href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
September 9,
2008
Consumer Borrowing Slowed in
July
Borrowing by consumers slowed in July to the weakest pace in seven
months, reflecting a slowdown in demand for car loans, the Associated
Press reported yesterday. The Federal Reserve reported Monday that
consumer borrowing grew at an annual rate of just 2.1 percent in July,
the slowest pace since a 1.9 percent rise last December. The slowdown
reflects a tiny 0.5 percent rate of growth in the category that includes
auto loans, down from a 6.1 percent surge in this category in June. The
category that includes credit cards grew at an annual rate of 4.8
percent in July, up from a growth rate of 3.5 percent in June. The 2.1
percent growth rate for total credit represented an increase of $4.5
billion, far smaller than the $8.8 billion rise that economists had been
expecting and down from a gain of $10.96 billion in June.
href='http://www.nytimes.com/2008/09/09/business/economy/09econ.html?ref=business&pagewanted=print'>Read
more.
Analysis: GSE Bailout Is Greeted with
Relief, Fresh Questions
While stock markets rallied and mortgage rates fell on the news
of the U.S. government's seizure of Fannie Mae and Freddie Mac,
obstacles still remain if the Treasury's takeover of Fannie Mae and
Freddie Mac is to succeed, the Wall Street Journal reported
today. In the weeks before the government's intervention, nervous
foreign finance officials barraged Treasury Secretary Henry Paulson and
Federal Reserve officials to find out what was happening with the
mortgage giants. Foreign banks' concerns were among the factors that
helped prompt the government's move on Sunday to take over Fannie and
Freddie. Under the takeover, the government replaced the companies' CEOs
and shifted management control to their regulator, the Federal Housing
Finance Agency. The government pledged to provide as much as $200
billion to help both firms ride through their expected mortgage-related
losses. Paulson outlined his desire to see both companies begin to
reduce the size of their mortgage portfolios beginning in 2010.
href='http://online.wsj.com/article/SB122088294934209997.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)
FTC and Justice Department Disagree on
Antitrust Policy
The Justice Department issued antitrust guidelines for corporate
monopolies yesterday, but drew a rebuke from the Federal Trade
Commission (FTC), which declined to endorse the report, Reuters reported
today. The department said the guidelines were aimed at stopping abuses
while avoiding “interfering in the rough and tumble of beneficial
competition.” The FTC, which shares responsibility for antitrust
enforcement, did not endorse the Justice Department report. “We
are very concerned that the recommendations in the report, if adopted by
the courts, would harm consumers and competition,” said FTC
commissioner Jon Leibowitz.
href='http://www.nytimes.com/2008/09/09/business/09antitrust.html?ref=business&pagewanted=print'>Read
more.
Mistaken Bankruptcy Report Hurts
United
An erroneous headline yesterday saying that United Airlines had filed
for a second bankruptcy sent the airline's stock plummeting to about $3
a share from more than $12, wiping out more than $1 billion in value,
the New York Times reported today. United blamed an old
Chicago Tribune article that, it said, was posted on the Web
site of the South Florida Sun-Sentinel newspaper. That article
was picked up by a research firm, Income Securities Advisors, which then
posted a link to it on a page on Bloomberg News, which sent a news alert
based on the old article. However, the newspaper's editor and the
Tribune Company, which owns the Sun-Sentinel, denied that the
paper had run the article on its Web site, saying it could be found only
href='http://www.nytimes.com/2008/09/09/business/09air.html?ref=business'>Read
more.
Trustee Sues CEO of Mortgage Lending
Investments Associates
Bankruptcy trustee Geoffery Groshong filed a lawsuit against
Mortgage Investment Lending Associates CEO Layne E. Sapp, alleging that
he looted the company's assets instead of taking action to turn the
company around while it was still a valuable entity, Bankruptcy Law360
reported yesterday. The lawsuit alledges that Sapp waited two years
while manipulating and looting the company's assets for personal gain -
using company proceeds to fund a boat and funneling dividend cash into
his own account as MILA fell into financial distress. The suit also
names several corporations and companies, including Lima Sierra LLC,
Next Online Mortgage Technologies Inc., Destiny Leasing LLC and CRS
Financial LLC, which are owned and controlled by Sapp and his
wife. Read
more. (Subscription required.)
