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April 23, 2008
name='1'>Lenders Swamped by Delinquent
Mortgages
A new report from a
coalition of state attorneys general and
banking regulators said that seven out of 10 troubled mortgage borrowers
remain without a plan to work out their
loans despite increased industry efforts to help them, the
size='3'>Washington Post reported
today. The group collected data from 13 of the largest
subprime lenders from October through
January and found that the lenders are overwhelmed by their workloads
and unable to keep pace with the number of
borrowers who are falling behind on payments. 'There still seems to be a
disconnect between homeowners and their
mortgage servicers,' said Mark E. Pearce,
w:st='on'>
size='3'>'s deputy commissioner of banks.
However, the coalition reported that the number of late borrowers
working with their lenders to prevent
foreclosure has increased and that the measures taken by lenders to help
them have become more aggressive.
Instead of rescheduling missed payments, the report found that more
lenders reduced the overall burden by
modifying loan terms. They lowered interest rates or extended the term
of the loan to cut payments. Less often,
they forgave part of the principal.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/04/22/AR2008042201339_pf.html'>Read
more.
name='2'>Government Seeks to Buy Student
Loans
The Bush administration
is proposing that Congress authorize
purchasing billions of dollars in federal student loans to make sure the
nation’s credit crunch does not
block borrowing for higher education, the New York
Times reported today. The proposal, outlined
in a letter to be sent today to members of
Congress from the Education and Treasury Departments and the Office of
Management and Budget, endorses a
provision in a bill passed by the House this month. The legislation
authorizes the Education Department to buy
federally guaranteed loans through July 2009. The Senate has not yet
taken up its version of the bill, introduced
by Senate Education Committee Chairman Edward M. Kennedy (D-Mass.).The
Education Department is also working out
the details of a “lender of last resort” program under which
students could borrow from guarantee
agencies — the nonprofit companies and state agencies that
guarantee federal loans on behalf of the federal
government. Education Secretary Margaret Spellings said that because
that program had never been used on a wide
scale, the department’s ability to buy federal student loans could
href='http://www.nytimes.com/2008/04/23/washington/23loans.html?_r=1&oref=slogin&ref=business&pagewan
ted=print'>Read more.
SEC
Rebuffs Lawmakers over Decision to Drop
Bear Stearns Inquiry
Securities regulators
refused a congressional request to disclose
why they dropped an investigation into whether Bear Stearns Cos. harmed
investors by improperly valuing complex
debt securities, the
size='3'>Wall Street Journal
size='3'>reported today. The Securities and Exchange Commission cited
confidentiality in its decision involving
the late-stage probe of the Wall Street firm. At issue is a move by the
SEC to abort an enforcement case into
activities at Bear Stearns several months before the firm imploded in
March. The firm has agreed to be acquired
for a fire-sale price by J.P. Morgan Chase & Co.
href='http://online.wsj.com/article/SB120892044378837399.html?mod=us_business_whats_news'>Read
more. (Registration required.)
Airlines
name='4'>Union Files Suit against ATA Airlines over
Shutdown
The union representing pilots
of ATA Airlines Inc. and its parent
company filed a lawsuit against the company for allegedly failing to
give prior notice when it shut down
operations, Dow Jones Newswires reported yesterday. The
Indianapolis-based carrier filed for chapter 11
protection and began shutting down its flight operations on April 2. The
Air Line Pilots Association
International alleges that ATA violated the federal Workers Adjustment
and Retraining Notification ACT, which
requires businesses with more than 100 employees to notify workers 60
days in advance of closing or
layoffs.
name='5'>Surging Energy Costs Take a Big Toll on
Airline Earnings
The parent company of
United Airlines, the UAL Corporation,
yesterday reported a $537 million loss in the first quarter as a 51
percent increase in fuel costs overwhelmed
efforts to raise fares at the country’s second-largest carrier,
the
size='3'>New York Times reported
today.
size='3'>United plans to reduce employment by 1,100 by the end of the
year, as airlines begin a new round of
layoffs. United increased the number of planes it plans to shed to 30,
from an earlier estimate of 15 to 20, in
hopes of constraining capacity and driving fares up further. JetBlue
Airways and AirTran Holdings, two formerly
fast-growing discount carriers, also posted first-quarter losses.
JetBlue reduced its growth plans for the year,
hoping to keep raising fares. AirTran said that it would delay growth
plans in the 16 months beginning in
September. AirTran, whose shares have fallen in the wake of bankruptcy
filings by some smaller carriers, said
that it would sell notes and stock to raise about $110 million and
bolster its cushion against the
href='http://www.nytimes.com/2008/04/23/business/23air.html?sq=bankruptcy&st=nyt&scp=4&pagewanted=pri
nt'>Read more.
name='6'>Frontier Airlines Wants to Sell Planes for
$106 Million
Frontier Airlines
Holdings Inc. is asking for bankruptcy court
permission to sell off four airplanes for $106 million, noting in court
papers that the company's budget for the
coming months relies on the infusion of cash the sale would
generate,
size='3'>Bankruptcy Law360 reported yesterday.
