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March 9, 2009
Oversight of Bank Bailouts
Criticized
Congressional investigators are criticizing the Obama
administration for failing to police deals in which banks participating
in the $700 billion federal bailout lent billions of dollars overseas,
the
size='3'>Washington Post reported today.A
report by a House oversight panel raises questions about an $8 billion
financing deal for Dubai by Citigroup (recipient of at least $45 billion
in bailout funds), a $1 billion investment in India by JPMorgan (which
got $25 billion from the government rescue) and a $7 billion investment
in China by Bank of America (which got $45 billion from the bailout).
The overseas deals by the banks were not illegal, the report concluded,
and it is impossible to know whether they were funded with bailout
dollars. The transactions also involve relatively tiny amounts of money
for multitrillion-dollar companies that operate in dozens of
countries.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/08/AR2009030802149_pf.html'>Read
more.
Commentary: Hard Lessons in
Helping Homeowners
Homeowners need leverage to counter mortgage
servicers’ lack of willingness to modify loans, which is why the
Senate must act quickly to reform bankruptcy law to allow judges to
alter the terms of home loans, according to a commentary by Maryland
Governor Martin O’Malley (D) in today’s
face='Times New Roman'>
size='3'>Washington Post. Congress should also
require institutions receiving funds from the Troubled Assets Relief
Program to demonstrate progress in providing sustainable modifications,
according to O’Malley. These institutions should be required to
report detailed data and should be held to benchmarks, including having
to demonstrate a significant number of loan modifications that result in
lower payments.Maryland was the second state to require loan servicers
to report data regarding loan modification efforts. The data is
startling: Many homeowners are receiving modifications that result in
the same or even higher monthly payments because of a failure to forgive
fees, penalties and arrearages. Few modifications result in a reduction
of the principal balance. As long as servicers continue to refuse to
reduce principal, O’Malley wrote, meaningful relief will be
impossible for all too many homeowners.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/08/AR2009030801495_pf.html'>Read
the full commentary.
Deadline Looms on Aid
President BarackObama's auto team will spend today at
the Detroit home of the Big Three automakers as the administration
begins to narrow its options for helping the reeling auto sector,
the
size='3'>Wall Street Journal reported today.
The trip wraps up nearly three weeks of fact gathering by the team since
General Motors Corp. and Chrysler LLC submitted their rescue plans to
the Treasury Department in the hopes of winning billions more in
government loans. Ford Motor Co. is not seeking government aid.Top
Treasury Department advisers Steven Rattner and Ron Bloom, who are
leading the auto task force, plan to use the day in Detroit to clarify
an array of lingering questions surrounding the companies' rescue plans,
which many analysts have criticized as overly optimistic. The team will
also meet with the United Auto Workers union to discuss its willingness
for deep compromises over wages, staff cutbacks and funding for its
retiree health plan.
href='http://online.wsj.com/article/SB123654462911064433.html#mod=testMod'>Read
more. (Subscription required.)
Top Republicans Push for GM
Bankruptcy Filing
Two top Republican senators yesterday called for
struggling General Motors to seek bankruptcy rather than fresh
government aid as the best path to a long-term recovery by America's
biggest carmaker, Agence France-Presse reported yesterday.'I think the
best thing that could probably happen to General Motors, in my view, is
they go into chapter 11,' said Sen. John McCain (R-Ariz.). 'They
reorganize, they renegotiate their union-management contracts and come
out of it a stronger, better, leaner and more competitive automotive
industry,' he said.GM on Friday denied reports that it is considering a
prepackaged reorganization financed by the government under the chapter
11protection. Sen. Richard Shelby (R-Ala.) also pushed for the automaker
to file for chapter 11. 'The automobile
business, those companies, Chrysler, Ford, and General Motors, they're
in deep trouble. We know that. I've suggested they go into Chapter 11.
That's where they belong.'
href='http://news.yahoo.com/s/afp/20090308/ts_alt_afp/uspoliticsautocompanygmbankruptcy_20090308185331/print'>Read
more.
Consumer Credit Climbed
$1.76 Billion in January
The Federal Reserve reported that the pace of
borrowing by U.S. consumers increased in January for the first time in
four months as consumer credit unexpectedly rose by $1.76 billion, or
0.8 percent at an annual rate, to $2.56 trillion, Bloomberg News
reported on Friday. The value of car and truck loans rose 0.7 percent
while deep discounts at retailers such as Limited Brands Inc. and
Macy’s Inc. boosted consumer spending in January for the first
time in seven months. Revolving debt such as credit cards increased by
$926.5 million. Non-revolving debt, including auto loans and mobile home
loans, rose by $830.2 million.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aevjjZSXkvSk&refer=home'>Read
more.
Tropicana Vegas Looks to
Emerge from Chapter 11 Later This Year
Tropicana Entertainment, LLC’s
restructuring plan was approved by the U.S. Bankruptcy
Court for the District of Delaware on Friday, the
face='Times New Roman'>Delaware
Business Journal reported on Friday.
Tropicana’s plans call for its senior secured debt to be converted
to common stock and its unsecured debt to receive warrants. Tropicana's
current common stock and other equity interests will be eliminated
without a distribution. The next step in the process is for the company
to solicit creditors' votes to approve the plans in April. A vote in
favor of management’s plans could give Tropicana the ability to
emerge from chapter 11 as early as May.
href='http://www.ledgerdelaware.com/articles/2009/03/07/news/doc49b14103c7424379073365.txt'>Read
more.
Frontier Pushes for $10
Million More in DIP Cash
Frontier Airlines Holdings Inc. has asked a bankruptcy
court to approve an amended credit facility that would add another $10
million commitment from Republic Airways Holdings Inc., bringing the
airline's total post-petition financing to $40 million,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported on
Friday.The motion, filed Thursday in the U.S. Bankruptcy Court for the
Southern District of New York, seeks to amend and restate the DIP
financing that the court signed off on previously in August and
September.As part of the deal, Frontier agreed to allow Republic a
stipulated damage claim of $150 million.
href='http://bankruptcy.law360.com/articles/90354'>Read more.
(Subscription required.)
United States to Push for
Global Stimulus
The United States will press world leaders to boost
emergency government spending to lift the global economy, risking a rift
with European nations more concerned with revamping financial
regulation, the
size='3'>Wall Street Journal reported today.
The government’s focus is at odds with France, Germany and other
European nations that want the Group of 20 summit on April 2 to focus on
rewriting rules governing financial markets. These nations say lax
regulation was a major cause of the financial crisis and want to tighten
their grip on hedge funds and private-equity firms. The differences
could be hashed out this coming weekend in London at a meeting of
finance ministers from the G-20, and in Washington, D.C., in the steady
stream of global leaders and finance ministers visiting President
Obama.
href='http://online.wsj.com/article/SB123655587029066001.html'>Read
more. (Subscription required.)
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