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October 30, 2009
name='1'>Bill Would Extend Time to Fund Pension Plans
Congress is again looking to give companies more time to
replenish employee pension plans, worried that looming payments will
crimp their cash flow and slow hiring, the New York
Times reported today. A bill introduced on Tuesday in the House
would give struggling employers the option of spreading out required
contributions to retirement plans over nine years, rather than the seven
years they are now allowed. Under the proposal, companies would make
only token payments for the first two years. To discourage companies
from joining the many businesses that have frozen pension benefits for
workers, Congress would also give employers up to 15 years to fully fund
their plans if they agreed not to freeze benefits. Pension plans were
hurt last year by the declines in the financial markets, leaving
employers hungry for cash to compensate for pension fund losses but with
few places to look outside of staff reductions or cuts to benefits.
While delaying pension contributions would ease that cash squeeze, it
would impose more risks on the Pension Benefit Guaranty Corp. The Senate
Health, Education, Labor and Pensions committee considered the
legislation yesterday and lawmakers appeared sympathetic to granting
employers more time to make payments.
href='http://www.nytimes.com/2009/10/30/business/30pension.html?ref=business&pagewanted=print'>Read
more.
href='http://help.senate.gov/Hearings/2009_10_29/2009_10_29.html'>Click
here to view yesterday's hearing.
size='2'>House Panel to Examine Overdraft
Protection Legislation
The House Financial Services
Committee will hold a hearing today examining H.R. 3904, the 'Overdraft
Protection Act of 2009.'
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_102309.shtml'>Click
here to view a live Webcast of the hearing, witness list and
prepared witness testimony.
name='3'>Consumer Financial Protection Bill Moves to House
Floor
Legislation to create a Consumer Financial Protection Agency and ramp up
the FTC's enforcement authority is headed to the floor after the House
Energy and Commerce Committee voted to approve (33-19) the measure
yesterday, CongressDaily reported. The committee
approved by voice vote an amendment offered by Energy and Commerce
Chairman Henry Waxman (D-Calif.) that would require the FTC and CFPA to
offer reciprocal notice before initiating enforcement actions. It would
also have the CFPA governed by five Senate-confirmed commissioners
instead of a single director, which Financial Services Chairman Barney
Frank's (D-Mass.) version of the bill would require. Frank issued a
statement opposing that change, arguing that shaking up the regulator's
leadership structure could 'weaken the capacity of the agency to provide
consumer protection.' Under his plan, the CFPA director would consult
with an oversight board of bank regulators and consumer groups as well
as a broader advisory board.
name='4'>American Home CFO Loses SEC Discovery Feud
Stephen Hozie, the former chief
financial officer of toppled mortgage lender American Home Mortgage
Investment Corp., has failed to win access to federal regulators'
discovery documents as he fights accounting fraud allegations his
one-time colleagues have chosen to settle, Bankruptcy
Law360 reported yesterday. Magistrate Judge Henry Pitman of the
U.S. District Court for the Southern District of New York dealt Hozie a
blow Wednesday, denying the embattled executive access to
prosecutors’ witness interview notes and their account for viewing
American Home’s audit papers. AHM filed for bankruptcy protection
in August 2007, and the U.S. Securities and Exchange Commission later
accused company's three senior officers of accounting fraud and
concealing the signs of the subprime meltdown from unwitting investors.
Unlike AHM’s former CEO Michael Strauss and former controller
Robert Bernstein, Hozie has chosen not to settle the SEC’s
allegations and instead pursued discovery.
The SEC refused to give Hozie
witness interview notes and share the agency’s access to Deloitte
& Touche LLP’s audit database.
href='http://bankruptcy.law360.com/print_article/131242'>Read
more. (Subscription required.)
name='5'>Lehman Asks to Restructure Real Estate Loan
Terms
Lehman Brothers Holdings Inc.
is asking the U.S. Bankruptcy Court for the Southern District of New
York to sign off on a bid to restructure the loan terms on its faltering
real estate portfolio, Bankruptcy Law360 reported yesterday.
In its motion filed Wednesday, Lehman said that many of its real estate
investments “are not performing, in large measure, due to the
prevailing economic conditions.” Before it slipped into Chapter 11
protection in September 2008, Lehman was among the country’s
biggest real estate lenders, with thousands of investments. Lehman now
wants the go-ahead to restructure the terms of many of those loans, as
well as approval to make new or additional investments in existing
properties “in order preserve the value of the debtors’
interests in existing loans and equity investments,” according to
its motion.
href='http://bankruptcy.law360.com/articles/131365'>Read more.
(Subscription required.)
U.S.
