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June 18, 2008
size='3'>Congressional Leaders Look to Reach Compromise on
Housing-Assistance Package
House leaders said yesterday
that they will make a counteroffer to the Senate over negotiations on a
housing-rescue package as they look to strengthen their hand over loan
limits for Fannie Mae and Freddie Mac, as well as whether the Bush
administration will be able to appoint a new regulator for the two
mortgage giants, CongressDaily reported today. The Senate
bill is slated to come to a floor vote in the upper chamber this week.
The revised Senate measure would set Fannie and Freddie loan limits at
$625,000, which is $75,000 more than called for by a measure approved by
the Senate Banking Committee last month. The House-passed bill would
maintain the loan limits at approximately $730,000, a benchmark that was
established in the economic-stimulus package passed in February but
lasts only through the end of the year. House Financial Services
Chairman Barney Frank (D-Mass.) said that the House will want to make
additional changes to the Senate measure, indicating that final passage
of the overall housing-assistance package could be delayed until after
the Independence Day recess.
Two
More Builders File for Bankruptcy
Oakridge Homes LLC in
California and M.W. Johnson Construction Inc., which builds homes in
Minnesota, Wisconsin and Florida, both filed for chapter 11 protection
on Friday, the Wall Street Journal reported today. M.W.
Johnson is seeking court approval of a $1 million bankruptcy loan to
help it liquidate its assets. Oakridge Homes did not state in court
papers whether it intends to reorganize or liquidate its assets during
its stay in chapter 11. Oakridge, of Valencia, Calif., listed assets and
debts in the range of $10 million to $50 million in its bankruptcy
petition.
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name='3'>Sharper Image Fights Shoppers' Bid for Stay
Relief
Bankrupt retailer Sharper Image
Corp. is fighting efforts by shoppers to proceed with a putative class
action over claims that the company illegally compiled personal data
from customers' credit cards, Bankruptcy Law360 reported
yesterday. The customers' state court action, filed in March last year,
is currently stalled in the San Diego Superior Court. There had been
unsuccessful mediation and settlement discussions, but no trial date was
set before Sharper Image filed for chapter 11 in February and the
lawsuit became subject to the stay. The suit accuses Sharper Image of
unlawfully collecting and recording its California customers'
information during credit card transactions and using the information to
create a marketing database, in violation of the California Civil Code.
In its objection filed Monday, Sharper Image argued that relief from the
stay would cause undue hardship to the company.
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more. (Registration required.)
Swap Planned in Newspaper Holdings Deal
The 'super-voting' shares that
gave jailed media baron Conrad Black power to control his former
newspaper holdings are scheduled to be swapped Tuesday in a deal with a
key creditor of his bankrupt holding company, Hollinger Inc., the
Wall Street Journal reported today. Creditors of Hollinger
will get the shares as part of a deal to resolve more than $100 million
in unpaid debts. The share swap is built into a settlement between
Hollinger and bondholder Davidson Kempner LLC, which has been pressing
Black's former holding company for payment. Davidson Kempner owns about
40 percent of more than $100 million in bond debt Hollinger owes.
Bondholder demands sent Hollinger into insolvency protection in Canada
and chapter 15 protection in the United States last year.
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name='5'>MBIA's Debt Is Setting Up Tough Situation for
Regulators
After credit default swaps
played a crucial role in the bailout of Bear Stearns, regulators now
face the tough task of whether to allow bond insurance company MBIA to
renege on a promise to shore up a crucial unit with $900 million in
capital, the New York Times reported today. MBIA has written
$137 billion in swaps, which are privately traded insurance contracts
that let people bet on companies' financial health. Most of these
contracts stipulate that if MBIA's bond insurance unit becomes insolvent
or is taken over by state regulators, buyers can demand payment
immediately. If that were to happen, however, MBIA would have far less
money to pay policyholders and owners of municipal bonds backed by the
company. The swaps give MBIA significant leverage over Eric R. Dinallo,
the commissioner of the New York State insurance department, who wanted
the company to bolster its insurance unit with the $900 million in cash.
href='http://www.nytimes.com/2008/06/18/business/18bond.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
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Approves Quebecor's Sale of European Assets
Bankruptcy Judge James
Peck authorized bankrupt Canadian printer Quebecor World Inc.
to sell its European operations to Vadeho, an affiliate of
Netherlands-based investment group Hombergh Holdings BV, Reuters
reported yesterday. Quebecor, which prints magazines for Time Warner
Inc., Forbes Inc. and Walt Disney Co. publications, said in May that it
would sell its European operations for 133 million euros ($206.6
million) to the group. Quebecor filed for bankruptcy protection in the
United States and Canada in January.