Friedman's Receives Extension to File
Chapter 11 Plan
Bankruptcy Judge Christopher S. Sontchi has given
Friedman's Inc. more time to file its chapter 11 reorganization plan
after the jewelry retailer said it had been unable to draft a suitable
plan because it has been trying to obtain debtor-in-possession
financing, liquidating its assets, and analyzing and resolving claims,
Bankruptcy Law360 reported yesterday. Judge Sontchi granted
Friedman's request of an additional 60 days to file its chapter 11 plan,
as well as a 60-day extension of the period during which the debtors
have the exclusive right to solicit acceptances of the plan. The
deadline for the debtors to file their reorganization plan is now
extended to Nov. 24, and the exclusive right to lobby for acceptance of
the plan until Jan. 23, 2009.
href='http://bankruptcy.law360.com/articles/68527'>Read
more. (Subscription required.)
1031 Tax Group Trustee Sues over Real
Estate
Chapter 11 trustee Gerard A. McHale for the 1031 Tax Group LLC has
lodged an adversary case against several defendants including
businessman Edward H. Okun, who is currently incarcerated and awaiting
trial after being accused of misappropriating more than $130 million,
Bankruptcy Law360 reported today. The eight-claim complaint,
filed Friday in the U.S. Bankruptcy Court for the Southern District of
New York, centers on real estate in New Hampshire and asks that at least
$5.1 million of the property's value be placed in a constructive trust
for the debtors. The 1031 debtors had millions of dollars taken from
them, and $5.1 million of that money went to buy the property at issue,
the complaint contends. The debtors want the court to make sure that
they get full restitution of their allegedly misappropriated funds
before any defendant gets any benefit from the property.
href='http://bankruptcy.law360.com/articles/68510'>Read
more. (Subscription required.)
Alabama County Takes More Time to
Avoid Bankruptcy
Jefferson County (Ala.) commissioners decided yesterday against making
payments on a $3.2 billion sewer debt until Sept. 30, a move Governor
Bob Riley (R) said allows time for talks to possibly avoid filing the
largest municipal bankruptcy in U.S. history, the Associated Press
reported. Riley said that the decision by the Jefferson County
commissioners allows 'some breathing time' for additional negotiations
with creditors on restructuring the county's huge debt. The problem
stems from years of risky borrowing agreements by the county for sewer
work. With the nation's credit squeeze, the county's payments increased
dramatically under those deals.
href='http://www.forbes.com/feeds/ap/2008/09/08/ap5401635.html'>Read
more.
U.S. Court Revives Enron Cases in
Texas
The Fifth Circuit Court of Appeals revived Texas state-court lawsuits
aimed at the estate of the late Enron founder Ken Lay, other company
leaders and financial institutions including Bank of America Corp.,
Credit Suisse First Boston, Barclays PLC and Citigroup Inc., the
Wall Street Journal reported today. The law firm of
Fleming & Associates first moved against Enron in late 2001, with a
series of seven state-court securities lawsuits brought on behalf of
'several hundred clients,' the appeals court said. A federal court
entertaining similar lawsuits enjoined the law firm from pushing ahead
in state court without getting federal-court permission. In 2005,
Fleming asked for and was denied permission to sue Enron's former
leaders and financial institutions for common law fraud, fraud on the
market, statutory fraud and aiding and abetting common law fraud. The
Fifth Circuit yesterday reversed the ruling that barred Fleming from
suing in state court. The appeals court said that the law firm moved in
time to save those potential claims, and it is now up to a Texas state
court to decide what happens to the lawsuits.
href='http://online.wsj.com/article/SB122093085422213803.html?mod=us_business_whats_news'>Read
more. (Subscription required.)
International
Alitalia Unions Oppose
Restructuring Plan
Italian airline Alitalia SpA and its unions girded for a showdown as
pilots and flight crews balked at work-rule changes demanded as part of
a government-backed rescue plan for the carrier, the Wall Street
Journal reported today. Union leaders lined up in opposition to the
proposals during a meeting yesterday with government officials and
representatives of Compagnia Aerea Italiana, a new company that plans to
buy the viable parts of Alitalia and merge them with a smaller rival,
Air One SpA, in a bid to reintroduce the airline. The proposals would
require Alitalia pilots and crews to put in more flight time and to
agree to more flexibility in the destinations they serve.
href='http://online.wsj.com/article_print/SB122090060976011211.html'>Read
more. (Subscription required.)