January 282008

 

name='1'>Hearings to Focus on Slumping Home Mortgage

Market

The House
Judiciary Subcommittee on

Commercial and Administrative Law and Senate
Banking Committee will hold hearings this week

to examine proposals to boost the slumping home mortgage market,

size='3'>CongressDaily reported today.
Witnesses have not been announced for

Tuesday’s hearing in the House Subcommittee
on Commercial and Administrative Law.

Senate Banking Chairman
face='Times New Roman'

size='3'>Chris Dodd (D-Conn.),
whose committee will hold its hearing on

Thursday, has expressed interest in plans that would allow cities to
finance the purchase of foreclosed homes and

the creation of a temporary government agency to provide liquidity to
the mortgage-backed securities market. FDIC

Chairwoman Sheila Bair will testify, as well as Alex Pollock, a resident

fellow at the American Enterprise

Institute who has suggested that lawmakers consider a course Congress
took in 1933 when it created the Home

Owners' Loan Corporation, which was authorized to offer up to $2 billion

in bonds to guarantee defaulted

residential mortgages during the Great Depression. 

href='http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=289'>Click

here for more

information on the Senate Banking Committee’s hearing scheduled
for Thursday.

name='2'>Loan Adviser to Assist

w:st='on'>New

York

Probe into Subprime Mortgages

A company that advises
Wall Street bankers who packaged and sold

risky mortgages has agreed to cooperate with New York state
investigators, advancing a months-long probe of the

subprime home loan debacle, the

size='3'>Washington

Post reported today.
w:st='on'>

size='3'>New York Attorney General
Andrew M. Cuomo and Clayton Holdings

officials yesterday confirmed the deal, which affords the

face='Times New Roman'
size='3'>Connecticut
size='3'>information services

company immunity from prosecution. The agreement could provide state
prosecutors with substantial new information

on what major banks knew about the quality of thousands of questionable
home loans -- and whether such concerns

were properly disclosed to investors and credit-rating agencies,
according to two people following the

investigation. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012701752_pf.html'>Read

more.

name='3'>Editorial: Banks' Mismanagement Could Bring

Further Regulation

From the savings and loan

meltdown in the 1980s to the current

housing-led seizure, financial institutions have proved unable to curb
their appetite for risky assets and may

face further regulations from Congress as a result, according to
a

size='3'>New York Times editorial today.
Regulation certainly needs tightening to

mitigate the worst kind of irresponsible, often predatory lending that
led to our current mess. A better

alignment of rewards with the long-term performance of the bank and its
investments could reduce the incentive to

maximize profit in the short run and shrug off the possibility that the
bet sours just around the corner. If

banks do not want to address the problem, they risk Congressional
action. 

href='http://www.nytimes.com/2008/01/28/opinion/28mon4.html?ref=opinion&pagewanted=print'>Read

more.

Autos

name='4'>Judge Approves Delphi’s

Reorganization Plan

Bankruptcy Judge
Robert

Drain approved struggling auto parts
maker Delphi Corp.’s reorganization

plan, clearing the way for the company to emerge from chapter 11
bankruptcy protection, the Associated Press

reported on Friday. Judge Drain said on Tuesday that he would approve
the exit plan once

w:st='on'>
size='3'>Delphi drastically reduced
cash

bonuses for top executives, from a proposed $87 million to $16.5
million.

face='Times New Roman' size='3'>Delphi
size='3'>said that the company reduced the

payments to $16.5 million, and the board’s compensation committee
will decide how to distribute the

money.
size='3'>Delphi

size='3'>said that it plans to emerge from chapter 11 during the current

calendar quarter following the

syndication and closing of approximately $6.1 billion of exit financing
facilities and satisfaction of other

conditions. 
href='http://www.buffalonews.com/145/story/261571.html'>Read
more.

name='5'>Dura Seeks New Loan from Cerberus

Unit

Cerberus Capital
Management's distressed lending arm has offered

$170 million worth of new bankruptcy financing to Dura Automotive
Systems Inc., loans that could buy the

struggling parts maker more time to figure out how to emerge from
chapter 11, the Associated Press reported on

