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February 17, 2005
House Looking to Senate to Help Expedite Bankruptcy Bill
House Republican Conference Chairwoman Deborah Pryce of Ohio said
yesterday the House might follow a pattern of allowing the Senate to
first pass GOP priorities, such as an overhaul of bankruptcy laws,
CongressDaily reported. Pryce noted that last week’s
Senate passage of a bipartisan class-action bill has helped expedite its
likely enactment. Senate Finance Chairman Charles Grassley’s
(R–Iowa) bankruptcy legislation is similar to a bill that passed
the House last year but stalled in the Senate over an abortion-related
amendment by Sen. Charles Schumer (D–N.Y.). The Senate Judiciary
Committee plans to mark up the bill today, and Majority Leader Bill
Frist (R–Tenn.) has said he plans to move it to the floor soon.
Pryce said the House probably would expedite passage of the bankruptcy
bill if the Senate passes it without the Schumer amendment.
“We’re ready to take it up,” Pryce said. She added
that House Judiciary Chairman James Sensenbrenner (R–Wis.)
yesterday told GOP leaders “he’d like to see [the bankruptcy
bill] as our second victory.”
Meanwhile, the House yesterday approved a rule that allows Democrats
to offer a substitute amendment during Thursday’s class-action
debate. The Democratic substitute, sponsored by Judiciary ranking member
John Conyers (D–Mich.), includes many provisions the Senate
rejected last week, including carve-outs for civil rights and
wage-and-hour lawsuits. The class-action bill would move many multistate
class action lawsuits from state courts to federal courts, where more
stringent rules would govern the cases.
Retailers Urge Judiciary to Reject Amendments
The retail industry’s largest trade group on Wednesday urged
the Senate Judiciary Committee to reject potential amendments during
today’s markup of legislation to overhaul the nation’s
bankruptcy laws, CongressDaily reported. “Bankruptcy
legislation has been debated and refined, revised and amended repeatedly
over the past several years,” Steve Pfister, the National Retail
Federation’s senior vice president of government relations, said
in a letter to Judiciary Chairman Arlen Specter (R–Pa.).
“The time is ripe to consider this bill quickly and without
amendment.” Committee Democrats have said they plan to offer
several amendments, including provisions to exempt families seeking to
declare bankruptcy because of high medical costs.
Law Professors Express Concern over Bankruptcy Reform Bill
Ninety law professors sent a letter to Sens. Arlen Specter
(R–Pa.) and Patrick Leahy (D–Vt.) expressing their belief
that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(S. 256) is deeply flawed.
href='/pdfs/LawProfsLetter.pdf'>Read the
letter (PDF) online at ABI World.
Housing Starts Rise to Nearly 21-Year High
A jump in starts on single-family housing pushed total U.S. housing
starts to a nearly 21-year high in January, but other data released on
Wednesday were not as robust, Reuters reported. Home mortgage
applications dipped last week and industrial production was flat in
January as warm weather dampened demand for heating and dragged down
utilities output. Many analysts, and U.S. housing industry officials,
said housing starts in January indicated solid economic growth in the
United States, meaning the Federal Reserve has little reason to shift
from its current stance of raising interest rates at a “measured
pace,” the newswire reported. U.S. housing starts climbed 4.7
percent to a seasonally adjusted annual rate of 2.159 million units in
January from an upwardly revised 2.063 million unit pace a month
earlier, the Commerce Department reported. The January total marked the
highest pace of housing starts since February 1984 when they hit a 2.260
million unit pace.
Greenspan: Rates Low, Discipline Vital
U.S. interest rates are still “fairly low” after six
straight increases, Federal Reserve Chairman Alan Greenspan said on
Wednesday, warning that despite the economy’s good health, fiscal
discipline is vital, Reuters reported. Financial markets took
Greenspan’s hotly awaited testimony to the Senate Banking
Committee as confirmation that more interest-rate hikes lie ahead in a
cycle that began in June, as well as a vote of confidence in the
expansion. “All told, the economy seems to have entered 2005
expanding at a reasonably good pace, with inflation and inflation
expectations well-anchored,” Greenspan said in the first of two
days of semiannual economic testimony before Congress. The Federal Open
Market Committee raised its estimate for 2005 economic growth, fourth
quarter over fourth quarter, to a range of between 3.75 percent and 4
percent from an earlier estimate of 3.5 percent to 4 percent.
