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November 25,
2008
name='1'>Judicial Pay Raise Stalls Again in Congress
The federal judiciary's long quest for salary increases made little
progress at the end of last week's lame-duck session of Congress, though
hope remains that the post-Thanksgiving session will bring some results,
the Legal Times reported today. The Judiciary Committees in
both houses had endorsed increases earlier in the session, but budget
constraints and, most recently, the financial meltdown have made further
progress tough. In fact the only change in judges' benefits that passed
into law in the current Congress was a ban on judges receiving honorary
club memberships valued at more than $50. For seven of the last 14
years, judges have not even gotten a cost-of-living increase. The Senate
approved the Judicial pay raise legislation by unanimous consent on Nov.
20, but there was no action in the House.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202426265590'>Read
more.
name='2'>Freddie Mac Increases Home Loan Support
Freddie Mac increased its support for the nation's ailing home loan
market in October, in part playing the role the government desired when
it seized the mortgage finance giant, the Washington Post
reported today. The company said yesterday that it bought $27 billion in
mortgage-backed securities in October, growing its portfolio at an
annual rate of 44 percent. The company's portfolio now stands at $764
billion; it may grow to $850 billion by the end of next year under the
government's plan. Delinquencies on loans guaranteed by Freddie Mac also
accelerated in October, rising to 1.34 percent from 1.22 percent in
September.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/24/AR2008112401242_pf.html'>Read
more.
name='3'>Obama Signals Big Stimulus Plan
President-elect Barack Obama suggested that he would package
much of his campaign spending proposals as economic stimulus and try to
push them quickly through Congress to combat a deepening downturn, the
Wall Street Journal reported today. 'Not only do I want the
stimulus package to deal with the immediate crisis, I want it also to
lay the groundwork for long-term sustained economic growth,' Obama said
yesterday. While stimulus plans are usually considered targeted, and
temporary, relief, the Obama economic team is looking at much deeper and
longer-term spending, reflecting the view that downward pressure on the
economy could last for several years. He ticked off a list of priorities
that included creating 2.5 million jobs and spending on roads, bridges,
schools and clean-energy programs.
href='http://online.wsj.com/article/SB122753584294452995.html'>Read
more. (Subscription required.)
size='3'>Autos
name='4'>Senator Calls On Fed Lending Facility to Aid Big
Three
Joint Economic Committee Chairman Charles Schumer (D-N.Y.) wrote to
Federal Reserve Chairman Bernanke yesterday requesting him to use the
Fed's lending facility to aid the financing arms of the Big Three
automakers, CongressDaily reported. Schumer wrote that the Fed
could play a vital role in providing liquidity to the financing units of
Ford Motor Co., General Motors Corp., and Chrysler LLC, given that
credit markets have dried up and Congress remains deadlocked over a
measure to provide $25 billion in low-interest loans to the three.
'Given the importance of the industry to the overall economy, and the
significant role that the lack of financing has played in the collapse
of Big Three auto sales recently, it is critical that the federal
government use the tools at its disposal to deliver immediate assistance
to the sector,' Schumer wrote. He said that the lending should
cover a sufficient time period beyond a short-term nature that was
extended recently to commercial paper because auto loans have longer
maturities.
name='5'>GM's Pension Fund Stays Afloat Amid Automaker's Financial
Difficulties
Though General Motors did not receive a congressional bailout last week,
GM appears to have enough money in the pension fund to pay its more than
400,000 retirees their benefits for many years - even with the markets
swooning around it, the New York Times reported today. That is
largely because of the conservative way GM has managed the fund
recently, and it explains why GM has not joined the long list of
companies pressing Congress for pension relief. GM says that it will be
paying retirees about $7 billion a year for the next 10 years. The
fund's assets were worth $104 billion at the end of 2007, more than
enough to cover its obligations of $85 billion. Since then, the assets
have declined and the obligations have grown, each by undisclosed
amounts. The company says it does not plan to add any money to the fund
for the next three or four years. Even if GM were forced into
bankruptcy, the government might insist that it keep the fund, and cover
any shortfalls with its own money.
href='http://www.nytimes.com/2008/11/25/business/25auto.html?_r=1&ref=business&pagewanted=print'>Read
more.
name='6'>Chrysler Workers Concerned as Deadline for Buyouts
Nears
Chrysler LLC employees are bracing this week for results of a buyout
offer aimed at removing about 5,000 salaried workers from the ailing
automaker's payroll by year end, the Wall Street Journal
reported today. The buyouts are part of a bid by Chrysler to conserve
cash amid a deep downturn in auto sales that has left the company in a
precarious financial position. Even if 25 percent of the company's
17,300 salaried and an undisclosed number of contract employees agree to
leave, Chrysler will impose involuntary layoffs by Dec. 31. More cuts
could be required if Chrysler doesn't get a bailout from the U.S.
government and a bankruptcy filing follows.
href='http://online.wsj.com/article/SB122757265855354833.html'>Read
more. (Subscription required.)
