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July 26, 2007
w:st='on'>
name='1'
id='1'>U.S.
Mortgage Prices Charged to Minority Borrowers
The Justice Department
told Congress it is investigating several lenders over suspicions they
charged minority borrowers higher mortgage rates than comparable white
borrowers, the Wall
Street Journal reported today. The Federal
Reserve has reported that 2005 loan-price data collected under the Home
Mortgage Disclosure Act found that 55 percent of African-American
borrowers and 46 percent of Hispanic borrowers received costly
mortgages, compared with just 17 percent for whites. The data didn't
take into account, however, whether borrowers who received more
expensive loans also had worse credit histories. Banking regulators who
have analyzed the data have found that the vast majority of instances
where borrowers were charged higher rates could be explained once credit
records were taken into account. Still, several outliers were
discovered, and those cases have been turned over to the Justice
Department.
href='http://online.wsj.com/article/SB118540240240078144.html?mod=us_business_whats_news'>Read
more. (Registration required.)
In related news, House
members probed yesterday whether the Home Mortgage Disclosure Act
(HMDA), which requires lenders to annually make available their data on
home purchases, should be expanded to include additional items to more
easily determine racial discrimination against borrowers,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported today. House Financial
Services Oversight and Investigations Subcommittee Chairman Melvin Watt
(D-N.C.) said at a hearing yesterday that he was disturbed that racial
discrimination in home lending seems to be continuing, based on
information gleaned from the law. Watt questioned witnesses over what
additional items should be included in the reporting requirements to
better determine the extent of racial discrimination in the home
mortgage industry. Ginny Hamilton, executive director of the Fair
Housing Center of Greater Boston, said that the findings from the HMDA
data are highly suggestive of racial discrimination in the market, but
it does not provide conclusive proof. Others
asked that credit scores and fees also be included in reporting
requirements, as well as loans made by mortgage brokers.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht072507.shtml'>Click
here to read the written testimony from the
hearing.
Committee Chair Looks to FTC to Deal with Credit Reporting
Problems
House Financial Services
Chairman Barney Frank (D-Mass.) said at a hearing yesterday that he
would sponsor legislation to give the FTC sole authority to write rules
providing consumers a right to access and correct mistakes on their
credit reports,
size='3'>CongressDaily reported. Frank said
that such a change is needed because the FTC and five different bank
regulators have been unable to finalize regulations on a 2003 law that
gave consumers access to their credit reports at no charge and allowed
them to place a fraud alert on their file if they suspect they have been
a victim of identity theft. While Frank said that he would give the FTC
more authority on that issue, he did not give any signal he would allow
it to have enforcement authority over national banks for unfair and
deceptive practices in areas such as credit cards, overdraft fees, late
fees and deposits. Consumer groups testified that the FTC should have
such authority to police federally regulated banks under the Federal
Trade Act because bank regulators such as the Office of the Comptroller
of the Currency are too close to the industry. Banks are opposed to
giving the FTC any enforcement authority. Frank said that he is more
inclined to give the OCC and the FDIC the ability to write rules because
the Federal Reserve has not spelled out what are unfair and deceptive
trade practices that are prohibited under the Federal Trade Act.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht07250710am.shtml'>Click
here to read the written testimony from yesterday’s
hearing.
Autos
id='3'>Government Defends Stay in Collins & Aikman
Case
The federal government on
Tuesday defended its bid to stop discovery in a securities suit against
bankrupt auto furnishings company Collins & Aikman, saying that the
stay was needed for the government to pursue a related criminal
proceeding, Bankruptcy
Law360 reported yesterday. The company and
several of its officers have been targeted by the U.S. Securities and
Exchange Commission in a civil action, and by the government in a
criminal action. The government argued that allowing civil discovery to
continue in the
size='3'>SEC's lawsuit would prejudice the government in the criminal
case. It also said that resolving the criminal case first would
“conserve legal and judicial resources.”
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=30560'>Read
more. (Registration required.)
id='4'>Dana Responds to Criticism over Deal with
Unions
Bankrupt auto parts
company Dana Corp. defended a deal with its unions against objections
from creditors, who have attacked a deal the company made with its
workers' union as ignoring the creditors' interests,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The objectors' concerns stem primarily from
a deal with the investment firm Centerbridge Capital Partners LLP, which
will fund the deal with Dana's workers. Two creditors, the investment
firms Appaloosa Management LP and Brandes Investment Parters LP, have
filed objections in bankruptcy court, along with the unsecured
creditors' committee. Dana said that the provisions of the deal with
Centerbridge were consistent with market terms, and that Dana was not
yielding any of its autonomy, either to Centerbridge or the unions, in
making a deal. A hearing on the objections is scheduled for
today.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=30537'>Read
more. (Registration required.)
id='5'>Banks Delay
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size='3'>Sale
Debt as Market Stalls
Chrysler Group yesterday
became a signpost for the high-yield-debt market's strain as bankers for
the ailing auto giant postponed a $12 billion sale of debt to investors
as part of a buyout severing Chrysler from German parent DaimlerChrysler
AG, the Wall Street
Journal reported today. The move isn't
expected to prevent the Aug. 3 closing of hedge fund Cerberus Capital
Management's deal to buy an 80 percent stake in Chrysler. However, the
higher borrowing costs that are growing out of the recent debt-market
turmoil promise to crimp the returns of buyout firms, potentially
shrinking their influence and their ambitions. And companies,
particularly struggling ones like Chrysler or Tribune Co., the media
company, could feel the pinch. Until now, they have been able to obtain
cheap loans to work out their problems or finance other plans.
