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March 28, 2008
name='1'>Obama Proposes Aid and Stricter Regulations to
Remedy Mortgage Crisis
Presidential candidate
Sen. Barack Obama (D-Ill.) called yesterday for tighter regulation of
mortgage lenders, banks and financial houses, even as he spoke of
pumping $30 billion into the economy to shield homeowners and local
governments from the worst effects of the collapse of the housing
bubble, the New York
Times reported today. Obama laid much of the
responsibility for the crisis on lobbyists and politicians who
dismantled the regulatory framework governing the energy,
telecommunications and financial services sectors, blaming Democrats no
less than Republicans.
href='http://www.nytimes.com/2008/03/28/us/politics/28dems.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
FHA
May Aid Borrowers 'Underwater' on Home Loans
The Bush administration
is considering regulatory changes to aid homeowners who owe more money
on their mortgages than their homes are worth, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The Department of Housing and Urban Development
plan would enable homeowners who are 'underwater' on their mortgages to
qualify for a partial backstop through HUD's Federal Housing
Administration. HUD's new plan, recently submitted to the White House's
Office of Management and Budget, would allow many more people to
qualify, though it still is unclear what the requirements would
be. HUD had $21.3 billion in its
mortgage-insurance fund at the end of 2007 to protect against losses. At
the end of February, the agency insured 3.8 million loans with a total
unpaid balance of $364.7 billion.
href='http://online.wsj.com/article_print/SB120667223787570811.html'>Read
more. (Registration required.)
name='3'>Analysis: Federal Reserve Leaders Ponder Expanded
w:st='on'>Mission
With its March 14
decision to make a special loan to Bear Stearns and a decision two days
later to become an emergency lender to all of the major investment
firms, the Federal Reserve abandoned 75 years of precedent under which
it offered direct backing only to traditional banks, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Leaders of the central bank had no master plan
when they took those actions, no long-term strategy for taking on a more
assertive role regulating Wall Street. While they were focused on the
immediate crisis in world financial markets, they now recognize that a
broader role may be the result of the unprecedented intervention and are
being forced to consider whether it makes sense to expand the scope of
their formal powers over the investment industry. The Fed has made a
special lending facility available to large investment banks for at
least the next six months. Even if that program is allowed to expire
this fall, the Fed's actions will have lasting impact, economists and
Wall Street veterans said.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/27/AR2008032703662_pf.html'>Read
more.
In related news, The
Fed's first auction yesterday of funds to Wall Street elicited barely
enough interest to cover the amount being offered as securities dealers
submitted $86.1 billion in bids -- putting up a wide range of
collateral, including riskier mortgage securities -- in exchange for $75
billion in Treasury bonds from the Fed, the
size='3'>Wall Street Journal reported today.
The Fed also said a separate direct-lending program created last week
for securities firms saw a modest increase in demand. Average daily
borrowing from the overnight-loan program was $32.9 billion in the week
ended Wednesday, up from $31.3 billion in the program's first three days
of existence last week. Loans outstanding as of Wednesday were at $37
billion, up from $28.8 billion a week earlier.
href='http://online.wsj.com/article_print/SB120666243770670283.html'>Read
href='http://online.wsj.com/article_print/SB120666243770670283.html'>
Fed
to Hold Hearings on Countrywide Acquisition
The Federal Reserve said
yesterday that it would hold public meetings next month on the offer by
Bank of America to acquire Countrywide Financial, Dow Jones Newswires
reported. The Fed scheduled the meetings, two in
w:st='on'>Los
Angeles
w:st='on'>
size='3'>Chicago
collect information related to factors it is required to consider under
the Bank Holding Company Act. Last month, Bank of America requested
approval under the law to acquire Countrywide. The Fed said it would
consider whether the acquisition could reasonably be expected to produce
benefits like greater convenience and more competition that outweighed
adverse effects, including conflicts of interests and unsound banking
practices.
name='5'>Seattle Company Bids for Aloha Airline's Cargo
Operations
A
w:st='on'>
size='3'>Seattle
said yesterday that it has offered to buy the cargo operations of Aloha
Airlines, which filed for chapter 11 protection last week, the
Associated Press reported. Saltchuk Resources Inc.'s bid for the
Honolulu-based carrier's cargo assets, equipment and service lines is
the first for any part of Aloha. The amount of the offer, which is
subject to court approval, was not disclosed, and Saltchuk said it was
not interested in taking over Aloha's passenger business. Rocked by
record fuel prices and a new low-fare competitor in Mesa Air Group
Inc.'s go! airline, Aloha filed for chapter 11 on March 20, a little
more than two years after emerging from bankruptcy. A day later, the
company put its passenger services, air cargo and contract services,
which include
w:st='on'>
size='3'>U.S.
size='3'>mail shipments, on sale.
href='http://biz.yahoo.com/ap/080327/aloha_bankruptcy.html?.v=2'>Read
more.
name='6'>Florida Home Loan Holding Company Enters
Bankruptcy
BFWest LLC, a wholly owned
subsidiary of Fort Lauderdale, Fla.-based
size='3'>BuilderFinancial Corp., which provides mezzanine financing to
builders, filed for chapter 11 on Wednesday,
size='3'>Bankruptcy Law360 reported
yesterday. With a portfolio of acquisition,
development and construction loans, BFWest estimates its liabilities to
be more than $200 million and its portfolio book value to be $184
million, a figure that excludes accrued interest, loss reserves and
nonaccrual allowance. Toughly $90 million in
unsecured debt is outstanding, pursuant to the sale of BFWest's loan
portfolio to two BuilderFinancial affiliates, BFSPE LLC and Builder
Funding LLC, according to a filing.
size='3'>The company's third and apparently final creditor is the
size='3'>New York
of German bank WestLB. BFWest said it owes the bank, which possesses a
security interest in the debtor's loan portfolio, roughly $115 million
under a credit facility and security agreement.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=51322'>Read
more. (Registration required.)