name='7'>Detroit's Shrinking Auto Sales Take a Toll on
Dealerships
General Motors, Ford Motor and
Chrysler dealerships have been decreasing as the Detroit automakers have
undertaken painful overhauls in recent years, the New York Times
reported today. More than 10,000 dealerships, nearly all of which sold
American brands, have closed since 1970, according to the National
Automotive Dealers Association. Last year, 430 called it quits, and the
organization expects at least that many, but probably far more, to close
in 2008, leaving about 20,000 of them nationwide. Last year, 260 GM
dealers closed their doors, mostly as part of the company's strategy to
combine Buick, Pontiac and GMC brands into single showrooms. GM still
has about 6,700 dealers Ñ more than four times as many as its
closest competitor, Toyota, has in the United States. Ford and Chrysler
also are pushing hundreds of their dealers to either sell or shut down.
href='http://www.nytimes.com/2008/06/18/business/18dealer.html?ref=business&pagewanted=print'>Read
more.
name='8'> Soaring Fuel Prices Pinch Airlines
Harder
Major carriers Northwest
Airlines Corp. and ACE Aviation Holdings Inc.'s Air Canada yesterday
joined the growing roster of airlines saying that they plan to ground
planes, reduce capacity and, in some cases, cut jobs this fall and
winter, the Wall Street Journal reported today. Discount
carriers Virgin America Inc. and AirTran Airways, a unit of AirTran
Holdings Inc., also weighed in with plans to reduce seats. UAL Corp.'s
United Airlines also said yesterday that its 2008 fuel costs, at current
prices, will be $9.5 billion, a jump of more than $3.5 billion from last
year. The carrier recently said it will cull 100 jets from its 460-plane
fleet, trim capacity and cut its work force.
href='http://online.wsj.com/article/SB121371813315881175.html?mod=us_business_whats_news'>Read
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name='9'> Senators Deny Knowing of Home Loan
Favoritism
Senate Banking Committee
Chairman Christopher J. Dodd (D-Conn.) said yesterday that he knew he
was part of a 'VIP' mortgage program offered by Countrywide Financial,
but he said that he was not aware that the privilege included waiving
fees that regular customers must pay to obtain lower interest rates, the
Washington Post reported today. Dodd - who reportedly
received the special treatment as part of the company's 'Friends of
Angelo' program, named for chief executive Angelo Mozilo - said loan
officers told him and his wife in 2003 that they would be part of an
exclusive program. However, the couple assumed the plan gave them
unspecified courtesies and did not ask whether it included a waiver of
the fees, known as points, or a reduced interest rate on their loans,
the senator said. The Senate Ethics Committee has started a preliminary
investigation of the special treatment afforded Dodd and Sen. Kent
Conrad (D-N.D.), who received a one-point reduction on his Countrywide
mortgage.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/06/17/AR2008061702579_pf.html'>Read
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name='10'> Some Public Pension Funds Feel Pinch of Market
Turmoil
Stock-market turmoil wrought by
the credit crunch is on track to push public pension-fund returns into
negative territory for the first time in six years, prodding some weaker
funds to take steps that could pain future employees, the Wall Street
Journal reported today. Most public pension funds remain
healthy as many state, city and other municipal funds are coming off
five years of positive returns through June 2007. However a number of
government funds in tough fiscal shape could face more-immediate
concerns. Kentucky lawmakers are expected to convene later this month to
consider a package of pension bills to reduce a $27 billion unfunded
liability. In New Jersey last week, a state senate committee approved
pension measures aimed at reducing the state's $28 billion unfunded
liability, including restricting membership in plans to those who work
at least 35 hours a week, and by requiring members who can draw on more
than one plan to choose only one.
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name='11'> Dana Settles Environmental Claims
Auto-parts supplier Dana
Holdings Corp. will pay $125.7 million to settle environmental cleanup
claims at six toxic-waste sites in five states, the Wall Street
Journal reported today. The settlement also resolves claims
against Dana for related civil monetary penalties. The Environmental
Protection Agency and Fish and Wildlife Service had filed $300 million
in claims to clean up six Superfund sites associated with Dana during
more than 100 years. Dana, which makes axles, drive shafts and service
parts, sought chapter 11 protection in March 2006 and exited bankruptcy
proceedings earlier this year.
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