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July 29, 2005
Senators Propose Reducing Amtrak Subsidies
Amtrak’s operating subsidies would be cut, but the railroad
would receive more money for improvements to tracks and equipment, under
a bipartisan proposal to be considered by a Senate committee today, the
Associated Press reported. The bill calls for reducing Amtrak’s
operating subsidy by 40 percent, leaving the railroad $3.3 billion in
subsidies over six years. Those cuts would be absorbed through
cost-cutting, restructuring and reform. The railroad, however, would
receive $4.9 billion over six years for capital grants.
U.S. Gross Domestic Product Increases 3.4 Percent in 2nd
Quarter
U.S. economic growth slowed slightly in the second quarter,
increasing at a real seasonally adjusted annual rate of 3.4 percent
after a 3.8 percent increase in the first quarter, the Commerce
Department said Friday. The figure matched expectations of economists
polled in the MarketWatch survey. Growth was more balanced in the second
quarter, with consumer spending, business investment, residential
investment, government spending and net trade all contributing to growth
in gross domestic product.
Bush Plan Would Raise Pension Contributions
If President Bush’s pension-funding proposals were enacted,
companies that operate traditional pensions would have to put about $430
billion more into their plans collectively than is required under
present law, according to figures from the government’s pension
insurance agency, the Washington Post reported today. The
figures, disclosed by Rep. George Miller (D–Calif.), who obtained
them from the Pension Benefit Guaranty Corp. (PGGC) under the Freedom of
Information Act, also show that Bush’s proposal would balance the
agency’s books by 2016. The PBGC has swung into deficit in recent
years, and administration officials and others have expressed concern
about a possible savings-and-loan-style government bailout.
United Air Parent Posts Wider Loss in 2nd Quarter
UAL Corp., parent of bankrupt United Airlines, reported yesterday a
wider net loss in the second quarter, including expenses attributed to
its reorganization. The No. 2 U.S. carrier, which has been in chapter 11
since Dec. 2002, said that its net loss increased to $1.43 billion, or
$12.33 per basic share, from $247 million, or $2.25 per share, a year
earlier, Reuters reported. Excluding the special and reorganization
items, UAL’s net loss for the second quarter totaled $26 million.
The carrier said these reorganization items are expected to be resolved
in the bankruptcy process and settled for a minor fraction of the amount
of the charges. The carrier has said it will file its reorganization
plan around Aug. 1.
In other news, some United Airlines flight attendants were planning
job actions yesterday that could cause problems for travelers, KYW radio
reported. Angry over pension cuts as the airline tries to pull out of
bankruptcy, the flight attendants were joining picket lines, and some
said they would walk off the job at random times and locations.
Bankruptcy Is Delphi’s Trump Card
At first glance, you’d think that Delphi Corp.’s recent
hiring of turnaround specialist Robert S. “Steve” Miller Jr.
as its chairman would be good news for General Motors Corp. (GM),
Business Week reported. After all, GM still buys gear worth
$15 billion annually from its troubled former parts unit. But in recent
years, Miller was quick to restructure distressed parts maker
Federal-Mogul Corp. and Bethlehem Steel Corp. by seeking bankruptcy
protection for both. And the last thing GM Chairman and CEO G. Richard
Wagoner Jr. needs right now is for his biggest supplier to head into
chapter 11.
href='http://www.businessweek.com/magazine/content/05_32/b3946057_mz011.htm'>Read
the full story.
Bankrupt Supplier: Automakers Still Paying Broke C&A
DaimlerChrysler AG said yesterday that it spent $10 million in the
second quarter of the year to help keep bankrupt Collins & Aikman
Corp. running, the Detroit Free Press reported. In the
third quarter, DaimlerChrysler estimates it will spend an estimated $65
million to 75 million in additional price increases and lending.
DaimlerChrysler and five other automakers, including General Motors
Corp. and Ford Motor Co., are contributing a combined $335 million to
fund C&A’s operations. That funding will keep Troy,
Mich.–based C&A going only through the end of September. Its
future beyond that is unclear.
Jobless Claims, Help-wanted Ads Rise
href='http://news.yahoo.com/news?tmpl=story&cid=580&e=4&u=/nm/20050728/bs_nm/…'>U.S.
jobless claims rose less than expected last week and help-wanted ads
edged up in June, two reports showed on Thursday in a sign the
nation’s job market is continuing to improve—if only slowly,
Reuters reported yesterday. New claims for state unemployment benefits
rose 5,000 last week to 310,000, the Labor Department said. That was
below Wall Street forecasts for a rise to 317,000 claims and a sharp
improvement from 340,000 for the same period a year earlier.
href='http://news.yahoo.com/news?tmpl=story&cid=580&e=4&u=/nm/20050728/bs_nm/…'>Read
the full story.
