November 82007

 

name='1'>Presidential Candidate

Offers Plan on Bankruptcy Reform, Credit Card Bill of
Rights

Democratic presidential
candidate Sen. Barack

Obama (D-Ill.) offered a package of proposals yesterday aimed at
halting growing income

inequity, including an overhaul of bankruptcy laws, the Associated Press

reported yesterday.

Obama said that he would reverse recent changes in the nation's
bankruptcy laws that he

said favored credit card companies over consumers, giving new
protections for those who go

into debt for medical expenses. ''I don't accept an

w:st='on'>

size='3'>America
size='3'>where we let someone

go over a cliff just because they get sick,'' Obama said. He added that
his credit card bill

of rights would ban unilateral changes to a credit card agreement,
prohibit changes in

interest rates in debt already incurred and ban interest on late
fees. 

href='http://www.nytimes.com/aponline/us/AP-Obama-Economy.html?pagewanted=print'>Read

more.

Mortgage
Lending

name='2'>House Judiciary

Committee Postpones Vote on Mortgage Bankruptcy Bill

The House Judiciary
Committee postponed a

vote yesterday on legislation that would make it easier for bankruptcy
judges to modify

certain home mortgages for chapter 13 debtors in an attempt to try to
reach a bipartisan

compromise on the measure,

size='3'>CongressDaily reported today. Though
the panel began

debating H.R. 3609, Republicans were poised to oppose the measure after
Democrats could not

reach an agreement with Rep. Steve Chabot (R-Ohio), who had sponsored a
rival version.

Chabot pushed for a provision that would cap the level of homeowners who

could seek such

relief to those at 150 percent of their county median income level.
Chabot thought he had a

deal with panel Democrats Tuesday night that also included a seven-year
sunset, but he said

that it fell apart yesterday. Chabot said that some Californians on the
panel were concerned

his means test would not help their constituents because they live in
high-priced home

areas. Before the cancellation, Judiciary Chairman John Conyers
(D-Mich.) said that he would

continue the talks with Chabot.

name='3'>House Panel Approves

Bill to Require Subprime Escrow Accounts

The House Financial
Services Committee

approved legislation yesterday that would require lenders to set up
escrow accounts on

subprime mortgages to help potentially distressed borrowers cope with
tax liens and forced

payments of insurance,

size='3'>CongressDaily reported yesterday. The

bill, sponsored by

Rep. Paul Kanjorski (D-Pa.), would also bar lenders from issuing
high-cost loans without

first obtaining a written appraisal of the properties. To protect
borrowers from loan

flipping, lenders would have to provide a second appraisal free of
charge in cases where

another loan was taken out on a piece of property in the previous six
months. The bill also

includes several provisions to help keep appraisals honest. All parties
involved in real

estate transactions would be explicitly prohibited from pressuring an
appraiser through

collusion and coercion. The appraiser could not have a direct interest
in the property or

any aspect of the deal. To prevent the appraisers from changing reports
to avoid liability

for over-valuing, the borrower would have to be supplied with appraisals

at least three days

prior to closings. Penalties for influencing appraisers would start at
$10,000 for the first

violation and range up to $20,000 for subsequent ones.

name='4'>Probe of Freddie Mac

and Fannie Mae Widens on Inflated Home Appraisals

Freddie Mac and Fannie
Mae, prodded by New

York State Attorney General Andrew Cuomo, agreed to appoint independent
examiners to look at

whether they have done enough to protect mortgage investors from the
risks of inflated home

appraisals, particularly on loans from Washington Mutual, the
Wall Street Journal
size='3'>reported today. As part of

a nine-month probe of the mortgage business, Cuomo sent letters and
subpoenas Tuesday to

Fannie and Freddie. Cuomo said that his staff continues to study
problems in the mortgage

industry, including the role of investment banks, which also create
mortgage-backed

securities for sale to investors. In his letters to Fannie and Freddie,
Cuomo wrote that

inflated appraisals, giving a false idea of the value of collateral
backing those loans and

securities, could hurt shareholders of those companies and investors in
mortgage-backed

securities they guarantee. 

href='http://online.wsj.com/article/SB119445185117285326.html?mod=us_business_whats_news'>Re

ad more. (Registration required.)

name='5'>Citigroup Faces

Shareholder Suit over Subprime Holdings

A shareholder derivative
lawsuit was filed

yesterday against Citigroup Inc., its former chief executive, Charles
Prince, and several

top executives and directors over losses related to its subprime
mortgage-backed securities

portfolio, the Wall
Street

Journal reported today. The lawsuit, filed in
federal court

in

size='3'>Manhattan, alleges

that Citigroup

executives recklessly purchased subprime loans to be used for future
collateralized debt

obligations and then made allegedly improper statements regarding the
financial services

company's exposure to the subprime market meltdown. It also alleges that

some defendants

sold their own shares in the company while in possession of 'material
nonpublic information'

about its exposure, securing more than $36 million in proceeds. 

href='http://online.wsj.com/article/SB119445474137285354.html?mod=us_business_whats_news'>Re

ad more. (Registration required.)

name='6'>Morgan Stanley Takes a

Hit on Mortgages

Morgan Stanley, its stock

buffeted in recent

days by speculation of high credit losses, said yesterday that it would
take a $3.7 billion

charge for nonperforming assets tied to subprime mortgages, the

size='3'>New York Times reported today. Unlike

its rivals

Citigroup and Merrill Lynch, which together have written down close to
$30 billion, Morgan

Stanley ranked low as an underwriter of collateralized debt obligations,

the pools of

complex securities tied to plummeting subprime mortgages. However,
Morgan Stanley chief

financial officer Colm A. Kelleher said that most of the write-down was
a result of trading

positions that went wrong as opposed to C.D.O.s that the firm had
underwritten but could not

sell. Kelleher said that Morgan Stanley’s net subprime-related
exposure had declined

to $6 billion at the end of October from $10.4 billion at the end of
August. 

href='http://www.nytimes.com/2007/11/08/business/08morgan.html?ref=business&pagewanted=p

rint'>Read more.