AFL–CIO Worried by Asbestos Plan Reopening
The AFL–CIO labor group is “deeply disturbed” by
calls from some senators and business interests to reopen parts of a
plan to create an asbestos compensation fund, the organization’s
legislative director, William Samuel, wrote in a letter released on
Wednesday, Reuters reported. “We are…deeply disturbed by the
statements of some senators and some business and insurance groups
calling for reopening agreements reached in the last Congress…'
the letter from Samuel to all 100 U.S. senators said.
Samuel’s letter said Specter’s latest draft
“includes important provisions strongly supported by the
AFL–CIO,” but there were important issues remaining to be
addressed. “The AFL–CIO will strongly oppose any attempt to
push through, on a partisan basis, legislation whose main purpose is to
bail out companies at the expense of victims,” Samuel said.
Judiciary Chairman Specter Has Hodgkin’s Disease
Senate Judiciary Chairman Arlen Specter (R–Pa.) announced
Wednesday that he has Hodgkin’s disease but expects to continue to
work in the Senate while being treated, the Associated Press reported.
Hodgkin’s disease is a type of cancer involving the lymph nodes.
Sen. Specter’s doctor said he has an “excellent chance of
being completely cured.” Sen. Specter, a 75-year-old Pennsylvania
moderate who just won re-election to his Senate seat, became Judiciary
chairman in January. Sen. Specter has been absent all week and will miss
today’s Judiciary Committee meeting, in which senators are
expected to vote on the bankruptcy reform measure.
Witness in WorldCom Trial Says He Lied
Former WorldCom Inc. finance chief Scott Sullivan, who has become the
star witness against Bernard Ebbers, admitted on Wednesday to a history
of lies, saying he had deceived shareholders, analysts and the board
while his staff undertook an $11 billion accounting fraud, Reuters
reported. Sharply questioned by the lead attorney for Ebbers, Sullivan
conceded that he had lied on more than a dozen occasions about the
financial health of the company, where accountants were cooking the
books to hide deteriorating profits between 2000 and 2002. The lead
attorney, Reid Weingarten, attacked Sullivan’s truthfulness in
hopes of undermining the credibility of the only witness to directly
link Ebbers to the accounting scandal at WorldCom. Sullivan—who
has pleaded guilty to fraud and is cooperating with prosecutors in hopes
of a lighter prison sentence—also admitted to lying during
presentations to shareholders, analysts and the company’s
board.
Deutsche Bank: YUKOS Lied to U.S. Court
Deutsche Bank on Wednesday accused YUKOS, the Russian oil company
under siege by the Kremlin, of lying about its U.S. links to persuade a
U.S. court to intervene with the Russian government, Reuters reported.
On the first day of a two-day hearing on whether the YUKOS bankruptcy
case should proceed in the United States, Deutsche Bank lawyer Hugh Ray
told the court YUKOS executives back-dated documents to help its chances
that U.S. courts would intercede. YUKOS has said its December bankruptcy
filing in Houston was an attempt to halt the auction of its main oil
producing arm in Russia, where it faces a back-tax bill of $27.5
billion. YUKOS has disputed the Russian tax claim, calling it a
“massive, politically motivated, unlawful action.” Despite
restrictions imposed by the U.S. Bankruptcy Court, Russian authorities
sold Yuganskneftegas, a YUKOS unit, in December for $9.4 billion to a
previously unknown group that was subsequently bought by
state-controlled oil company Rosneft. The U.S. court’s
jurisdiction has been challenged by Deutsche Bank and Gazpromneft, a
former unit of Russian gas monopoly Gazprom, which is slated to merge
with Rosneft.
Bankruptcy Likely to Wipe Out Stock, Ultimate Warns
Shares in Ultimate Electronics plummeted Wednesday after the company
said its bankruptcy reorganization most likely would leave its publicly
traded common shares worthless, the online Denver Post
reported. The electronics retailer also confirmed—as the
Post reported—that it has replaced its chief
executive with new board chairman Mark Wattles as it reorganizes under
bankruptcy protection. Declining to predict the length of time it will
operate in chapter 11, Ultimate acknowledged for the first time on
Wednesday that “it appears unlikely that the outcome of the
company’s reorganization will result in any value for the holders
of our common stock.” Ultimate said sales for the quarter ended
Jan. 31 declined 19.4 percent to $195.9 million, compared with $243.2
million in the same period of the previous year. Ultimate Electronics
filed for chapter 11 bankruptcy protection Jan. 11. It has secured up to
$118.5 million in debtor-in-possession financing.