating is that the company exercises no control over its own app store.

BlackBerry is also rapidly losing subscribers, so big app makers don't want to devote resources to a vanishing platform. But BlackBerry also gives free rein to small developers to fill its app store with spam apps.

Although the open-ended strategy may be mildly beneficial to BlackBerry and a few ambitious developers in the short term, encouraging such a large ratio of garbage apps to quality apps poses consequences in the long run: Smaller developers don't want to invest in BlackBerry, because it it's hard for consumers to stumble upon their apps in a diluted pool.

It's no coincidence that the major mobile platforms don't let that kind of activity fly inside their app stores.

Apple (AAPL, Fortune 500), whose stringent app approval process often errs on the conservative side, has all but made it impossible for app spammers to exist on a ridiculous scale.

Even Google, a company that preaches openness for its Android mobile platform, imposes limits on app spam. While it does not prevent anyone from downloading and installing apps outside its app store, Google frowns upon apps delivering repetitive content in its Play Store. Google requires developers to individually submit each app for approval, which works as a deterrent towards app spam.

BlackBerry thought it could attract users by giving Android developers the ability to quickly port their existing apps to the BlackBerry 10 platform. But many of those apps were still garbage ones, and the ones that were decent still provided an inferior experience.

BlackBerry can produce all of the nicest phones in the world if it wants, but the low standards it has for the apps in its app store, and the seemingly minimal effort it has put into trying to improve it, ultimately contributed to the once-venerable company's demise.

First Published: September 25, 2013: 3:41 AM ET

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Shutdown: Are Social Security payments at risk?

A government shutdown would not affect the funding for Social Security benefits. And if the past is any guide, the Social Security Administration will retain enough staff to process those benefits without delay.

NEW YORK (CNNMoney)

But it's very likely that the nearly 58 million people who receive Social Security benefits would still be paid on time, at least if the law and history are any guide.

For starters, funding for Social Security is considered "mandatory" and therefore not subject to the annual appropriations process.

Translation: The money that funds benefits is automatically authorized and not dependent on Congress coming to a compromise on a new federal spending measure by Monday night.

What isn't automatically authorized, however, is the money that Congress appropriates every year to run the Social Security Administration and pay its employees to process those benefits.

Related: What would happen in a government shutdown

But even here, there's reason to believe the agency would be sufficiently staffed to ensure that Social Security payments don't get held up.

During the last two government shutdowns in the mid-1990s, Social Security checks were sent out on schedule.

That happened even though the Social Security Administration was grossly understaffed during the first -- and shorter -- of the two shutdowns. It had kept on just under 5,000 employees. Once it realized how many more were needed to carry out essential duties, the agency was quick to staff up.

So by the second shutdown, which lasted 21 days, the agency required the majority of its employees (55,992) to keep coming to work, furloughing just 10,203 workers.

Today most, if not all, Social Security benefits are paid by way of direct deposit or debit card. So it's fair to assume that making those payments is less labor intensive than it used to be when paper checks were mailed out.

It's not clear, though, if the Social Security Administration would retain enough staff during a shutdown to process without delay any new applications for benefits or other benefit-related activities.

Even though a relatively short shutdown may not imperil Social Security beneficiaries, the failure by lawmakers to raise the nation's borrowing limit could.

"The biggest risk to Social Security payments is the debt ceiling," said Charles Konigsberg, who was assistant director of the White House budget office during the last shutdown.

If the ceiling isn't raised, the Treasury Department will eventually run short of funds to pay all its bills.

That fight will likely come to a head between mid-October and mid-November.

First Published: September 24, 2013: 3:56 AM ET

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