Charges Financial Firm in California with Fraud
The Department of Justice charged a California financial firm and three
of its executives with fraud and conspiracy in its dealings with state
and local governments in the municipal bond market, the New York
Times reported today. In a nine-count indictment, the
department charged CDR Financial Products and its founder and chief
executive, David Rubin, with secretly manipulating the competition among
banks and other investment firms for the lucrative business of helping
governments raise money. The indictment said the participating banks
then kicked back part of their profit to Rubin and his firm. From at
least the late 1990s, the indictment said, Rubin and his firm engaged in
a variety of schemes that shortchanged the Internal Revenue Service and
imposed hidden costs on local governments. In some cases, they increased
their profit by adding derivatives to the bond transactions, only to
have the derivatives sour, leaving local governments with unexpected
bills.
href='http://www.nytimes.com/2009/10/30/business/30bonds.html?_r=1&ref=business&pagewanted=print'>Read
more.
name='7'>Judge Gives Nod to Bayou Disclosure
Statement
Bankruptcy Judge Robert D.
Drain preliminarily approved a disclosure statement in
fraud-ridden hedge fund Bayou Group LLC's chapter 11 case, Bankruptcy
Law360 reported yesterday. The second amended disclosure statement
submitted Bayou trustee Jeff J. Marwil included changes that
addressed issues that included disputed claims of offshore investors,
the potential for more litigation and the potential for delayed or
decreased distributions to certain creditors. Shmuel Vasser of Dechert
LLP, who represents the debtors along with three other firms, agreed to
make the changes. The case is In re Bayou Group LLC, number
06-22306, in the U.S. Bankruptcy Court for the Southern District of New
York.
href='http://bankruptcy.law360.com/print_article/131323'>Read
more. (Subscription required.)
name='8'>Delphi Reaches Settlement with Appaloosa
Delphi said yesterday that it reached a settlement in a lawsuit it filed
last year against a hedge fund after it pulled out of a deal to lift the
auto supplier out of bankruptcy protection, the Associated Press
reported yesterday. Appaloosa, run by Goldman Sachs alum David Tepper,
led a group of investors in 2007 that agreed to inject as much as $2.55
billion into Delphi in exchange for stock, but the group withdrew from
the deal in April 2008. Delphi sued, claiming that the Appaloosa group
urged lenders to withdraw commitments for $6.1 billion in financing it
needed to exit bankruptcy. Delphi argued that Appaloosa and Tepper were
liable for what other members of the group may have done to discourage
lenders. Delphi finally emerged from chapter 11 earlier this month -
nearly four years to the day it filed - after reaching a deal with its
lenders and receiving a promise for billions in aid from GM.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/29/AR2009102903513_pf.html'>Read
more.
name='9'>Senate Stalls on Homebuyers' Tax Credit
Senate leaders yesterday remained at an impasse over reaching an
agreement to attach an extension of the $8,000 homebuyers' tax credit
and tax relief for cash-strapped companies to the unemployment insurance
extension, CongressDaily reported yesterday. There was
bipartisan agreement at least on a substitute amendment to the
unemployment bill that would renew the homebuyer credit through the
spring, as well as lengthen the net operating loss carry-back period for
unprofitable firms from two to five years. The housing tax credit is
expanded at a reduced figure of $6,500 to help existing homeowners who
have lived in their homes for five or more years move to a bigger home.
It also expanded the pool of eligible prospective homebuyers to those
with incomes of $125,000 for individuals and $225,000 for couples, up
from $75,000 and $150,000 under current law. Baucus said that would help
millions of people who are now renting their homes but earn more than
$75,000.
House Committee Won't Consider Overhaul of
Federal Reserve This Year
House Financial Services Chairman Barney Frank (D-Mass.) said at a
hearing yesterday he would take up an overhaul of the Federal Reserve's
structure next year instead of moving changes within legislation to
revamp the nation's financial regulatory system, CongressDaily
reported today. Frank said that including a revamp of the central bank's
structure, especially over the selection process of the presidents of 12
regional banks, would be too much to tackle in the overhaul and that the
issue pertains more to a discussion over monetary policy rather than
banking regulation. Critics contend the election process for presidents
at the regional banks should be changed because it is tilted too heavily
toward banks, which effectively puts the institutions in charge of
picking their regulator.
Spending by Americans took a big tumble in September, as they lost a
popular government subsidy and were left with a difficult job market and
a credit crunch, the Wall Street Journal reported today. The 0.5
percent drop in spending was the largest since December 2008, when the
recession was at its worst. Most of the drop was in durable goods, which
include autos. Outlays on nondurable goods and services posted a gain
from last month. Spending rose 1.4 percent in August, driven by the
'cash for clunkers' government rebate program. Commerce Department data
showed personal income flat compared to August while spending last month
decreased by 0.5%. A key gauge of prices reiterated inflation wasn't an
immediate threat, as the economy fights to recover. Personal saving as a
percentage of disposable personal income was 3.3 percent in September,
compared to 2.8 percent in August.
href='http://online.wsj.com/article/SB125690429096718435.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
FairPoint Plans to Seek $30 Million in Union
Concessions
FairPoint Communications says it expects to seek $30 million in
concessions from unions as part of its chapter 11 filing, the Associated
Press reported yesterday. The company is in talks with union leaders
about future wage increases or opportunities to improve productivity.
FairPoint has not determined where the cuts will be made.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/29/AR2009102902646_pf.html'>Read
more.
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