name='7'>Delphi Delays Bankruptcy Hearing
Delphi Corp. yesterday pushed back a court hearing to change the terms
of $4.35 billion in bankruptcy loans, an effort to give the company some
breathing room amid a seizure of the credit markets, the Associated
Press reported yesterday. The auto parts maker rescheduled the hearing
for next Monday after its former parent, General Motors Corp., asked for
a delay. A later hearing also gives Delphi time to settle objections
from lenders, who said that the changes were improper and violated the
loan agreement. The extension would give Delphi an option other than
trying to secure more loans, especially as GM's prospects waver.
href='http://www.buffalonews.com/businesstoday/localbusiness/story/504234.html'>Read
more.
name='8'>AIG Auto Unit to Drop Damaged Brand to Help
Sale
American International Group Inc., the insurer bailed out by the
government, will remove “AIG” from the name of a U.S. auto
unit and cut 6.6 percent of jobs there to improve chances of finding a
buyer for the operation, Bloomberg News reported yesterday. AIG will
start calling its aigdirect.com business 21st Century Insurance in
January, reverting to the brand of a California-based car insurer
acquired last year, said Nicholas Ashooh, a spokesman for AIG. The
company will also close offices in 12 cities, AIG said in an Oct. 21
letter to workers. The unit had about 5,500 employees as of September
2007.
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=aQ6z20Kdn2pI'>Read
more.
name='9'>Developers Denied Relief from Stay in Lehman
Case
A bankruptcy judge in the Lehman Brothers Holdings Inc. bankruptcy case
has refused to grant relief from an automatic stay preventing bankrupt
real estate developer SunCal Cos. from filing motions in its own
bankruptcy that could hurt Lehman, Bankruptcy Law360 reported
yesterday. The ruling on Friday was based on a Nov. 10 motion filed by
SunCal and more than a dozen affiliates collectively known as the SCC
entities. Lehman and the SCC entities are party to an agreement under
which Lehman has financed a number of SCC's development projects,
according to court documents. So far, Lehman has lent the SCC entities
about $2.3 billion. However, after filing for bankruptcy, Lehman failed
to continue financing the projects under the agreement, the SCC entities
said in the motion. As a result, many of the SCC entities have gone
bankrupt, the motion said. The entities asked for a lift of Lehman's
automatic stay so they can administer their bankruptcy in ways that
might impair Lehman. These would include seeking use of Lehman's cash
collateral, subordinating Lehman's liens to new debtor-in-possession
financing and proposing a plan that could impair Lehman, the SCC
entities said.
href='http://bankruptcy.law360.com/articles/77997'>Read
more. (Subscription required.)
name='10'>Uncertainty on Strategy in Citi Rescue
The Bush administration's rescue of Citigroup Inc. is creating
new confusion about the government strategy to shore up volatile
markets, the Wall Street Journal reported today. After trying
to bolster the financial system with a broad-based plan of injecting
capital into lenders, officials over the weekend reverted to their ad
hoc approach of rushing to prop up a specific troubled institution. This
came just days after Treasury Secretary Henry Paulson issued assurances
that rescue programs to date had removed the dangers of a big financial
institution toppling. There have been other recent shifts in strategy.
Last week, Mr. Paulson suggested he wouldn't tap into the second portion
of Treasury's Troubled Asset Relief Program. Yesterday, Bush
administration officials sent signals they were getting closer to doing
just that.
href='http://online.wsj.com/article/SB122757611998255257.html'>Read
more. (Subscription required.)
name='11'>Wells Fargo Deal Means Big Payout for Wachovia
Chiefs
A regulatory filing yesterday showed that 10 Wachovia Corp.
executives are eligible to collect as much as $98.1 million in severance
if Wells Fargo & Co. completes its purchase of the Charlotte, N.C.,
bank by Dec. 31, the Wall Street Journal reported today. The
amounts, triggered by 'change-in-control' clauses in the executives'
employment contracts, include $17.6 million available to Ben Jenkins,
vice chairman and president of the general bank, and $20.3 million that
could go to Steve Cummings, managing director of corporate and
investment banking, according to earlier filings. The potential payouts
could stoke more emotion about the proposed merger as shareholders
prepare to cast their votes Dec. 23. Already the North Carolina state
treasurer has labeled the deal 'highway robbery' and has said he would
urge the state pension fund to vote against the deal. Separately
yesterday, a Charlotte, N.C., judge heard arguments in a shareholder
suit challenging Wachovia's decision to grant more than 40 percent of
the voting rights to Wells Fargo in the form of preferred
shares.
href='http://online.wsj.com/article/SB122757783426255421.html'>Read
more. (Subscription required.)
name='12'>Judge Approves Boscov's Sale to Family Group
/>
A bankruptcy court has approved the $275 million sale of Boscov's
Department Store LLC to a family investor group, the Albany (N.Y.)
Business Review reported yesterday. Under the plan, Boscov's will
be taken over by the Boscov and Lakin families, including Albert Boscov
and his brother-in-law Edwin Lakin, both of whom are former executives
of the department store chain. Boscov's filed for chapter 11 protection
on Aug. 4 and closed 10 of its 49 stores that month.
href='http://www.bizjournals.com/albany/stories/2008/11/24/daily7.html?t=printable'>Read
more.
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