Denver-based Frontier filed a motion on
Friday seeking authorization to enter into a letter of intent and to
sell two Airbus A319-111 aircraft and two
Airbus A318-111 aircraft to Verulamium Finance Ltd. Verulamium would pay
$106 million for the four planes, $68.5
million of which would go to pay for the mortgages on each of the
aircraft, leaving Frontier with $37.5
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=53849'>Read
more.
(Registration required.)
Allows W.R. Grace to Sell Contaminated
Sites
Bankruptcy Judge
size='3'>Judith K. Fitzgerald has given W.R.
Grace & Co. approval to sell off 10
polluted industrial sites in a deal that the company has estimated will
help it eliminate more than $12.5 million
in environmental liabilities,
size='3'>Bankruptcy Law360
size='3'>reported yesterday. Under the agreement, Environmental
Liability Transfer Inc., an environmental
acquisition development company, will be required to deposit $11 million
into an environmental trust responsible
for distributing funds to reimburse expenditures or cleanup costs for
the properties. The amount will include a
$2.5 million upfront payment, plus a percentage of the subsequent sale
proceeds. Grace will receive $4.4 million
from the sale of all but the
w:st='on'>
size='3'>Charleston,
w:st='on'>
size='3'>S.C., property,
which is treated differently under the
agreement. Judge Fitzgerald wrote that the sale agreement did not
relieve Grace of its duties to comply with a
cleanup settlement agreement the company reached in December with
the
w:st='on'>
size='3'>U.S.
size='3'>government, or with any other settlement or
judgment in the various states where the contaminated properties are
located.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=53825'>Read
more. (Registration
required.)
name='8'>Jockeys' Guild Looks to Emerge from
Bankruptcy
The Jockeys' Guild filed
a plan to emerge from bankruptcy that has
it expecting to generate about $213,000 in income a month, the
Associated Press reported yesterday. The Guild
filed for bankruptcy protection Oct. 12 in
w:st='on'>
size='3'>after financial problems from its health
insurance plan, litigation and decreased payments from racetrack
associations left it with few assets. Under the
plan filed yesterday, the Guild said it could pay $780,095 to nonsecured
creditors while still meeting all of its
href='http://news.yahoo.com/s/ap/20080422/ap_on_sp_ot/rac_jockeys__guild_bankruptcy_1'>Read
more.
Autos
name='9'>Federal-Mogul Gets Back on
Track
Free from bankruptcy,
Federal-Mogul Corp. reported a net loss, but
an operating profit, for the first three months of the year,
the Detroit Free Press
reported today.
Federal-Mogul yesterday reported a first-quarter loss of $31.5 million,
or 31 cents per share, after a $68
million charge the company had to take as it emerged from chapter 11
bankruptcy. The Southfield, Mich.-based
company said that the $68 million charge was caused by the need to
revalue its inventory. Sales for the quarter
increased to $1.86 billion, up 8 percent from the first quarter last
year. The company said that the sales
increase was boosted by $120 million because of favorable currency
exchange rates and an increase of $23 million
in sales to European automakers.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20080423/BUSINESS06/804230373'>Read
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20080423/BUSINESS06/804230373'>
name='10'>Ford Eyes More Cuts as Recovery
Advances
Ford Motor Co. is showing
signs of a surprise turnaround, though
the automaker isn't done cost-cutting as more job cuts may be on the
way, according to the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>today. In 2007, Ford startled the
industry by reporting $400 million in positive operating cash flow,
something General Motors Corp. and Chrysler
LLC have been hard-pressed to match. Ford CEO Alan Mulally is reportedly
looking to sell its Volvo unit, despite
Ford's repeated statements that it intends to hang on to the brand.
Similarly, he said he hopes to shutter
the ailing Mercury brand. More job cuts may also be coming to Ford. In
the company's most recent buyout offer,
only about 4,000 workers signed on, about half the desired total.
Mulally will likely offer one more round, then
href='http://online.wsj.com/article_print/SB120890822859036427.html'>Read
more. (Registration required.)
International
id='11'
name='11'>Italy
size='3'>to Lend Alitalia 300 Million
Euros before
face='Times New Roman'
size='3'>Sale
The Italian government
will lend Alitalia SpA 300 million euros
($479 million) to prevent the state-owned carrier from running out of
cash before Prime Minister-elect Silvio
Berlusconi can find a buyer for the state-controlled airline, Bloomberg
News reported yesterday. The announcement
came after Air France-KLM Group late Monday withdrew its takeover bid
for the state-controlled airline, the only
concrete offer presented following more than a yearlong search for a
buyer. Berlusconi asked the outgoing
government to make a bigger loan than originally planned to give him
more time to seek a buyer, Prime Minister
Romano Prodi said after a Cabinet meeting in
w:st='on'>
Alitalia is losing more than 1 million
euros a day and had less than 200 million euros in cash and credit
available at the end of March. The company's
management said that it needs at least 750 million euros of new
investment by the middle of this year to stay in
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=a7mCyN.b2cS0'>Read
more.
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=a7mCyN.b2cS0'>