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February 12,
2009
Regulator
Calls for Lenders to Stop Foreclosures
The Office of Thrift Supervision
(OTS) yesterday called for the mortgage lenders it regulates to halt
foreclosures until the Obama administration puts in place a program to
help struggling homeowners, the
size='3'>Washington Post reported today. After
presenting a plan to boost the financial sector on Tuesday, Treasury
Secretary Timothy F. Geithner said that a $50 billion initiative to help
homeowners facing foreclosure is not expected for at least a week. OTS
is joining consumer advocates and some in Congress, including Rep.
Barney Frank (D-Mass.), who have called for lenders to institute a
moratorium on foreclosures in the meantime. OTS regulates more than 800
savings and loans across the country.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021101894_pf.html'>Read
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021101894_pf.html'>
Senate Panel
to Examine Credit Card Protections
The Senate Banking Committee will hold
a hearing today titled “Modernizing Consumer Protection in the
Financial Regulatory System: Strengthening Credit Card
Protections.”
href='http://banking.senate.gov/public/index.cfm?Fuseaction=Hearings.Detail&HearingID=d8561426-8765-479e-9f0d-00c069cb3544'>Click
here to read the prepared testimony and watch a live Webcast of
the hearing scheduled for 10 a.m. ET.
Analysis:
Bank Test May Expand U.S. Regulators’ Role
As part of the Obama
administration’s bank bailout plan, regulators plan to assess the
potential losses a bank could face over the next two years, rather than
the typical one year, the New
York Times reported today. They are also
expected to look at banks’ exposure to derivatives and other
assets normally carried off their balance sheets, and make sure that
banks also carry an additional capital cushion. The exams could be used
not only to determine which large banks would receive additional aid but
also to help weed out small, unhealthy banks, hastening consolidation in
the industry.The government could inject capital into the bank without
declaring it insolvent, since it may meet other industry standards. It
might also require that the bank have enough common equity to start
lending again, something investors increasingly demand.
href='http://www.nytimes.com/2009/02/12/business/12stress.html?ref=business&pagewanted=print'>Read
more.
Deal Reached in
Congress on $789 Billion Stimulus Plan
House and Senate leaders
yesterday struck a deal on a $789 billion economic stimulus bill after
negotiations with the Obama administration, clearing the way for final
congressional action, the New
York Times reported today. The package of
spending increases and tax relief, intended to spur an economic recovery
and create jobs by putting money back in the pockets of consumers and
companies, ended up smaller than either the House or Senate had
proposed.Many Democrats would have preferred a larger bill but agreed to
pare back, including cuts to favored education and health programs, to
win three crucial Republican votes in the Senate.The House was poised
for a final vote as early as Friday, with the Senate to follow, clearing
the way for President Obama to sign the bill by Monday.
href='http://www.nytimes.com/2009/02/12/us/politics/12stimulus.html?_r=1&hp=&pagewanted=print'>Read
more.
Bank
Executives Draw Ire of Lawmakers
Chief executives at eight banks
and securities firms that have gotten $165 billion in federal aid were
barraged by U.S. lawmakers, who showed little patience over the
companies practices toward lending and policies on executive pay,
the Wall Street
Journal reported today.In 2006 and 2007, the
eight executives got total compensation of $401 million, according to
securities filings. The combined stock-market value of their companies
has plunged 69 percent since the Dow Jones Industrial Average peaked in
October 2007. House Financial Services Committee members did little to
hide their ire about what they perceive as wasted aid from the
government. In the hearing's more substantive moments, the CEOs painted
grim portraits of the U.S. economy, predicting more pain on everything
from credit cards to home loans, while opening the door to reforms the
industry has long shunned. Bank of America CEO Kenneth Lewis, for
instance, suggested that his company might support legislation that
would allow bankruptcy judges to alter the terms of loans.
href='http://online.wsj.com/article/SB123435812693672823.html?mod=testMod'>Read
more. (Subscription required.)
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr021109.shtml'>Click
here to read the prepared testimony from yesterday’s
hearing.
New York
Attorney General Blasts Merrill Lynch Executives on
Bonuses
New York Attorney General Andrew Cuomo
laid out further details yesterday about $3.6 billion in bonuses Merrill
Lynch & Co. executives received, calling the investment bank's
executives irresponsible, the Associated Press reported yesterday. Cuomo
detailed the size and scope of the bonuses in a letter sent to U.S.
House Financial Services Chairman Barney Frank. The Merrill bonuses were
paid in late December, just days before Bank of America Corp. completed
its purchase of New York-based Merrill. The payments also came as
Merrill was on the brink of reporting a more than $15 billion
fourth-quarter loss as it has been among the hardest hit by the ongoing
credit crisis.Cuomo said in the letter that Bank of America was
apparently complicit in the move to award bonuses before Merrill's
fourth-quarter loss was announced.Both Merrill and Bank of America could
face charges of securities fraud in New York as the attorney general's
office investigation unfolds. Cuomo's office is attempting to determine
if proper disclosures were provided to investors about the timing and
size of the bonuses as well as the 'deteriorating health of
Merrill.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021100929_pf.html'>Read
more.
