March 8, 2004
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Institute
(ABI).
Bankruptcy Reform Could Punish Elderly (CNBC)
Big banks are pushing for tough revisions to bankruptcy laws
that would
be painful for many older Americans who are already struggling
with
debt, according to CNBC.
According to a report from Demos, "Conventional wisdom
suggests
that this segment of the population -- with lifetimes of
financial experience,
an over 80 percent homeownership rate and a generational ethos
of thrift
-- would be immune to the record debt increases of the
1990s,"
the report notes. In fact, older Americans are equally in
danger of
being run over by debt. The report found that self-reported
credit card
debt among seniors had nearly doubled from 1992 to 2001,
reaching an
average of $4,041. An earlier report noted that self-reported
credit
card debt may understate actual debt because it is only
one-third the
level reported by the Federal Reserve. Read the
href='http://moneycentral.msn.com/content/invest/extra/P76658.asp'>full
article.
Conference Meeting on Pension Legislation Scheduled This
Week
Conferees will begin work this week to resolve differences
between House
and Senate versions of pension legislation,
CongressDaily reported.
The first conference meeting is scheduled for Tuesday, with
House Education
and the Workforce Chairman John Boehner (R-Ohio) expected to
chair the
conference. The legislation would change the formula that
companies
use to calculate the contributions they must make to their
pension plans,
a move expected to save them $80 billion over the next two
years. The
Senate version, however, includes an additional $16 billion in
breaks
for airlines, steelmakers and other companies, the newswire
reported.
Talks On Asbestos Bill Set To Intensify
As planned floor action on legislation overhauling the
asbestos litigation
system draws nearer, its supporters are negotiating how to
fund the
new system for compensating asbestos victims,
CongressDaily reported.
Senate Judiciary Chairman Orrin Hatch (R-Utah) , who authored
the asbestos
litigation bill, is hoping that a formal meeting of the major
stakeholders
and key senators later this month will result in a vote in
early April.
"This issue is too important, and we are too close not to
give
this one last effort through an extended two-day-long
meeting,"
Hatch said.
Since action on the bill was shelved last year, negotiations
have continued
among Senate staffers representing leaders of both parties, as
well
as key senators. Sen. Arlen Specter (R-Pa.) has been leading
separate
industry talks moderated by an independent judge to establish
medical
criteria for those sickened by asbestos and other
administrative mechanisms.
Although talks have so far yielded little on funding for the
new system,
they are expected to intensify. Senate Majority Leader Bill
Frist (R-Tenn.)
said he plans floor action on the bill in the first week of
April, and
aides said it could be as late as the second week of that
month, reported
the newswire.
Borrowing, Overall Debt Up by 8.6 Percent
Americans increased their borrowing in January by the largest
amount
in eight months, the Federal Reserve reported on Friday, the
Associated
Press reported. New debt accumulated by consumers increased at
a seasonally
adjusted annual rate of 8.6 percent in January, or by $14.3
billion,
from the previous month. That marked the largest increase
since May
and pushed total consumer credit outstanding to a record $2
trillion
in January. January's borrowing pace marked a pickup from
December,
when consumer borrowing rose at a 5 percent rate.
Demand for revolving credit, such as credit cards, rose at a
8.6 percent
pace in January. That was up from a 1.4 percent growth rate in
December
and represented the fastest pace November 2001. For
nonrevolving credit,
which includes loans for new cars, vacations and education,
demand rose
at an 8.5 percent rate in January, compared with a 7.1 percent
growth
rate in December. Consumers have been increasing their debt
loads even
as the labor market has struggled to recover, the newswire
reported.
Americans Struggle with Credit Card Bills
Americans, facing a weak labor market, are struggling to pay
off their
credit card bills, according to an industry survey released on
Friday,
Reuters reported. At the same time, they have no plans to rein
in their
spending, which accounts for two-thirds of the U.S. economy,
the Cambridge
Consumer Credit Index survey said. Thirty-nine percent of the
1,000-plus
people surveyed last week said they paid off their monthly
balance in
full, down from 43 percent a year ago, according to the
survey. Although
in a hiring mode, companies have been adding jobs at a tepid
pace. On
Friday, the government reported that nonfarm payrolls
increased by 21,000
jobs in February, far below the 125,000 gain forecast by
economists
polled by Reuters. Consumers who are confident about their
financial
standing have either limited their credit card use or paid
their bills
in full every month. But those who are struggling to make
monthly payments
have been forced to take on more debt.
