April 142008

 

name='1'>Insurers Object to Congoleum’s Chapter 11 Exit
Plan

Insurance companies that
have been battling Congoleum Corp. for years in bankruptcy court are
objecting to the flooring maker's plan to exit chapter 11 protection,
the Wall Street
Journal reported today. More than a dozen
insurance companies -- including CNA Financial Corp., Travelers Cos. and

Employers Insurance Co. of Wausau -- balked at provisions in the plan
that, they say, don't conform to bankruptcy law. The insurers say the
plan, among other things, unfairly favors some asbestos claimants.
Congoleum is the subject of more than 100,000 asbestos-related
personal-injury claims. The Mercerville, N.J., company sued a number of
its insurers, including Travelers, ACE Group's ACE American Insurance
Co. and CNA for failing to provide coverage on the asbestos
claims. The
company has reached settlements with some insurers over coverage as it
is proposing that money be put into a trust to cover the asbestos
liabilities. Bankruptcy Judge Kathryn C.
Ferguson has scheduled a conference today

to discuss the insurers' objections. 

href='http://online.wsj.com/article_print/SB120812292693911241.html'>Read

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Housing
Crisis

name='2'>Housing Woes Spread Globally

The collapse of the
housing bubble in the
face='Times New Roman' size='3'>United
States is mutating into a
global phenomenon, with real estate prices swooning from the Irish
countryside and the Spanish coast to Baltic seaports and even parts of
northern

face='Times New Roman'
size='3'>India,
the New York
Times reported today. This synchronized global

slowdown, which has become increasingly stark in recent months, is
hobbling economic growth worldwide, affecting not just homes but jobs as

well. In

size='3'>Ireland,

size='3'>Spain,

size='3'>Britain
size='3'>and elsewhere, housing markets that soared over the last decade

are falling back to earth. Property analysts predict that some countries

will face an even more wrenching adjustment than that of the

size='3'>United States
size='3'>, including the possibility that the downturn could become a
wholesale collapse. 

href='http://www.nytimes.com/2008/04/14/business/worldbusiness/14real.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

more.

name='3'>Editorial: Housing Relief Proposals Need More
Work

As foreclosures are hitting
nearly 20,000 families per week, Congress needs to come up with a better

housing relief package that is targeted to at-risk homeowners, according

to a New York Times editorial today. According to the
editorial, lawmakers will first have to scrap most of the provisions in
a bill passed last week by the Senate. The Senate package would cost $21

billion over 10 years, with $15 billion of the total going to tax cuts
that offer no direct help to at-risk families or hard-hit communities.
One set of cuts would subsidize renewable energy; another would let
businesses take temporarily larger write-offs for losses. A proposed
$7,000 tax credit for buyers of foreclosed homes could backfire,
encouraging more foreclosures by allowing banks to charge more for
repossessed property. There are parts of each of the bills that should
be preserved, including money for foreclosure-prevention counseling, for

issuing tax-exempt bonds to help refinance subprime mortgages and for
local governments to purchase foreclosed properties. 

href='http://www.nytimes.com/2008/04/14/opinion/14mon1.html?ref=opinion&pagewanted=print'>Read

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In related news, the
House Financial Services Subcommittee on Capital Markets, Insurance, and

Government Sponsored Enterprises will hold a hearing tomorrow entitled
'H.R. 5579, the Emergency Mortgage Loan Modification Act of 2008.' The
hearing will take place at 2 p.m. ET in room 2128 of the

size='3'>Rayburn
face='Times New Roman' size='3'>House

size='3'>Office
face='Times New Roman'
size='3'>Building
size='3'>. 

href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht041508.shtml'>Click

here to view the witness list.

House

Committee Calls for GAO Study on Fair Lending Enforcement

Members of the House
Financial Service Committee sent a letter to the Government
Accountability Office (GAO) on Friday calling for a comprehensive review

of the current state of the federal enforcement of the Equal Credit
Opportunity Act, the Home Mortgage Disclosure Act  and the Fair
Housing Act, and other related fair lending laws, according to a press
release.  The members expressed concern over
the thoroughness and effectiveness of the oversight and enforcement of
fair lending laws and asked the GAO to study mortgage lending as well as

other types of lending such as small business and unsecured
lending. 

href='http://www.house.gov/apps/list/press/financialsvcs_dem/press041108.shtml'>Click

here to read the letter.

name='5'>Hancock Secures $100 Million Exit-Financing Deal with GE
Capital

Hancock Fabrics Inc. has
brokered an exit financing deal with General Electric
face='Times New Roman'>Capital Corp., which has agreed to

provide the bankrupt fabric company with a revolving credit line of up
to $100 million,
size='3'>Bankruptcy Law360 reported on Friday.

