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November 21,
2008
name='1'>Fannie, Freddie to Suspend Foreclosures During
Holidays
Mortgage giants Fannie Mae and Freddie Mac will suspend foreclosure
sales and evictions on certain properties until after the holiday
season, as they prepare to implement a previously announced
loan-modification program, the Wall Street Journal reported
today. The temporary foreclosure suspension announced yesterday applies
to 10,000 borrowers with Fannie-owned mortgages and 6,000 with
Freddie-owned mortgages in occupied single-family and two- to four-unit
properties with foreclosure sales scheduled between Nov. 26 and Jan. 9.
Fannie and Freddie, which are under government control, last week said
they would begin to modify the loan terms on potentially hundreds of
thousands of mortgages that are at least 90 days past due.
href='http://online.wsj.com/article/SB122721715521945487.html?mod=testMod'>Read
more. (Subscription required.)
name='2'>Crisis Hits Values of Commercial Mortgages
Fears about rising default rates and declining property values are
spreading to the commercial real estate market, hammering the value of
bonds backed by loans made to office buildings, shopping centers and
apartment complexes, the Washington Post reported today. The
market for commercial-mortgage-backed securities has been sent into a
tailspin by the now-familiar combination of forced selling and bleak
economic forecasts. Atlanta, Detroit, New York and Tampa are among the
markets showing signs of rising defaults on commercial mortgages that
have been packaged into bonds. Skittish investors are demanding higher
premiums to hold commercial-mortgage bonds. Yields on the safest-rated
category of commercial-mortgage-backed debt are now 15 percent above
benchmark interest rates, traders said. At the start of the week, that
spread was just 8.5 percent.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/20/AR2008112003732_pf.html'>Read
more.
name='3'>Congress Postpones Stimulus Plan to '09
Lawmakers postponed work on a sweeping stimulus package until the new
Congress and administration can take over next year, the Wall Street
Journal reported today. Democratic leaders said yesterday that they
may return to Washington in December to consider aid to the auto sector.
However, even as the economy deteriorates sharply, they don't appear to
have enough support for a major stimulus program before January.
Congress yesterday granted smaller-scale relief by passing an extension
of unemployment benefits. The move came after the Bush administration
said it would support the proposal.
href='http://online.wsj.com/article/SB122722552199946003.html'>Read
more. (Subscription required.)
Analysts: Auto Failure Could Add Fuel to
Credit Crisis
Some analysts are saying that the possibility of allowing one
of the nation's automakers to fail would deepen the nation's credit
crisis, the Washington Post reported today. The risk arises in
part because so many financial institutions hold bonds issued by the
automakers. Moreover, an estimated $290 billion in credit-default swaps
have been written on that debt, according to the Depository Trust &
Clearing Corp. In a research note issued yesterday, JPMorgan Chase
analyst Eric J. Selle suggested that the automakers' failure would mark
'Credit Crisis Part II,' noting that bonds issued by General Motors,
Ford and their lending companies make up about 10 percent of the
high-yield bond market and that automakers represent one of the largest
sectors in finance for banks.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/20/AR2008112003593_pf.html'>Read
more.
name='5'>Pennsylvania Governor Promises Bankruptcy Exit Help for
Boscov's
Pennsylvania Gov. Ed Rendell (D) is offering $35 million in
state-guaranteed federal loans to help regional department store chain
Boscov's exit bankruptcy, the Associated Press reported yesterday. The
loans would be financed through a U.S. Department of Housing and Urban
Development program, although Boscov's still needs to secure some
private loans before it can get the money. Reading-based Boscov's filed
for chapter 11 protection in August and announced that it would close 10
of its 49 stores. In Pennsylvania, it operates 24 stores and employs
more than 5,000 people. 'We took this step because of the extraordinary
reach that Boscov's has in Pennsylvania,' Rendell said.
href='http://www.centredaily.com/business/story/975196.html'>Read
more.
name='6'>Creditors Approve Reliant Energy Channelview
Plan
All the creditors eligible to vote on Reliant Energy Channelview LP's
reorganization plan have voted to adopt it, bringing the Reliant Energy
subsidiary and Texas power plant operator closer to emerging from
chapter 11, Bankruptcy Law360 reported yesterday. Under Reliant
Energy Channelview's plan, secured and unsecured lenders will be paid in
full, and equity holders will receive distribution from the remaining
assets, according to the company's plan and disclosure statement, filed
in early September. Only one class, consisting of Reliant Energy
Channelview's equity interests, was eligible to vote on the plan, since
secured claims and general unsecured claims were unimpaired. All
subclasses of equityholders voted unanimously to approve the plan,
according to a vote certification filed Wednesday in the U.S. Bankruptcy
Court for the District of Delaware. A confirmation hearing is set for
today. Read
more. (Subscription required.)
name='7'>Judge Approves $40 Million DIP Loan for Value
City
Bankruptcy Judge James M. Peck approved $40 million in
debtor-in-possession financing for bankrupt discount retailer Value City
Holdings Inc., Bankruptcy Law360 reported yesterday. Value City reached
the financing agreement with National City Business Credit Inc. and
Wells Fargo Retail Finance LLC when it filed for chapter 11 protection
in late October. Judge Peck approved the financing solely for working
capital and general corporate purposes, as well as the payment of costs
incurred in doing business. In addition, Judge Peck approved Value
City's bid to pay any tax claims issued prior to its filing for
bankruptcy protection, including claims that were received after the
filing. He allowed for utility payments and approved Value City's
petition to honor gift cards, gift certificates, consumer credit and
warranties, among other consumer obligations.
href='http://bankruptcy.law360.com/articles/77668'>Read more.