Autos

name='7'>Judge Dismisses $20

Million Claim against Dana

Bankruptcy Judge
Burton R. Lifland threw
out a $20 million

claim filed by one of bankrupt Dana Corp.'s suppliers, agreeing with the

auto parts company

that the claim lacked merit,
size='3'>Bankruptcy

Law360 reported yesterday. Jasco Tools Inc.
filed the claim based

on a 1995 purchase agreement between the two companies under which Jasco

provided

precision-machined casings to Dana for five years. In 1999, the
companies met to renegotiate

the deal, although Dana also solicited bids from several other
companies.

Based on a bidding process, Dana
awarded the contract

to Nationwide Precision Products Corp., which prompted Jasco to bring a
suit alleging that

Dana and Nationwide participated in a scheme to divert the business away

from Jasco. Dana

opposed arguing that both Jasco's contract claim and its tort claim were

not substantive

enough to give the company standing in the bankruptcy
proceedings. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=39508'>Read

more. (Registration required.)

name='8'>Federal-Mogul on Fast

Track to Exit Bankruptcy

Bankruptcy Judge
Judith Fitzgerald said
yesterday that she is

looking to approve Federal-Mogul Corp.'s chapter 11 plan, setting up the

company for a fast

exit from bankruptcy, the Associated Press reported yesterday. Barring
unforeseen problems,

Judge Fitzgerald said that she would sign off on the order confirming
the Southfield,

Mich.-based company's reorganization plan within days. 
Shaking

off the last objections to its chapter 11 restructuring was vital for
Federal-Mogul, which

must put its plan in place by midnight Dec. 31, or sit down with its
banks to renegotiate

pricing on $3.5 billion worth of reorganization exit financing. 

href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20071107/UPDATE/711070454'>Read

more.

GM

Hit with Large Loss

in Third Quarter

General Motors Corp.'s
$38.96 billion

third-quarter net loss is raising questions over whether it can keep its

current turnaround

on track, the Wall
Street Journal

reported today. The vast majority of GM's loss, which
came to $68.85 a share,

stemmed from a $38.6 billion charge related to the write-down of tax
credits and doesn't

affect its cash position. The company blamed the losses before the
charge on subprime home

loans by its former financing unit, soft market conditions in

the United States and

face='Times New Roman' size='3'>Europe
size='3'>, and unfavorable

exchange rates, especially against the Canadian dollar and the euro. The

results indicate

that GM based its 2005 restructuring plan on assumptions that didn't pan

out, particularly

about expected profits from financial services and

w:st='on'>

size='3'>U.S.
size='3'>auto sales. 

href='http://online.wsj.com/article/SB119254528073860596.html?mod=hpp_us_whats_news'>Read

more. (Registration required.)

name='10'>Committees Look to Help

Calpine against Pension Fund Claims

The creditor and
shareholder committees in

Calpine Corp.'s bankruptcy case filed joinders on Tuesday seeking to
throw out a pension

fund's $60 million proof of claim for alleged securities
violations,

face='Times New






&a

mp;#13;





&amp

;#13;




&#13

;









&a

mp;amp;#13;


&

#13;



&am

p;amp;amp;#13;
Roman' size='3'>Bankruptcy
Law360

size='3'>reported yesterday. The dispute began in 2003, when the Hawaii
Structural

Ironworkers Pension Fund filed a lawsuit against
face='Times New






&a

mp;#13;





&amp

;#13;




&#13

;


Roman'>

size='3'>Calpine in the Superior Court of the State of

w:st='on'>

face='Times New Roman' size='3'>California

w:st='on'>

size='3'>County of

w:st='on'>Santa

Clara. The suit
alleged that Calpine

issued false and misleading statements in its registration statement and

prospectus for its

April 2002 equity offering. It also accused Calpine, some of its current

and former officers

and directors, and the company’s underwriters and investment banks

of strict liability

and negligence. The joinders filed yesterday by the two committees added

to a motion filed

this August by Calpine, which called the claims
“meritless.” A hearing on

the matter is scheduled for Nov. 27. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=39493'>Read

more. (Registration required.)

name='11'>Investors Buy Bombay

Co. Headquarters

Real estate investor John

Goff and Goff

Capital Inc. are buying bankrupt Bombay Co.’s corporate
headquarters office in

size='3'>Fort

Worth for $16.35 million,
the Fort Worth

Star-Telegram reported yesterday. Goff’s bid won over the
nine initial bids made

on the building and four bids remained through the final process, said
Haynes and Boone

attorney John
Penn

size='3'>. The sale of the building is part of
w:st='on'>

w:st='on'>

size='3'>Bombay’s
chapter 11 bankruptcy,

which will result in the shutdown of the company next year.

face='Times New Roman' size='3'>Bombay
size='3'>is liquidating some

320
face='Times New Roman'

size='3'>U.S.
size='3'>home-furnishings stores

through Jan. 31.
href='http://www.star-telegram.com/business/story/295203.html'>Read

more.

href='http://www.star-telegram.com/business/story/295203.html'>

href='http://www.nytimes.com/2007/11/07/business/07fed.html?_r=1&oref=slogin&ref=bus

iness&pagewanted=print'>