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November 6, 2008

Federal Government's Effort to Help
Distressed Homeowners Off to a Slow Start
The Federal Housing Administration reported that lenders filed just 42
applications to refinance troubled mortgages under the federal Hope for
Homeowners program in the two weeks after the program's Oct. 1 launch,
the Wall Street Journal reported yesterday. The program allows
mortgage companies to refinance delinquent borrowers into affordable,
government-backed loans, provided that the mortgage company writes down
a portion of the loan balance. To qualify for a new loan, homeowners
must agree to share future appreciation with the federal government. In
addition, the new loan amount -- including a 3 percent upfront mortgage
insurance premium -- can't exceed 90 percent of the current appraised
value, which is likely to mean a significant reduction in the loan
balance. Some think there are often better options for mortgage
companies, such as reducing borrowers' interest rates. 'The only reason
you would do a principal write-down under the Hope for Homeowners
program is if you think property values are going to continue to go
down,' says Thomas Lawler, an independent housing economist. 
href='http://online.wsj.com/article/SB122585243365400089.html'>Read
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U.S. Treasury Explores Additional
Options to Deploy Financial Rescue Funding
The Treasury Department said it is exploring additional ways to apply a
$700 billion financial-industry rescue package approved by Congress in
October, the Wall Street Journal reported today. The Troubled
Asset Relief Program (TARP) was passed by Congress last month in
response to the crisis in financial markets this year. The Treasury said

it hasn't made any decisions about new rescue programs and offered few
details about what areas policymakers are exploring. There is growing
pressure for Treasury to attach binding requirements to any capital
injections, to prevent firms from hoarding the government funds or using

them to pay for acquisitions. 
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Auto Leaders to Press for More Federal

Aid
Top auto industry executives and the president of the United Auto
Workers plan to meet with House Speaker Nancy Pelosi today to ask for
additional federal aid for the struggling U.S. carmakers, the
Washington Post reported.Chief executives G. Richard Wagoner
Jr. of General Motors, Alan Mulally of Ford, Robert L. Nardelli of
Chrysler and UAW president Ron Gettelfinger are in Washington to argue
that if there is a November stimulus package from Congress, the auto
industry should receive an additional $25 billion loan to retool for
production of energy-efficient vehicles. That measure has been endorsed
by President-elect Barack Obama and other Democrats. Yesterday, the
Energy Department completed the interim program rules for the existing
$25 billion loan package. The rules allow automakers and suppliers to
apply for government funding. Just last month the department said it
could take more than a year for the money to reach the troubled
automakers. Industry officials and members of Congress urged the
department to accelerate the process. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/05/AR2008110504546_pf.html'>Read

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Iowa Meatpacker Seeks Bankruptcy
Protection
Kosher slaughterhouse Agriprocessors has filed for bankruptcy
court protection, blaming its financial difficulties on the May
immigration raid on its Iowa plant in which more than 300 people were
arrested, the Associated Press reported yesterday. The move to file for
chapter 11 protection on Tuesday came as Agriprocessors faced a hearing
yesterday in federal court, where St. Louis-based First Bank was seeking

to foreclose on the Postville plant and appoint a third party to oversee

Agriprocessors' assets. The company owes First Bank at least $33
million. That hearing was canceled due to the bankruptcy filing, which
showed that Agriprocessors owes between $50 million and $100
million to 397 secured and unsecured creditors. 

href='http://news.yahoo.com/s/ap/20081105/ap_on_re_us/kosher_slaughterhouse/print'>Read

more.

Tweeter Files for Chapter 11 for Second
Time
Tweeter, an electronics chain with about 94 U.S. stores, filed for
chapter 11 protection for the second time in two years and said it had
begun store-closing sales, Reuters reported yesterday. Tweeter's latest
filing listed assets of $50 million to $100 million and debts of the
same level. In its filing with the U.S. Bankruptcy Court in Delaware,
the company said it faced 'a severe liquidity crisis brought on by slow
sales.' Tweeter Home Entertainment Group Inc, a former publicly traded
company, filed for bankruptcy protection in June 2007 and was later
bought by Schultze Asset Management. 

href='http://www.reuters.com/article/marketsNews/idUSN0533669420081105'>Read

more.

Boscov's to Sell Assets to Family
Group
Bankrupt retailer Boscov's Department Store LLC said that it
will sell substantially all of its assets to a family group led by
Albert Boscov and his brother-in-law Edwin Lakin, Bankruptcy
Law360 reported yesterday. Along with the announcement of the sale,

the Pennsylvania-based, family-owned department store chain said it has
formally terminated its previously announced agreement to sell most of
its assets to Versa Capital Management Inc. Boscov's had filed a letter
of intent with the bankruptcy court in September, designating Versa as
the stalking horse bidder. On Wednesday, Boscov's chairman and CEO Ken
Lakin confirmed that the new agreement had the support of the official
creditors' committee. 
href='http://bankruptcy.law360.com/articles/75709'>Read
more. (Subscription required.)