"The haves either don't use their credit cards at all or
feel
secure about paying off their credit card bills when they
arrive,"
Jordan Goodman, a spokesman for the Cambridge group, said in a
statement.
"The growing number of have-nots, however, are being
forced to
borrow to pay for their daily necessities, and are getting
deeper into
debt."
In the latest survey, 49 percent of those who are taking on
more debt
said they are borrowing more because they do not have the
money to pay
in full when the credit card bills arrive. That figure is up
from 44
percent for the same period in 2003. The survey's
"reality gap"
index, which gauges the difference between the amount of debt
consumers
say they will pay off in the next 12 months versus the amount
they actually
paid off a month later, grew to 12 percentage points in March
from February's
7 points. In March, 40 percent of Americans surveyed plan to
take on
more debt to make purchases, up from February's 37 percent,
the survey
said, the newswire reported.
Court Denies Bid to Block Cone Mills Sale
The last potential obstacle to the sale of the assets of Cone Mills
Corp. to WL Ross & Co. was removed Friday, when the court overseeing the
denim maker's bankruptcy case refused a request to reconsider a ruling
approving the deal, the Associated Press reported. Chief U.S. Bankruptcy
Judge Mary F. Walrath said delaying the sale could mean immediate job
loss for Cone Mills workers being hired on with the new denim operation,
as well as trouble for suppliers who had extended credit in anticipation
of the W.L. Ross deal. The judge said there was no clear error of fact
in her Feb. 11 decision approving the sale, product of a January auction
conducted in the company's chapter 11 case. No other bidder stepped up
to counter W.L. Ross's offer of $46 million in cash for the Greensboro,
N.C., company, plus the assumption of liabilities. Friday's ruling went
against secured bondholders and a panel representing shareholders, who
say Cone Mills downplayed its value to win approval of the sale to W.L.
Ross at an unfairly low price, reported the newswire.
Wells Fargo Unit Sues Kmart Over Fees
Wells Fargo & Co.'s Trumbull Group LLC unit has filed a lawsuit
against Kmart Corp. to collect about $6.6 million in unpaid fees for
work done on the retailer's bankruptcy case, according to court papers,
the Associated Press reported. Trumbull, a claims agent said in court
papers filed on Thursday that its troubles collecting invoices began
after ESL Investments Inc. gained control of Kmart. ESL's Edward
Lampert, a financier who is now Kmart's chairman, owns more than 50
percent of the retailer's stock as part of its reorganization plan. The
suit was filed with U.S. District Court for the Northern District of
Illinois, Eastern Division. Kmart filed for federal bankruptcy-court
protection on Jan. 22, 2002, and emerged on May 6, 2003. While Kmart has
paid all Trumbull invoices for work completed during the duration of the
case, the retailer still must pay for all work done after it emerged
from bankruptcy, Trumbull said, the newswire reported.
United Airlines Reports February Traffic Up 8.2 Percent
UAL Corp.'s United Airlines saw its February total systemwide traffic
increase 8.2 percent, led by a 13.9 percent increase in Pacific travel.
In a press release on Friday, the air carrier reported traffic of 8.04
billion revenue passenger miles in the month, up from 7.43 billion a
year ago. A revenue passenger mile is defined as one paying passenger
flown one mile.
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Parmalat Seeks As Much As EUR500 Million From U.S. Banks, Sources
Say
Parmalat Finanziaria SpA has mandated lawyers to work on suits aimed
at seizing up to EUR500 million from U.S. banks in a major step to
recover assets for creditors of the insolvent dairy group, people
familiar with the situation said. Parmalat has hired Lombardi Molinari &
Associati in Milan to determine whether there are grounds to seek the
cash from global banks under an Italian claw-back law called
'revocatoria,' the people said. The banks at the center of the lawyers'
attention are Morgan Stanley, Bank of America Corp and Citigroup, the
people said.
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