Records Reaches $3.7 Million Settlement with Record
Company
Bankrupt music
size='3'>purveyor
face='Times New Roman' size='3'>Tower
Records asked a court on Wednesday to approve a deal with
record company Warner/Elektra/Atlantic Corp. that would settle all debts
and litigation between the two companies for $3.7 million,
size='3'>Bankruptcy Law360 reported yesterday.
The settlement resolves proofs of claim totaling more $18 million, of
which roughly $1 million is allegedly entitled to administrative
priority under the bankruptcy proceedings. Warner will also agree to
withdraw from an informal committee currently suing the now-defunct
music retailer.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=51280'>Read
more. (Registration required.)
name='8'>American Home Mortgage Receives another Exclusivity
Extension
Bankruptcy Judge
size='3'>Chris
size='3'>topher S. Sontchi extended the
exclusivity period for American Home Mortgage Holdings Inc. (AHM) to
file a reorganization plan and support as it tries to settle pending
disputes, Bankruptcy
Law360 reported yesterday. AHM received an
extension to June 2 to file its reorganization plan and until July 31 to
solicit acceptances for the plan. However, the company said the
requested extensions “may not provide sufficient time for the
debtors to complete the various sales and other tasks that must be
completed before a plan can be filed and acceptances of such plan can be
solicited.”
size='3'>Despite the concern, AHM sought the 90-day extension after
consulting with its unsecured creditors’ committee and retained
the right to file for further extensions if needed.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=51301'>Read
more. (Registration required.)
name='9'>Credit Turmoil Raises Student Loan Worries
Concern is growing that the
U.S. Department of Education has yet to detail its plans for making
emergency federal loans if students can't borrow through normal channels
for the coming school year, the Wall Street Journal reported
today. Students receiving admissions letters around this time of year
are typically referred by their colleges to one of 2,000 banks and other
lenders that make loans through the federal government's guaranteed-loan
program, which supplies billions of dollars to pay for college and is by
far the largest source of financial aid. However, investors who normally
buy the loans in bundled lots have balked this year amid broader turmoil
in the credit market. The Education Department and others have said they
expect that plenty of credit will still be available for college. Signs
of distress, however, have prompted calls from Congress and elsewhere
for the department to make plans to start an emergency lending channel,
called the 'lender of last resort' program, should it be needed.
href='http://online.wsj.com/article_print/SB120667039791670745.html'>Read
more. (Registration required.)
name='10'>Strike Could Shut Down GM Car Factories
The month-long strike at
auto parts maker American Axle and Manufacturing Holdings Inc. could
force General Motors Corp. to shut down a few of its car factories, the
Associated Press reported today. Two GM factories that make cars
in
size='3'>Michigan
size='3'>Ohio
the strike, which already has fully or partially shut down 28 GM plants
in the United States and
w:st='on'>
size='3'>Canada
size='3'>due to parts shortages. GM confirmed yesterday that the strike
will force it to idle the Detroit-Hamtramck assembly plant after today,
and a local union president in Lordstown, Ohio, said yesterday that his
complex will be shut down on April 4. Previously the strike had affected
only plants that assemble or supply parts for slow-selling pickup trucks
href='http://www.nytimes.com/aponline/business/AP-American-Axle-Labor.html?sq=bankruptcy&st=nyt&scp=4&pagewanted=print'>Read
more.
International
name='11'>Japan
face='Times New Roman' size='3'>'s Core Inflation Rises, Jobless Rate
Worsens
w:st='on'>
size='3'>Japan's
inflation rate climbed at its fastest rate in a decade in February and
the jobless rate worsened to 3.9 percent under data released today,
raising concerns about the health of the world's second-largest economy,
Dow Jones Newswires reported. The core consumer price index, which
excludes volatile fresh food prices, rose 1.0 percent in February from a
year ago -- the fastest reading since March 1998, the Ministry of
Internal Affairs and Communications said.
w:st='on'>
size='3'>Japan
size='3'>has long struggled with deflation, or falling prices, but
Friday's data, which also marked the fifth straight month of gains, show
that higher prices for imported oil and commodities are adding pressure
on living costs.
size='3'>Separately,
w:st='on'>
size='3'>Japan
unemployment rate stood at a worse-than-expected 3.9 percent in
February, the Ministry of Public Management said. The results reflected
slowing domestic and overseas growth, which has made business less
willing to hire workers.
href='http://online.wsj.com/article_print/SB120667613440771103.html'>Read
more. (Registration required.)
href='http://online.wsj.com/article_print/SB120667613440771103.html'>