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December 1, 2004
Consumer Spending, Incomes Up in October
Consumers spent briskly in October, an encouraging sign that the
final quarter of 2004 is getting off to a good start, the Associated
Press reported. The Commerce Department reported today that consumer
spending went up by 0.7 percent in October, up from 0.6 percent rise in
September and the best showing since July. Growth in Americans’
incomes—the fuel for future spending—jumped by 0.6 percent
in October as the employers added significantly to payrolls. That
compared with a 0.2 percent advance in September and marked the biggest
increase since May.
Warning on Internet Loans
The Consumer Federation of America has warned borrowers about the
costs and risks of using Internet payday loan sites that make relatively
small loans to consumers for short periods of time, CNNMoney reported.
The non-profit association said on Tuesday the loans typically cost $25
per $100 borrowed and must be repaid or refinanced by the
borrower’s next payday. That cost for a two-week loan works out to
650 percent annual interest rate (APR). But the consumer group says only
38 sites out of 100 surveyed disclosed the annual interest rates for
loans prior to customers completing the application process.
A Generation Weighed Down by Debt
Saddled with record-high college loans and credit-card debts at a
time when wages are stagnant and the job market is tight, young adults
may be the most indebted generation of young Americans ever, the
Christian Science Monitor reported. “These young adults are doing
everything society tells them to do,” says Tamara Draut, coauthor
of a new study, “Generation Broke: The Growth of Debt Among Young
Americans,” published by Demos, a public-policy group in New York.
“They’re going to college, taking on tremendous student-loan
debt, and working longer hours than ever before while in college. When
they get in the real world, they can’t get ahead because of the
debt they went into to get the degree to get the good job.”
Bid Raised for Rights to Brobeck Litigation
A group of plaintiff lawyers indicated on Tuesday that it would raise
its bid to purchase rights to a suit against Clifford Chance relating to
the collapse of Brobeck, Phleger & Harrison, the Recorder reported.
But near the end of an all-day hearing it was unclear whether U.S.
Bankruptcy Judge Dennis Montali would consider the offer or accept a
$4.5 million deal that Brobeck bankruptcy trustee Ronald Greenspan
reached with Clifford Chance to settle claims against the firm. Read the
article at www.law.com.
United’s Pension Trustee Seeks Millions in Payments from
Airline
Hoping to salvage some lost pension money, the trustee representing
employee pension funds at United Airlines sought a court order on
Tuesday that the carrier be required to make up hundreds of millions of
dollars in skipped contributions, the Associated Press reported. The
trustee, Independent Fiduciary Services, said in the motion filed in
Federal Bankruptcy Court that it sought to collect as much as $994
million in payments that United had missed since it announced in July
that it was halting pension contributions. The motion asked for at least
$260 million, the minimum that United was to have paid.
High Court Puts Limit on Lender Liability
The Supreme Court yesterday overturned a five-figure damage award to
an Alexandria man for a local auto dealer’s alleged loan scam,
ruling that a Richmond-based federal appeals court had wrongly
interpreted a federal fair-credit law when it upheld the award last
year, the Washington Post reported. By a vote of 8 to 1,
the court said that, in cases of loans secured by personal property,
such as car loans, the Truth in Lending Act limits consumers to $1,000
in so-called statutory damages—cash awards for plaintiffs who can
prove that a lender violated a law but not that they actually lost money
because of the violation.
SES Gets U.S. Approval to Buy Verestar
Luxembourg’s SES Global, the world’s largest satellite
operator, said today it had won U.S. regulatory approval to complete its
purchase of Verestar for $18.5 million in cash, Reuters reported. SES
announced in April it had won a U.S. auction to buy the bankrupt
satellite communications services provider. Fairfax, Va.–based
Verestar had been operating under bankruptcy protection.
US Airways
US Air Creditors Back Plan to Dump Labor Contracts
Major creditors holding billions in claims on Tuesday supported plans
by US Airways to void labor contracts covering thousands of workers if
the bankrupt airline cannot obtain voluntary concessions from key
unions, Reuters reported. The committee of unsecured creditors said in a
statement the bankruptcy court should also approve US Airways’
attempt to throw out two employee pension plans and cut retiree medical
benefits, if necessary.
Union Readies Itself for Possible Strike at US Air
A major union at US Airways positioned itself on Tuesday for a
possible strike if the airline throws out union contracts to save money,
Reuters reported. The national executive board of the Communications
Workers of America, which represents 6,000 ticket, reservation and gate
agents at the seventh-largest carrier, voted unanimously to let the
union’s president call a walkout, if necessary.