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U.S. Economy: July Michigan Confidence Index Rises to 90.3
U.S. consumer confidence rose this month as optimism about current
economic conditions increased to the highest in more than a year, a
University of Michigan survey showed, Bloomberg News reported. The
university's preliminary July sentiment index rose to 90.3 from 89.7
last month. That's the third increase in the last four months. The
Standard & Poor's index of 500 stocks has risen 22 percent since a
low in March, which may have contributed to higher confidence this
month, economists said. Lower interest rates and prospects of tax cuts
may also be boosting optimism, paving the way for stronger consumer
spending and growth that is needed before companies feel confident
enough to hire. 'What we are going to have is good growth, but it's not
going to be a boom,'' said John Silvia, chief economist at Wachovia
Corp. in Charlotte. 'Consumers still have a lot of concerns out there. I
don't see how consumers are going to write off the war or write off the
job problem,'' reported the newswire.
House to Hold FCRA Hearing This Week
The House Financial Services Committee plans to hold a markup this week
on legislation to reauthorize provisions of the Fair Credit Reporting
Act (FCRA), CongressDaily reported. A spokesman said Financial
Services Chairman Michael Oxley (R-Ohio) is committed to securing
passage this week so the measure can be brought to the House floor in
September. The pending measure would extend the federal preemption of
state law put in place by the 1996 amendments to the FCRA.
A committee aide said lawmakers have been working toward a compromise
on a large number of amendments that were offered and withdrawn during
last week's Financial Institutions Subcommittee markup. But the aide
said those amendments -- many of which were aimed at strengthening
consumer protections -- could come up again during the full committee
meeting. The final measure is expected to pass by a wide margin,
CongressDaily reported.
The Senate Banking Committee has not scheduled any FCRA-related
meetings this week, but senators expect to hold two hearings on the
issue next week. Banking Chairman Richard Shelby (R-Ala.) also plans to
work with ranking member Paul Sarbanes (D-Md.) and other lawmakers on
FCRA legislation over the August recess, according to a committee
spokesman. 'We hope to have legislation to move on when we return,' the
aide said, reported the newswire.
Congress Expected to Vote on Asbestos Legislation in
September
Congress is expected to break for its August recess without voting on
asbestos litigation legislation, sources said, CongressDaily
reported. The bill that emerged from the Senate Judiciary Committee
still lacks support from Democrats and industry segments -- making its
chances for a quick vote unlikely.
Judiciary Committee to Hold Hearing on WorldCom
The Senate Judiciary Committee has scheduled a hearing on Tuesday, July
22, on 'The WorldCom Case: Looking at Bankruptcy and Competition
Issues,' to examine the bankruptcy and competition issues surrounding
the WorldCom case.
Enron Will Pay $109,000 for New Jersey Contributions
Enron Corp. agreed to pay $109,000 to settle allegations that it made
more than 30 improper political contributions in 1999 to candidates in
New Jersey, which bars such donations by licensed power and natural gas
suppliers, Bloomberg News reported. Enron must pay New Jersey by Aug.
14, according to a statement by Attorney General Peter Harvey in
Trenton. Enron Energy Services Inc. was licensed to do business in New
Jersey when the company made the political donations between Oct. 22 and
Nov. 1, 1999, Harvey said. The state is committed 'to police New
Jersey's election laws and to protect New Jersey citizens from those who
seek to undermine those laws for financial gain or political
influence,'' Harvey said, reported the newswire.
Conseco Asks for Approval of Plan to Exit Bankruptcy
Protection
Conseco Inc. said that its management had 'every incentive'' to properly
calculate the company's worth, countering claims that the valuation is
off by $2 billion, Bloomberg News reported. Carmel, Ind.-based Conseco
asked U.S. Bankruptcy Judge Carol Doyle to approve its recovery plan,
letting it reduce what it owes creditors by about $5.7 billion.
To win the judge's approval, the company must overcome objections by
holders of trust originated preferred securities. The holders say
they'll be left with almost nothing and accuse Conseco of undervaluing
the reorganized company. They say the value of the company is $5.7
billion; Conseco claims it is worth $3.8 billion. 'Management has to
live with this plan. They have to be credible,'' Conseco lawyer John
Hartmann of the law firm Kirkland & Ellis said during closing
arguments in Chicago. 'They have every incentive to be right,'' reported
the newswire.
UNITED AIRLINES
United Air Has Not Decided on Chapter 11 Exit Timing
United Airlines executives have not yet decided whether to exit chapter
11 bankruptcy protection late this year or early next, the company's
chief financial officer said on Friday, Reuters reported. Jake Brace
said in an interview at a bankruptcy court hearing that the company is
still weighing the appropriate time to exit from court protection and
said it will not do so until its problems are fixed. Talks to secure
exit financing needed to replace special bankruptcy loans have begun,
but they are expected to take some time, according to banking sources
familiar with United's situation. United's chief executive, Glenn
Tilton, had indicated recently that the airline might try to emerge from
bankruptcy earlier than originally planned. When the airline filed its
petition last December it outlined the process as taking 18 to 24
months, reported the newswire.
