href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
July 10, 2008
House Financial Services Committee to
Examine Changes to Financial Regulatory Structure
The House Financial Services Committee will begin a series of hearings
starting today on the policy implications of retooling U.S. regulatory
structures for the changing financial markets, according to a committee
press release. Scheduled witnesses include Treasury Secretary Henry
Paulson and Federal Reserve Board Chairman Ben Bernanke. The committee
also plans to invite New York Federal Reserve President Timothy
Geithner, SEC Chairman Christopher Cox, other federal regulators,
academics, economists and market participants to present their views at
subsequent hearings later in July and continuing in the fall.
href='http://www.house.gov/apps/list/press/financialsvcs_dem/press070108.shtml'>Read
more.
Funding Issues Still Block Housing
Bill's Path
As Congress enters final negotiations over a housing-recovery package,
House Democrats are splintering over whether to accept a Senate
provision that would provide almost $4 billion in funding for
communities to buy and rehabilitate foreclosed properties,
CongressDaily reported today. The issue will come to a head as
the Senate could pass its bill as early as today and send it to the
House. Conservative Democratic members of the House, known as the Blue
Dog Coalition, are insisting that the Senate language be offset or
dropped when the House considers the package next week. On the other
hand, the Congressional Black Caucus claims that the funding should be
considered as an emergency and not comply with pay/go rules because of a
record foreclosure rate that is devastating communities. The funding has
become the main sticking point for final passage of the package that
would revamp oversight at Fannie Mae and Freddie Mac, overhaul the
Federal Housing Administration's mortgage insurance program and allow
the FHA to guarantee up to $300 billion in new loans for at-risk
subprime borrowers.
Consumer Borrowing Increases in May as
More Americans Use Credit Cards
Americans boosted their borrowing in May, reflecting heavy
credit card use to finance their purchases, USA Today reported
yesterday. The Federal Reserve reported Tuesday that consumer credit
increased at an annual rate of 3.6 percent in May, roughly the same pace
as logged in the prior month. The increase pushed total consumer
borrowing up $7.8 billion to $2.57 trillion. The increase was led
by much stronger demand for revolving credit, which rose at a 7.1
percent pace in May. That compared with a cutback in such credit of 0.5
percent in April.
href='http://www.usatoday.com/money/economy/2008-07-08-may-borrowing_N.htm?csp=34'>Read
more.
Utah Bankruptcies Increase 42
Percent
The U.S. Bankruptcy Court for Utah reported that 4,216 Utahns and
businesses in the state filed for bankruptcy protection during the first
half of this year, a 42 percent increase over the first six months of
2007, the Salt Lake Tribune reported today. So far this year,
56 percent of Utahns who filed for bankruptcy sought protection from
their creditors under chapter 7. The other 43 percent filed for chapter
13, Utah Bankruptcy Court Clerk David Sime said.
href='http://www.sltrib.com/ci_9831640'>Read more.
Clothing Retailer Files for
Bankruptcy
Fashion retailer Steve & Barry's filed for bankruptcy protection
yesterday, but said its 276 stores would remain open while the company
continued to look for a buyer or sold some of its assets, the New
York Times reported. Steve & Barry's also said it would
eliminate 172 jobs in its headquarters in Port Washington, N.Y., and
elsewhere. The company said that its chapter 11 filing was prompted by a
credit squeeze. The company ran into a cash squeeze after defaulting on
a loan made in March by the commercial lending unit of General Electric
and could not secure other financing.
href='http://www.nytimes.com/2008/07/10/business/10retail.html?ref=business&pagewanted=print'>Read
more.
Reliant Wins Fourth Extension to File
Reorganization Plan
A month after Bankruptcy Judge Mary Walrath signed off
on Reliant Energy's $500 million sale of its Channelview plant, she has
granted the company its fourth extension to file a reorganization plan,
Bankruptcy Law360 reported yesterday. Judge Walrath decided
last week to extend Reliant's exclusivity period to file the plan to
Aug. 19 and the plan must be accepted by Oct. 20. Reliant filed its
latest exclusivity extension on June 20, arguing that it wanted to wait
until after it completed the $500 million sale of its assets to GIM
Cogeneration Channelview LLC before filing a plan.
href='http://bankruptcy.law360.com/secure/printview.aspx?id=61618'>Read
more. (Registration required.)
Hedge Fund Manager Shuts Down
Business
Despite efforts to salvage his business, John Devaney, who made and then
lost a fortune trading mortgage investments, has shut his hedge fund and
told his investors that all their money was gone too, the New York
Times reported today. Devaney's Horizon Strategy fund, founded near
the height of the mortgage bubble, is just the latest hedge fund to fall
victim to the credit squeeze. Several others, including Peloton Partners
and Sailfish Capital Partners, have stumbled as well. Devaney thinks the
mortgage crisis is nowhere near its end and expects regional banks and
insurance companies to face big losses on mortgage bonds.
href='http://www.nytimes.com/2008/07/10/business/10fund.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Citing Fuel Costs, Northwest Plans to
Cut 2,500 Jobs
Northwest Airlines said yesterday that it would cut 2,500 jobs,
including pilots, flight attendants, mechanics and other employees,
reflecting its reduction in flights in the wake of high fuel prices, the
New York Times reported today. Northwest also said it would
join other airlines in charging many travelers $15 for the first checked
bag, a move that takes effect with tickets purchased today and
afterward. Northwest also joined other airlines in charging fees for
frequent-flier award tickets and increased its fees for changing
tickets.
href='http://www.nytimes.com/2008/07/10/business/10air.html?ref=business&pagewanted=print'>Read
more.
Judge Bars Suit Alleging Negligence by
Hedge Fund Accountants
A Manhattan judge has rebuffed an attempt by the liquidators of an
'imploded' Cayman Islands hedge fund to seek $292 million from its
allegedly negligent accountants, the New York Law Journal
reported today. The liquidators of Beacon Hill Master, which collapsed
in 2002, were appointed by a Cayman Islands court to pursue claims on
behalf of the fund. However, in the case of Bullmore v. Ernst &
Young Cayman Islands, 104314/05, New York Supreme Court Justice Charles
E. Ramos held that the liquidators were barred from bringing claims
against the fund's auditor, Ernst & Young Cayman Islands, because
the wrongful conduct of the fund's investment managers 'is imputable' to
the fund itself. The liquidators alleged that the fund's four investment
managers had fraudulently inflated the value of the mortgage-backed
securities held in its portfolio. The liquidators also alleged that
Ernst & Young performed a deficient audit between January and March
2002, and failed to detect the managers' fraudulent acts and alert the
fund's directors, thereby contributing to the fund's collapse.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202422874868'>Read
more.
DOJ Revising Rules on White-Collar
Crime
The Justice Department is preparing revised prosecutor guidelines for
white-collar criminal cases partly aimed at forestalling proposed
legislation the department opposes, the Wall Street Journal
reported today. Deputy Attorney General Mark Filip yesterday sent a
letter to the Democratic and Republican leaders of the Senate Judiciary
Committee, laying out proposed changes to the McNulty Memorandum, named
for Filip's predecessor, who issued the guidelines in December 2006. The
memo is used by prosecutors to help determine when companies are deemed
to be cooperating with an investigation. The department has come under
criticism for wielding the threat of criminal charges against companies
in order to gain leverage in investigations of alleged wrongdoing by
company employees. Legislation is pending in Congress to restrain the
department's hand in white-collar cases.
href='http://online.wsj.com/article_print/SB121565088341041197.html'>Read
more. (Registration required.)