Autos
GM Offers
Retirement Incentives to 22,000
General Motors Corp. is offering
retirement incentives to 22,000 of its 62,000 United Auto Workers union
members as part of a turnaround plan to be presented to the U.S.
government on Tuesday, the Wall
Street Journal reported today. In its new
retirement inducement, GM is offering up to $20,000 in cash to certain
workers who choose to leave the company, plus a $25,000 voucher toward a
car purchase.
href='http://online.wsj.com/article/SB123437639459773941.html'>Read
more. (Subscription required.)
Analysis:
Automakers' Loans Hinge on 11th-Hour Talks with
Unions
Despite the reorganization
efforts the companies have already made, General Motors and Chryslermust
negotiate concessions from the United Auto Workers and their bondholders
and present them Tuesday as part of their viability plans to the
government, the Washington
Post reported today. So far, GM has received
$9.4 billion and could get $4 billion more if its plan satisfies the
government. Chrysler has collected $4 billion in loans and plans on
requesting an additional $3 billion. The Treasury Department has
mandated that the union cut compensation to levels competitive with
Nissan, Toyota and Honda. The U.S. automakers also must agree on how
much they will contribute to a union-run health-care trust for
retirees.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021103717_pf.html'>Read
more.
Court
Approves $3 Million Superfund Deal in Asarco Case
Bankruptcy Judge Richard
S. Schmidt approved a $3 million settlement between bankrupt
mining company Asarco LLC and six other companies, including BP America
Inc., over the cost of cleaning up a polluted site in Missouri,
Bankruptcy Law360
size='3'>reported yesterday. In addition to BP, the settling companies
are the Doe Run Resources Corp., DII Industries, Cyprus Amax Minerals
Co., Homestake Lead Co. of Missouri and Teck Cominco American Inc.All of
the settling defendants will be allowed a joint general unsecured claim
of $3 million. BP will be paid in the form of a credit toward its
liability to other claimants, while the other five defendants will
receive shares of any cash distribution to Asarco's unsecured
creditors.
href='http://bankruptcy.law360.com/articles/86924'>Read
more. (Subscription required.)
Pliant
Files Prepackaged Chapter 11 Plan
Overburdened with loans and unable to
refinance, Pliant Corp.filed a prepackaged chapter 11 plan, seeking to
eliminate $674 million of long-term bonds and swap first-lien notes for
new equity, Bankruptcy Law360 reported yesterday. Under the
plastic film and packaging company’s prepackaged chapter 11 plan,
roughly $400 million in first-lien notes set to mature this year will be
exchanged for 100 percent of new Pliant stock, and existing
equity-holders will be left empty-handed. In addition to negotiating the
plan with the first-lien noteholders, Pliant arranged for access to $75
million in post-petition financing.This is the second bankruptcy filing
for Pliant in three years. The manufacturer exited chapter 11 in July
2006 after closing a $200 million revolving credit facility with Merrill
Lynch Commercial Finance Corp.
href='http://bankruptcy.law360.com/articles/86872'>Read more.
(Subscription required.)
DirecTV
Owner Said to Seek Deal for Sirius XM
Sirius XM Radio, the satellite
radio giant on the brink of bankruptcy, is in preliminary talks with
Liberty Media, the conglomerate controlled by John C. Malone, the
New York Times
size='3'>reported today.A potential deal between Sirius XM and Liberty,
which owns a controlling interest in DirecTV, could create a battle for
control of the satellite radio company.EchoStar, the television
satellite company, has been acquiring Sirius XM’s debt and has
been angling to take over the company as part of a negotiation to keep
Sirius from falling into bankruptcy. DirecTV is the nation’s
largest satellite television provider by subscribers, ahead of the Dish
Network from EchoStar.The negotiations come as Sirius XM faces $175
million in debt payments that will come due on Tuesday. An offer by
Malone for Sirius XM would pit the nation’s two big satellite
television stations against each other.
href='http://www.nytimes.com/2009/02/12/business/media/12radio.html?ref=business&pagewanted=print'>Read
more.
Retail
Sales Increased 1 Percent in January
U.S. retail sales unexpectedly
rose in January, opening the year with a broad-based increase that
marked the first advance in seven months, the
face='Cambria' size='3'>Wall Street Journal
size='3'>reported today. Retail sales climbed by 1 percent last month,
according to a Commerce Department reported today. Economists said that
the increase seemed to be a correction for plunges during the holidays
rather than the start of a recovery in consumer spending. Sales in
December decreased 3.0 percent, which was a revision down from an
originally estimated 2.7 percent decline.
href='http://online.wsj.com/article/SB123444481543177335.html?mod=testMo'>Read
more. (Subscription required.)
International
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