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December 16, 2004
Bush Urges Congress to Curb Asbestos, Medical Malpractice Suits
President George W. Bush said he’ll send Congress legislation
to limit frivolous lawsuits by curbing class action litigation, lawsuits
seeking damages for exposure to asbestos and medical malpractice suits,
Bloomberg News reported. Bush, speaking to a White House-sponsored
economic summit, said spiraling litigation costs as result of frivolous
lawsuits are a drag on business growth and job-creation. “The cost
of litigation in America makes it more difficult for us to compete with
nations in Europe, for example,” Bush said. “We expect the
House and Senate to pass meaningful liability reform.”
The president’s appearance during the forum on lawsuits
signaled his readiness to exert pressure on Congress to enact
legislation that stalled in the Senate last year over Democratic
objections, the newswire reported. Commerce Secretary Donald Evans said
what he called a “tort tax” amounts to 2 percent of the
gross domestic product and also counts for 4.5 percent of the cost of
manufactured goods.
Bankruptcy, Tort Reform Among Issues under Consideration Next
Year
Consumer groups plan to fight legislation to overhaul bankruptcy
laws, according to Travis Plunkett, legislative director of the Consumer
Federation of America, CongressDaily reported.
“I’ll be very surprised if the House doesn’t move very
quickly to pass it and put pressure on the Senate to move quickly on it
as well,” Plunkett said. The bankruptcy bill passed the House last
year but stalled in the Senate because of abortion language favored by
Democrats.
Stakeholders also noted that incoming Senate Judiciary Chairman Arlen
Specter (R–Pa.) has indicated he will introduce a revised bill
early next year to create a trust fund to compensate victims of
asbestos-related illnesses. A Specter aide said bankruptcy and tort
overhauls are among the “many matters under consideration”
for the committee next year. House Judiciary Chairman James
Sensenbrenner (R–Wis.) has not made any decisions yet about next
year’s agenda on litigation-related measures, according to a
committee spokesman.
Burden Growing on Pension Group
Last week, IBM announced that it was closing its traditional
defined-benefit pension plan to new employees and instead would offer
new workers a 401(k) plan, the New York Times reported.
This is just the most recent of many such announcements by major
companies. In the mid-1980’s, 40 percent of workers were covered
by defined-benefit plans. But those plans have become less popular in
recent years, and now only 20 percent of workers are covered by such
plans. Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
Delta CEO Sees Start of Turnaround
Having narrowly averted a bankruptcy-court filing in recent weeks,
Delta Air Lines CEO Gerald Grinstein said the airline is beginning to
see dividends on his turnaround plan but is bracing for more major
transformations in the industry over the next two years, the Wall
Street Journal reported. Grinstein said in a luncheon speech to
the Wings Club, an aviation-industry group, that the airline still faces
major hurdles as it tries to reverse $6 billion in losses accumulated
over the past three years. But some elements of Delta’s rescue
plan have begun to pay off, he said, the online newspaper reported.
Summary Judgment Decisions Set Stage for WorldCom Accounting Fraud
Trial
The litigation over WorldCom Inc.’s accounting fraud took a
major step forward yesterday as a federal judge decided summary judgment
motions in the case, the New York Law Journal reported.
Southern District of New York Judge Denise L. Cote set the stage for a
Feb. 28 trial that pits aggrieved investors against 16 investment banks
defending their role in bond offerings totaling $17 billion that the
telecommunications giant made in 2000 and 2001. Read the full article at
UAL Warns of $725 Million Loss without Labor Savings
UAL Corp., parent of bankrupt United Airlines, will suffer a $725
million operating loss in 2005 unless it can wring additional savings
from its labor force, according to documents the airline filed with
federal regulators yesterday, Reuters reported. That loss contrasts with
a $1.27 billion profit the carrier had projected earlier. United also
forecast a $26 million operating profit in 2006, down from earlier
projections for a profit of $1.72 billion, the newswire reported.
Westjet Sues Air Canada Alleging Abuse of Courts
WestJet Airlines Ltd. launched a C$30 million ($24 million) lawsuit
against Air Canada yesterday, claiming its rival’s legal action
against WestJet is part of an overall campaign to destroy the no-frills
carrier, Reuters reported. WestJet, target of a C$220 million lawsuit
from Air Canada over allegations of corporate espionage, said that suit
is an abuse of the justice system aimed at destroying WestJet’s
reputation and driving it out of business, the newswire reported.
Reuters Summit High-yield Debt Boom Could Pay Off
The boom in issuance of high-yield debt will provide tremendous
opportunity for distressed-debt investing when the next recession hits,
a specialist in securities of troubled companies said yesterday, Reuters
reported. David Winters, chairman and CEO of Mutual Series Fund, said
companies are issuing high-yield debt at the briskest pace since 1998,
the newswire reported.
SEC Says Fannie Mae Violated Accounting Rules
The staff of the Securities and Exchange Commission has ordered
Fannie Mae, the nation’s largest buyer of mortgages, to restate
its earnings over the last four years after concluding that it had
violated accounting rules on its treatment of derivatives and loans, the
New York Times reported. Fannie said last month that if it
was found to be in violation of the rules, it might have to report
after-tax losses on its derivatives transactions of as much as $9
billion.
PG&E CEO Glynn to Step Down
After heading PG&E Corp. during one of the most tumultuous
periods in utility history, Robert Glynn will turn over his duties as
president and chief executive to the company’s chief financial
officer, Peter Darbee, effective Jan. 1, the Wall Street Journal
reported. Darbee, who joined PG&E in 1999, also was elected to the
boards of the San Francisco company and its utility unit, Pacific Gas
& Electric Co. Glynn will remain as chairman of the parent and the
unit through the end of next year, when he will retire.
Mooney Aerospace’s Reorganization Plan Is Approved by
Judge
Mooney Aerospace Group Ltd., which makes small, single-engine
aircraft, won bankruptcy court approval for its recovery plan that gives
half of the company to Swissinvestor Allen Holding & Finance Ltd.,
Bloomberg News reported. As part of the plan, existing stockholders will
be issued new shares of Mooney Aerospace Group common stock, the company
said in a statement. U.S. Bankruptcy Judge Mary Walrath approved the
plan in Wilmington, Del.