(Subscription required.)
name='8'>Reuters Objects to Lehman Services-Sharing Plan
Thompson Reuters PLC has asked a bankruptcy court to require
Lehman Brothers Holdings Inc. to disclose and compensate Reuters for any
of the information company's services and intellectual property that
might be included in a transition services agreement between Lehman and
its European branches, Bankruptcy Law360 reported yesterday.
The limited objection filed Wednesday takes issue with Lehman's Nov. 13
motion seeking approval of a transition services agreement that would
re-establish a cross-Atlantic trade of information among Lehman, Lehman
Europe and Neuberger Berman Holdings LLC. All of Lehman's various
incarnations 'were and largely continue to be dependent on ... a shared
information technology platform' housed in both New York and London,
without regard to the geographic location of the Lehman entities using
the system, according to the motion.
href='http://bankruptcy.law360.com/articles/77621'>Read
more. (Subscription required.)
name='9'>Sixth Circuit Revives Dana Securities Class
Action
A federal appellate court has vacated and remanded a lower court's
dismissal of a securities class action against two former officers of
bankrupt auto parts maker Dana Corp., saying that the district court
didn't appropriately consider a recent Supreme Court decision when
dismissing the case, Bankruptcy Law360 reported yesterday. A
three-judge panel of the U.S. Court of Appeals for the Sixth Circuit
said that Judge James G. Carr of the U.S. District Court for the
Northern District of Ohio should have considered the high court's ruling
in Tellabs Inc. v. Makor Issues & Rights Ltd. differently.
The lead plaintiffs in the litigation - Howard Frank, the Plumbers &
Pipefitters National Pension Fund, the SEIU Pension Plans Master Trust
and the West Virginia Laborers Pension Trust Fund - represent a class of
investors who bought stock in Dana between April 21, 2004, and Oct. 7,
2005. The suit alleges that former Dana Corp. CEO Michael J. Burns and
former chief financial officer Robert C. Richter were responsible for a
number of intentional or reckless misstatements and material omissions
in an attempt to artificially boost the company's stock price.
href='http://bankruptcy.law360.com/articles/77605'>Read more.
(Registration required.)
name='10'>Farmers Feeling the Effects of Crop Price
Drops
The price paid for crops is dropping much faster than the cost of
farmers growing them, the New York Times reported today. The
government reported this week that the cost of goods and services
nationwide fell by a record amount in October as frantic businesses
tried to lure customers. When the price of wheat, corn, soybeans and
just about every other food grown began to increase two years ago,
farmers were pleased, but refused to believe that the good times would
be permanent. Now, farmers are getting an early taste of a deflationary
world. They have finished planting next year's winter wheat, but it cost
about $6 a bushel in fuel, seed and fertilizer to put the crop in. That
is $1 more than they could sell it for today, not including other
expenses like renting land.
href='http://www.nytimes.com/2008/11/21/business/21farm.html?ref=business&pagewanted=print'>Read
more.
name='11'>Citigroup Weighs Its Options, Including Possible Sale
/>
Executives at Citigroup Inc., faced with a plunging stock
price, began weighing the possibility of auctioning off pieces of the
financial giant or even selling the company outright, the Wall
Street Journal reported today. The internal discussions are at a
preliminary stage and don't signal that Citigroup's board and management
are backing down from their insistence that the New York company has
ample capital, funding and strategic direction. However, with the stock
down another 26 percent yesterday, the worst one-day percentage decline
ever for the company, Citigroup officials have decided they need to
consider a range of scenarios that were unthinkable only weeks ago.
Weighing down the shares has been the Treasury Department's decision
last week not to buy troubled assets from banks. Citigroup's balance
sheet includes battered securities and loans that many investors hoped
could be offloaded to the government.
href='http://online.wsj.com/article/SB122722907151946371.html'>Read
more. (Subscription required.)
Treasury Will Help Liquidate Reserve
Fund
In an unusual step, the U.S. Treasury announced that it will
help liquidate a money-market fund from Reserve Management Corp., whose
travails touched off the recent turmoil in money funds that has rocked
the investing world, the Wall Street Journal reported today.
The Treasury is essentially acting as a buyer of last resort for the
Reserve U.S. Government Fund, which invests in securities from the
government and agencies like Fannie Mae. The Government Fund isn't
Reserve's most troubled offering, but it has been swept up in panic
selling that began in September. That month, Reserve's flagship, the $65
billion Reserve Primary Fund, broke the buck,' or fell below $1-a-share,
as commercial paper from Lehman Brothers Holdings Inc. became virtually
worthless amid the bank's collapse.
href='http://online.wsj.com/article/SB122722728577846211.html'>Read
more. (Registration required.)
name='13'>New York Will Suspend Its CDS Regulation Plan
/>
New York State Insurance Superintendent Eric Dinallo told the House
Agriculture Committee yesterday that the state will delay 'indefinitely'
its plans to regulate credit-default swaps because of progress made by
federal regulators toward herding the business into regulated, central
clearinghouses, the Wall Street Journal reported today. The New
York State Insurance Department announced its intentions to regulate
some of the instruments Sept. 22. It limited its ambitions to 'covered'
credit-default swaps, those bought by an investor with an underlying
ownership interest in the debt, on the grounds the transaction is akin
to buying insurance, which is regulated by the states. New York didn't
take aim at 'naked' credit-default swaps, those purchased by speculators
who don't own the underlying debt and are merely betting on a company's
creditworthiness.
href='http://online.wsj.com/article/SB122723120539846617.html'>Read
more. (Registration required.)
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