United Airlines Gets Approval for Bonuses to Technical
Workers
UAL Corp.'s United Airlines got permission from the court to implement a
plan that pays bonuses to some computer programmers and analysts to keep
them from quitting, Bloomberg News reported. U.S. Bankruptcy Judge
Eugene Wedoff granted the Chicago-based company's request to
implement the program over the objections of United's Association of
Flight Attendants because he agreed that the workers are important to
UAL's reorganization, reported the newswire.
U.S. to Extend STT-Global Crossing Review
The Committee on Foreign Investment in the United States (CFIUS) will
extend its review of bankrupt Global Crossing Ltd's plan to sell a
majority stake to a company owned by an arm of the Singapore government,
a person familiar with the review said on Thursday, Reuters reported.
U.S. economic and defense officials on the panel were divided over
whether to allow Singapore Technologies Telemedia (STT) to buy the 61.5
percent stake on concern over the impact on U.S. national security, so
the group would extend its review for 45 days, the person said, Reuters
reported. At the end of the extended investigation, the panel will make
a recommendation to President Bush, who will then have another 15 days
to decide, according to the newswire.
Spiegel Judge Approves $26 Million of Employee Bonus Payments
Spiegel Inc. won a judge's permission to give 225 top employees as much
as $26.4 million in bonus payments, including $8.6 million for the chief
executive officers of its main units, Bloomberg News reported. Eddie
Bauer CEO Fabian Mansson and Spiegel's catalog unit CEO Geralynn Madonna
also would get more than $3.1 million in severance if they're fired
without cause or Spiegel liquidates. U.S. Bankruptcy Judge Cornelius
Blackshear in Manhattan approved the plan on Tuesday, court papers
show.
The bonuses come as the Downers Grove, Ill.-based store and catalog
retailer fires workers, closes stores and sells assets to slash costs
and trim more than $1.71 billion in debt. Bankrupt companies typically
use such 'pay-to-stay'' bonuses to keep executives and managers from
leaving as they rebuild.
Halliburton Gets the OK for Asbestos Stay
Halliburton Co. on Monday said lawyers representing asbestos victims
agreed to let the company seek another extension for applying for
bankruptcy protection for its Harbison-Walker Refractories unit, Reuters
reported. Under the new agreement, the Houston-based oil services and
engineering company on Tuesday will ask federal Judge Judith
Fitzgerald in Pittsburgh to extend a stay on more than 200,000
asbestos claims until Sept. 30. Halliburton says it needs more time to
complete documenting the cases and file a reorganization plan. As part
of the deal between Halliburton's DII Industries and Harbison-Walker
units and asbestos victims, DII agreed to fund $30 million under a
debtor-in-possession facility to Harbison. DII would also buy a $50
million insurance receivable from Harbison, reported the newswire.
MCI Emergence Could Spur More Consolidation, Report Says
The emergence of WorldCom Inc. from bankruptcy could trigger more
consolidation in the industry, Blair Levin, managing director of Legg
Mason's telecommunications group, told Barron's, Reuters reported. Levin
said in an interview that the best time for the Bell companies to buy
the enterprise operation of WorldCom would be in the three-to-six-month
period when MCI emerges from bankruptcy.
Mirant Puts Pepco, Workers in a Bind
A Washington Post article examines how Mirant's bankruptcy
filing affects union talks, future power sales. To read the article,
point your browser to
href='http://www.washintonpost.com/'>www.washintongpost.com.
$1,000,000 Bankruptcy Fraud Announced by the Office of the U.S.
Attorney for the Southern District of California
U.S. Attorney for the Southern District of California Carol C. Lam
announced on Friday the arrests in Mexico of Terry Brunning and Susan
Brunning, who were charged in a 15-count indictment pending in U.S.
District Court in San Diego with conspiracy, bankruptcy fraud, money
laundering and criminal forfeiture. According to the indictment, the
Brunnings, who had operated two Postal Annex stores in San Diego, filed
for bankruptcy on August 20, 2002. Prior to filing bankruptcy, the
Brunnings transferred approximately $1,000,000 from their Postal Annex
business accounts to an offshore financial institution located on the
Isle of Man, Great Britain. In the bankruptcy petition, the Brunnings
stated that they only had between $0 and $50,000 in assets. However,
according to the indictment, the Brunnings had over $1 million in
domestic and offshore financial accounts (including the account on the
Isle of Man), a Rolls-Royce, a Jaguar, a 57-foot sailing yacht, and a
promissory note worth $155,000. The indictment alleges that the
Brunnings concealed these assets from the Bankruptcy Court Trustee and,
when the promissory note was discovered by the Bankruptcy Trustee, the
Brunnings created a fictitious claim against the bankrupt estate in
order to obtain all or part of the proceeds from the sale of the note by
the Bankruptcy Trustee.
Management Faulted as Major Cause of Business Failure:
Study
Poor management is the most important factor contributing to business
failures, according to a new study analyzing the underlying internal and
external causes of business distress in the United States. The survey of
1,900 executives, aimed at appraising historic internal and external
causes for business failure in today's environment, was conducted by
Seton Hall University's Stillman School of Business and Buccino &
Associates Inc.
Eighty-seven percent of those that responded to the survey said
businesses fail because of internal issues, such as excessive debt,
improper planning and failure to change, as opposed to external factors
like competition and the economy. By contrast, more than 88 percent of
the respondents felt that the impact of 9/11 and subsequent terrorist
acts will have only a small or fair impact on business failures over the
next few years and that recent accounting irregularities will also have
a minimal impact.
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