The financing agreement also includes a letter of credit subfacility of
up to $20 million, Hancock said.

size='3'>The company recently received an extension to May 30 to file
its reorganization plan. Additionally, Bankruptcy Judge Brendan
L. Shannon approved a settlement on Thursday in a separate
class action suit that alleges that  the bankrupt company printed
credit card expiration dates on consumer receipts in violation of the
Fair and Accurate Credit Transactions Act. Under the terms of the
agreement, Hancock will conduct a 10-percent-off sale event for class
members later this year at all of its retail locations. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=52721'>Read

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size='3'>Arkansas Town Files for
Bankruptcy

The city of

size='3'>Gould,
w:st='on'>
size='3'>Ark., will seek
chapter 9 bankruptcy protection from its long-standing debts, which run
into the hundreds of thousands of dollars, the Associated Press
reported. Gould mayor Juanita Stephens said that she broke a tie vote
among the city council members to hire a
w:st='on'>
size='3'>Little Rock
size='3'>bankruptcy attorney to work with the city. Stephens could not
offer a precise total for the debt, which she estimated is almost a
half-million dollars. However, she hopes a court-approved bankruptcy
will at least 'knock off' some penalties and interest from the $224,000
that the city owes the Internal Revenue Service in back taxes. 

href='http://www.nwaonline.net/articles/2008/04/13/news/041308argouldbank.txt'>Read

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name='7'>Sallie Mae to Charge for Student Loans

Sallie Mae, the country's

largest student lender, announced Friday that it will start charging
students who apply for federally backed loans and cut the type of loans
available, citing the turmoil in the credit markets as a reason for this

shift, the Washington
Post reported on Saturday. 
size='3'>Starting next month, Sallie Mae will charge fees -- ranging
from $35 for freshmen to a few hundred dollars for graduate students --
to apply for federal loans. These fees had largely been covered by
lenders in the past, but most firms are now dropping this benefit.
Citing 'severe credit market deterioration' and a decision by Congress
last year to cut subsidies to lenders, Sallie Mae President C.E. Andrews

and Executive Vice President Barry S. Feierstein said that one-third of
the top 100 student lenders have left the business. He warned that this
means 'loan demand will significantly exceed lender supply for the
upcoming academic year.' 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/04/11/AR2008041103835_pf.html'>Read

more.

In related news, the
Senate Banking Committee will hold a hearing tomorrow on how the current

credit crunch has hampered the availability of student loans. The
hearing will take place at 10 a.m. ET in room 538 of the

size='3'>Dirksen
face='Times New Roman' size='3'>Senate

size='3'>Office
face='Times New Roman'
size='3'>Building
size='3'>. 

href='http://banking.senate.gov/public/index.cfm?Fuseaction=Articles.Detail&Article_id=c41da039-3478-42bc-9552-78ac79614061'>Click

here to view the witness list.

Delta

Aims to Unveil Northwest Merger Pact

Delta Air Lines Inc. and
Northwest Airlines Corp. may unveil their long-delayed merger
announcement as early as tomorrow in the latest move by airlines to
grapple with high fuel prices and a softening economy, the
Wall Street Journal
reported today. The deal could value Northwest at roughly

$3 billion, although terms were still being negotiated. That would be
well below Northwest's market value of more than $4.6 billion as of Feb.

1, reflecting the industry's worsening prospects in recent weeks. Moving

ahead with a deal risks a clash with the airlines' pilots, who don't
have veto power but can complicate a merger. Delta and its roughly 6,000

unionized pilots remained in talks over the weekend on a new post-merger

contract that would cover that group only. 

href='http://online.wsj.com/article_print/SB120811358101510993.html'>Read

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name='9'>Study: IRS Scrutiny of Big Firms Plummets

The Internal Revenue
Service’s scrutiny of the nation’s biggest companies is at a

20-year low, according to the study, conducted by Transactional Records
Access Clearinghouse, or TRAC, a research group affiliated with

size='3'>Syracuse
face='Times New Roman'
size='3'>University,
the New York
Times reported today. The study found that
major corporations — defined as those with assets of at least $250

million — have about a one in four chance of being audited, down
from about three in four in 1990. However, IRS officials, who reviewed
the report before its release, said Friday that TRAC had misinterpreted
a basic shift in corporate
w:st='on'>
size='3'>America
size='3'>in recent years. Companies of all sizes, as well as wealthy
individuals, have embraced the use of partnerships and other opaque
entities in an effort to minimize taxes, the IRS officials said.
Sometimes those arrangements cross the line into tax abuse; Enron used
hundreds of them to commit fraud. Because large companies increasingly
use such partnerships, the IRS has stepped up scrutiny of these
entities. 

href='http://www.nytimes.com/2008/04/14/business/14irs.html?ref=business&pagewanted=print'>Read

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