In other news, stocks were up yesterday on news that
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR20050…'>U.S.
factories booked orders more briskly and new-home sales rose to a record
high last month, the government reported yesterday, adding to other
recent signs that the economy is gaining momentum, the Washington
Post reported. New orders for big-ticket manufactured goods rose
1.4 percent in June, the Commerce Department said yesterday. It also
increased its previous estimate of May orders for such durable
goods—items expected to last at least three years, such as
computers, machinery and appliances—to a 6.4 percent increase,
reflecting, in part, some big aircraft orders.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR20050…'>Read
the full story.
As Debt Collectors Multiply, So Do Consumer Complaints
Embarrassing calls at work. Threats of jail and even violence.
Improper withdrawals from bank accounts. An increasing number of
consumers are complaining of
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR20050…'>abusive
techniques from some companies that are part of a new breed of debt
collectors, the Washington Post reported today. They
are debt buyers, companies that acquire unpaid bills from credit card
firms and other credit providers for pennies on the dollar, and then try
to collect. Some of these companies go after bills so old that consumers
can no longer be sued for them in court or punished for them on their
credit reports. The Federal Trade Commission (FTC) receives more
complaints about debt collectors than any other industry. But in recent
years, these complaints have increased dramatically—from 13,950 in
2000 to 58,687 last year. Complaints about third-party debt collectors
accounted for close to one in six of all FTC complaints last year, up
from 9.5 percent in 2000.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR20050…'>Read
the full report.
Royal Bank to Pay Enron $25 Million (U.S.) in Cash to Settle
Lawsuit
Royal Bank of Canada said Thursday it will pay $25 million (U.S.) to
settle its part in the so-called “megaclaims” lawsuit
brought against it and others by bankrupt energy trading company Enron
Corp., the Canadian Press reported yesterday. “The agreement
resolves all claims” between Royal Bank and members of the RBC
Financial Group related to Enron’s bankruptcy case, the bank said
in a release. Royal Bank said it “plans to continue to vigorously
defend the remaining Enron-related cases against it.”
In a separate proceeding in the bankruptcy court, the Royal Bank will
pay Enron $24 million (U.S.) in order for Enron to allow some $114
million in claims, including a $50-million-U.S. claim transferred by RBC
that is the subject of a separate court proceeding. The agreement must
be approved by the U.S. Bankruptcy Court for the Southern District of
New York.
Feds Take Over Ohio Company’s Pension Plan
A federal agency announced Thursday that is has taken responsibility
for the pensions of 6,200 workers and retirees of Amcast Industrial
Corp., an auto parts maker, the Associated Press reported yesterday. The
Pension Benefit Guaranty Corp. (PBGC) said that the company, which filed
for chapter 11 bankruptcy protection in late 2004, met all legal
criteria under federal law to transfer its pension liabilities to the
pension insurance program. The PBGC estimates that the company’s
pension plan is 47 percent funded, with $77 million in assets to cover
$166 million in benefit promises. The agency said that it will be liable
for $83 million of the $89 million shortfall.
Frank’s Emerges from Bankruptcy as Real Estate Development
Company
Lawn and garden retailer Frank’s Nursery & Crafts Inc. said
it has emerged from chapter 11 bankruptcy protection as a real estate
development company, the Associated Press reported yesterday. The
reorganized company, called FNC Realty Corp., will retain and develop
about 42 parcels of real estate, and will “continue to hold
certain other properties until such properties can be sold,”
Frank’s said in a statement.
Judge OKs Fla. Co. Bid for Armor Assets
A federal bankruptcy judge has approved a Florida company’s $45
million bid for the assets of Second Chance Body Armor Inc., the target
of lawsuits accusing it of making defective bullet-resistant police
vests, the Associated Press reported yesterday. Judge James Gregg
of the U.S. Bankruptcy Court in Grand Rapids signed an order Wednesday
authorizing the sale to Armor Holdings Inc. of Jacksonville, Fla.
Winn-Dixie Sells Prescription Records
Bankrupt Winn-Dixie Stores Inc. is selling pharmacies the records of
thousands of customers who bought prescription drugs at 139 supermarkets
it’s closing, the Associated Press reported yesterday. In federal
bankruptcy court yesterday, U.S. District Bankruptcy Judge Jerry Funk,
approved the sale of prescription records to 10 companies for about
$16.5 million. The rival companies will also receive the inventories of
the closing Winn-Dixie pharmacies at cost. CVS Corp., one of the
nation’s leading pharmacy chains, bought the most, obtaining the
records from 62 stores for $6.4 million. Most states require pharmacies
that are closing to transfer their records to other pharmacies.