August 5, 2004
Fed Expected to
Raise Rates on Tuesday
Despite a lull in economic
growth and anxiety about the effect of high oil prices on spending, the
Federal Reserve is expected to continue its strategy of gradually
raising interest rates when policy-makers meet next Tuesday, the New
York Times reported. Indicators suggest that economic growth
slowed sharply last quarter, particularly in June, and may continue to
be sluggish for a few more months. But Fed officials and many outside
economists predict that the lull will be temporary and that activity
will pick up again by the fall. On Wednesday, the Commerce Department
released new data on orders for manufactured products that in many ways
reinforced the signs of sluggish growth. But the economic picture is not
clear and other indicators point to a renewed step-up in growth.
Consumer confidence is back at high levels, and automobile sales last
month jumped to an annual rate of 17.3 million cars and trucks from a
rate of just over 15 million vehicles in June, the newspaper
reported.
OCC Decision on National
Banks Prompts Plea for Markup
House Financial Services Committee members have urged panel leaders to
mark up two resolutions that would invalidate the Office of the
Comptroller of the Currency's rules exempting national banks from many
state consumer protection laws, CongressDaily reported. In a
letter to Financial Services Chairman Michael Oxley (R-Ohio) and
Financial Institutions Subcommittee Chairman Spencer Bachus (R-Ala.),
the lawmakers said the House still has time to act on the legislation
before the end of the session. The letter was signed by Financial
Services ranking member Barney Frank (D-Mass.), Oversight and
Investigations Subcommittee ranking member Luis Gutierrez (D-Ill.) and
eight other members, including Ron Paul (R-Texas). Gutierrez is chief
sponsor of the House legislation to overturn the regulations. Oxley has
not scheduled a markup of Gutierrez's legislation, according to a
committee spokesman. Oxley has said during hearings that he disagrees
with concerns that the OCC pre-emption rules undermine the dual-charter
banking system, the newswire reported.
Delta Pilots: Company
Demands Too Hefty
The pilots' union at Delta Air
Lines Inc. on Wednesday said management's demands for $1 billion in wage
cuts and other concessions 'far exceed' the company's economic
situation, and hinted it might have to take 'another path' in the
negotiations, Reuters reported. Delta last week said it asked pilots for
a minimum $1 billion in concessions and proposed changes to the pension
plan. In a letter to union members on Wednesday, John Malone, head of
Delta's Air Lines Pilots Association, said the union presented
management with a proposal worth between $655 million and $705 million
in annual concessions for four years. In return, the union requested
equity, profit-sharing and corporate governance rights. But Malone said
that Delta did not address the requirements or provide a tie to an
overall restructuring including other stakeholders, the newswire
reported.
Warnaco Profits
Up Thanks to Sportswear Group, Lower Costs
Warnaco Group Inc., the maker
of Speedo swimsuits and Calvin Klein jeans, said on Wednesday it posted
a quarterly profit from a year-ago loss, helped by strong gains in its
Sportswear Group and lower restructuring costs, Reuters reported.
Warnaco, which emerged from chapter 11 bankruptcy protection in February
2003, posted second-quarter earnings of $4.4 million, or 10 cents per
share. In the same period a year earlier, the company reported a net
loss of $9.0 million, or 20 cents per share.
Universal Access Files for
Bankruptcy Protection
Universal Access Global
Holdings Inc., a communications network company, on Wednesday said it
has filed to reorganize under chapter 11 bankruptcy protection, Reuters
reported. The Chicago-based company said it filed in the U.S. Bankruptcy
Court for the Northern District of Illinois. Universal Access said it
will continue to conduct business, and its non-U.S. subsidiaries are not
included in the filing and also will continue to operate
normally.
PwC in Plea for Bankruptcy
Alternative
PricewaterhouseCoopers has
appealed for a new bankruptcy alternative after consumer debt in
the
passed the symbolic £1 trillion mark, AccountancyAge
reported. The appeal to the government by the
countancy firm coincided with predictions that figures due out tomorrow
will show the number of people going bankrupt has increased.
PwC said that it was time for a
'simplified' alternative to bankruptcy for those who struggle with debt.
It is suggesting a 'consumer arrangement' scheme for debtors owing up to
£30,000 that would simplify negotiations with creditors. Debtors
would pay back at least 20p per pound by electronic transfer and failure
to do so would automatically trigger full-scale bankruptcy. Read the
article at
href='http://www.accountancyage.com/News/1137836'>
size='3'>http://www.accountancyage.com/News/1137836.
New Borrowers Get Credit Break
For years, lenders have granted credit
to consumers who already have it, trapping those without any credit
histories in a Catch-22, the online Wall
Street Journal reported. Now, lenders are being offered a new
scoring process for these consumers -- mainly young people, recent
immigrants and low-income individuals -- that could make it easier for
them to obtain credit cards and loans, without paying exorbitant rates.
Read the article at
face='Arial' color='#085aaf' size='3'>www.wsj.com
size='3'>(subscription required).
US Airways: Failed
Turnaround Plan Could Result in Chapter 11
US Airways Group Inc. must cut its unit
costs to the level of rival low-cost carriers in the third quarter or
risk returning to bankruptcy , the company said Wednesday in a filing
with the Securities and Exchange Commission,
the online Wall Street Journal
reported.Unlessthe airline can implement its turnaround plan,
which involves cutting distribution and labor costs, the airline may
violate the terms of a loan from the federal Air Transport Safety Board,
as well as other debt covenants and credit card processing agreements,
the company said in the filing.Read the article at
href='http://www.wsj.com/'>
size='3'>www.wsj.com (subscription
required).
Choice One to Reorganize in Prearranged
Bankruptcy
Choice One, a Rochester,
N.Y.-based telecommunications provider, said it will refinance its debt
through a prearranged chapter 11 bankruptcy filing,
the Pittsburgh Tribune-Review reported. Regulatory changes
in recent months scrapping the wholesale rate caps which incumbent Baby
Bell carriers like Verizon and BellSouth could charge competitive
carriers has made life more difficult for companies like Choice One. Its
shareholders will be wiped out as the company's primary lenders owed
more than $656 million will convert their debt into equity in the
reorganized company. Vendors, such as Cheswick-based Tollgrade
Communications Inc., will be paid as usual, the newspaper
said.
Acclaim Gets Extension
on Credit Agreement
Video game publisher Acclaim
Entertainment Inc. said on Wednesday its primary lender has extended its
loan agreement until August 20, Reuters reported. Its credit facility
with GMAC Commercial Finance was due to expire on Wednesday. Acclaim,
which said in July it could face bankruptcy without a new loan
agreement, said it was working with a new lender on a proposed credit
agreement for up to $65 million secured by the company's assets. The new
credit facility would replace the GMAC agreement, the newswire
reported.