Congoleum Settles Prepetition Asbestos

Dispute
Congoleum Corp. has resolved a long-running dispute over partial
payments made to asbestos claimants through settlements negotiated
before the bankrupt flooring company filed for chapter 11 more than four

years ago, Bankruptcy Law360 reported yesterday. Bankruptcy
Judge Kathryn C. Ferguson on Friday approved a
settlement that clears the way for asbestos claimants to receive equal
treatment under the company's reorganization plan, eliminating the
primary roadblock to plan confirmation. The agreement terminates
settlements reached before the company's chapter 11 filing and requires
claimants who have already received some payments to either return the
funds in favor of pursuing a future claim or keep the money and make no
additional claims. 
href='http://bankruptcy.law360.com/articles/75594'>Read more.
(Subscription required.)

Wall Street's Pay Is Expected to
Plummet
Consulting firm Johnson Associates reported that executive bonuses on
Wall Street, which soared to record heights in recent years, could drop
by 20 to 35 percent across the industry, the New York Times
reported today. A report yesterday from the New York State Assembly also

said Wall Street bonuses could tumble 41.3 percent next year, which
could further widen a budget deficit. Nine of the nation's biggest banks

began handing over data yesterday to Attorney General Andrew M. Cuomo of

New York on how much they plan to pay in bonuses this year, as well as
how much they paid in 2006 and 2007. Several of the banks have asked Mr.

Cuomo for more time to provide the figures. 

href='http://www.nytimes.com/2008/11/06/business/06pay.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

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Small Airlines Hurt by Big-Carrier
Cuts
Regional airlines' financial performance is being pinched by their
big-airline partners' cost-cutting amid high oil prices and the weak
economy, the Wall Street Journal reported today. The mainline
carriers are terminating some of their contracts with the regionals,
while also cutting back the terms of other contracts to limit the number

of planes involved and restrict flying hours. SkyWest Inc., the largest
regional carrier by passengers, said yesterday its third-quarter profit
fell 39 percent to $26.2 million from a year ago, and its hours flown
dropped 7.6 percent as a result of cutbacks by its major airline
partners. ExpressJet Holdings Inc., the No. 3 regional carrier, said its

third-quarter revenue fell 41 percent to $262 million, though its loss
narrowed to $4.8 million from year-ago red ink of $22.3 million. 

href='http://online.wsj.com/article/SB122593118177203289.html'>Read
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Lehman CEO to Be Let Go by End of
Year
Lehman Brothers Holdings Inc. CEO Richard Fuld, who received $34.4
million in pay in 2007, will be “terminated” by the bankrupt

company without any bonus, Bloomberg News reported yesterday. “His

employment will end at the end of the year,” Harvey Miller,
Lehman's lead bankruptcy lawyer, of Weil, Gotshal & Manges, said
yesterday. “He will receive no severance or bonuses.” Fuld
has stayed on as CEO while lawyers and other professionals disperse
Lehman's assets to pay creditors after the fourth-largest investment
bank filed the biggest U.S. bankruptcy Sept. 15 in New York. Lehman is
the subject of three federal criminal probes, and at least 12
individuals have been subpoenaed to testify before grand juries. 

href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aBP4NHggajGI&refer=home'>Read

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Small Business Owners Lobby to Cut
Credit Card Fees
Small merchants are lobbying for legislation that would compel banks to
negotiate fees they must pay banks every time a customer swipes a debit
or credit card, the New York Times reported today. At the same
time, some merchants are seeking class-action status for litigation
claiming antitrust violations by banks and the MasterCard and Visa card
networks. A typical merchant card payment has two parts: an
“interchange fee,” which includes an average 1.7 percent of
the sale price and a flat per-transaction fee, and a separate fee that
goes to the merchant's bank. In 2007, merchants paid $61.56 billion in
electronic payment fees, up from $48.58 billion in 2005, according to
the Nilson Report, a payment systems industry newsletter. Rep. Peter
Welch (D-Vt.) said he planned to reintroduce a “credit card bill
of rights for merchants” in the next Congress. “American
merchants are paying the world's highest interchange fees, a
fast-increasing cost of business for them, with literally no
protections,” he said. 

href='http://www.nytimes.com/2008/11/06/business/smallbusiness/06sbiz.html?ref=smallbusiness&pagewanted=print'>Read

more.