href='http://online.wsj.com/article/SB118537491026477594.html?mod=us_business_whats_news'>Read
more. (Registration required.)
w:st='on'>
id='6'>Shareholders
w:st='on'>
size='3'> Sue
face='Times New Roman'
size='3'>State
face='Times New Roman' size='3'> Bancorp for
Fraud
State Bancorp Inc.
revealed on Tuesday that it had been named in a shareholder derivative
lawsuit alleging that the company breached its fiduciary duty when
settling litigation concerning bankrupt firm Island Mortgage Networks
Inc., Bankruptcy
Law360 reported yesterday. The suit was filed
July 18 in Nassau County Supreme Court and names a number of current and
former executives of State Bancorp as defendants, including company
chairman Thomas Goldrick. Island Mortgage filed for bankruptcy after its
mortgage banker license was suspended in June 2000. A number of Island
Mortgage's creditors, including HSA Residential Mortgage Services of
Texas, filed lawsuits asserting, thereafter, that the State Bank
of
size='3'>Long Island
abetted fraud by Island Mortgage. Island Mortgage allegedly kept over 40
accounts with State Bank of
face='Times New Roman' size='3'>Long Island
size='3'>for a mortgage fraud scheme, where it defrauded mortgage
warehouse lenders out of millions, according to the lawsuit.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=30514'>Read
more. (Registration required.)
id='7'>Tweeter Abandons Bankruptcy Bonuses
Liquidating retailer
Tweeter Home Entertainment Group is scrapping its executive bankruptcy
bonus program and apologizing to workers for a failed attempt to pay
severance benefits, the Associated Press reported yesterday. Tweeter
Chief Financial Officer Gregory Hunt said the company decided to abandon
plans to pay bonuses to top-ranking executives when results of a
bankruptcy sale brought disappointing results. He said that the aborted
severance program was a good-faith effort that foundered along with
Tweeter's hopes for an out-of-court restructuring. The
w:st='on'>
size='3'>Canton
w:st='on'>
size='3'>Mass.
chapter 11 in
face='Times New Roman' size='3'>Delaware
in June and this month sold its remaining assets to
Schultze Asset Management for $38 million. The court-approved deal is
not expected to leave creditors with much of a recovery as Tweeter owed
creditors about $165 million when it sought chapter 11
protection.
href='http://biz.yahoo.com/ap/070725/tweeter_bankruptcy.html?.v=1'>Read
more.
id='8'>Collapsed Hedge Fund Accused of Manipulating Gas
Markets
After a yearlong
investigation, federal regulators have charged Amaranth Advisors, a
high-flying hedge fund that collapsed in 2006, with attempts to
manipulate natural gas prices last year, the New
York Times reported today.
size='3'>The suit, filed yesterday, contends that Amaranth and its
former head energy trader, Brian Hunter, tried to influence prices on
the New York Mercantile Exchange on two separate days several months
apart. The civil enforcement action was
filed by the Commodity Futures Trading Commission in Federal Court for
the Southern District of New York. It seeks fines of $130,000 for each
violation and is asking the court to block Amaranth and Hunter from
trading. Amaranth lost more than $6.5 billion on wrongheaded bets in the
natural gas market last summer before shutting itself down. The
fund’s demise, and the recent battering of two hedge funds managed
by Bear Stearns, showed how quickly some risky investments by hedge
funds could collapse.
href='http://www.nytimes.com/2007/07/26/business/26trader.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
June
Sales of Existing Homes Fell 3.8 Percent
The National Association of
Realtors reported that sales of existing homes fell in June for a fourth
consecutive month, further evidence that housing troubles are far from
over, according to the Associated Press yesterday. The realtors said
that sales of existing homes dropped by 3.8 percent in June, to a
seasonally adjusted annual rate of 5.75 million units. That is the
slowest sales pace since November 2002, and the decline was about twice
what had been expected. The median price of an existing home edged up to
$230,100, 0.3 percent more than a year ago. For June, the median price
of a single-family home rose by 0.1 percent and the price of a
condominium increased by 2.6 percent when compared with the period a
year ago.
href='http://www.nytimes.com/2007/07/26/business/26economy.html?ref=business&pagewanted=print'>Read
more.
International
id='10'>Judge Dismisses Foreign Parmalat Purchasers'
Claims
A group of auditors and
banks secured a major victory Tuesday when a judge dismissed foreign
plaintiffs' claims that they are liable for securities fraud due to
alleged their roles in aiding bankrupt Italian dairy giant Parmalat
SpA's market manipulation,
size='3'>Bankruptcy Law360 reported yesterday.
Judge Lewis A. Kaplan of the U.S. District Court for the Southern
District of New York dismissed foreign purchasers of Parmalat
securities's charges against four financial institutions. Judge Kaplan
found that these plaintiffs did not sufficiently argue that the banks
had committed culpable actions in the
w:st='on'>
size='3'>United States
size='3'>, and therefore ruled that the district court lacks
subject-matter jurisdiction. The judge also ruled that Grant Thornton
and Deloitte Touche, whose accused role in Parmalat's alleged fraud
involves auditing, lie outside of
w:st='on'>
size='3'>U.S.
because the plaintiffs do not sufficiently accuse them of
violating
w:st='on'>United
States
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=30510'>Read
more. (Registration required.)
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=30510'>
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