Friday. Bankruptcy Judge
size='3'>Kevin Carey

size='3'>granted Dura's bid for a speedy hearing on its revised
bankruptcy finance package, which includes a loan

from Cerberus's Ableco Finance LLC. If it clears a Tuesday hearing in
the U.S. Bankruptcy Court in

size='3'>Wilmington

size='3'>,

size='3'>Del., the revised

financing will give Dura an additional

six months to get out of bankruptcy, court papers say. Dura said that it

wants to tap $105 million of the Ableco

loans to replace its existing term loans, and borrow another $45 million

to pay down revolving loans and cover

fees and expenses on the financing. 
href='http://www.chron.com/disp/story.mpl/ap/fn/5486809.html'>Read

more.

w:st='on'>
name='6'>Bombay

face='Times








&

#13;



&am

p;amp;amp;#10;

&#13

;
New







Roman'> Sells

Name and

Intellectual Property

Bombay Co., the
home-furnishings retailer that filed for

bankruptcy in September and is being liquidated, has agreed to sell its
name and other intellectual property for

$2 million and a 25 percent share of future licensing proceeds,
the

size='3'>Fort Worth Star-Telegram reported on
Thursday. Hilco Consumer Capital, owner

of the Halston fashion brand, and an affiliate of Gordon Brothers Retail

Partners make up a joint venture that

will own the
face='Times








&

#13;



&am

p;amp;amp;#10;

&#13

;
New







Roman'

size='3'>Bombay name.
Haynes Boone attorney John

Penn, who is representing

w:st='on'>

size='3'>Bombay, also told
Bankruptcy Judge

face='Times New Roman' size='3'>Michael Lynn
size='3'>that the sale of the chain's inventory was

completed last Monday.

name='7'>Solutia Chapter 11 Emergence Likely to Be

Delayed

Solutia Inc. said Wednesday
that the effective date of its confirmed

plan of reorganization and its emergence from chapter 11 bankruptcy
protection will be delayed from the

previously anticipated Jan. 25 emergence date, CNN Money.com reported on

Saturday. Solutia was informed Tuesday

by the lead arrangers of its exit financing that they have not been able

to complete the exit financing they

committed to on Oct. 25, 2007, because of continuing problems in the
credit markets. The exit financing consists

of a $1.2 billion senior secured term loan facility, a $400 million
senior secured asset-based revolving credit

facility and $400 million aggregate principal amount of senior unsecured

notes. Solutia said that it believes the

ongoing conditions in the credit markets began long before Oct. 25 and,
therefore, it believes the lead

arrangers are required to fund their commitments on or before Feb.
29. 

href='http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22460841.htm'>Read

more.

name='8'>Banks' Motion to Stay Calpine Confirmation

Denied

In a victory for the
unsecured creditors of Calpine Corp.,

Bankruptcy Judge Burton
R. Lifland said

Thursday that he would not grant the temporary stay demanded by Calpine
shareholders Compania Internacional

Financiera SA, Coudree Global Equities Fund, Standard Bank of London and

Leonardo Capital Fund SPC,

Bankruptcy Law360
reported on Friday. The

banks requested the stay in December, claiming that Calpine's sixth
amended plan “undervalues the debtors

by billions of dollars, fails to meet the standards required for
confirmation, results in creditors being paid

more than in full and unnecessarily strips significant value from
shareholders.” 

size='3'>Judge Lifland, however, said that the banks had failed to prove

they would be harmed by the plan in its

current state. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=45208'>Read

more. (Registration required.)

name='9'>Senate Banking Chairman Pledges GSE Overhaul

after Loan Limits Are Raised

Senate Banking
Chairman

face='Times New Roman' size='3'>Chris
size='3'>Dodd (D-Conn.) assured Treasury

Secretary Henry Paulson on Friday that he would move legislation to
revamp oversight at Fannie Mae and Freddie

Mac as part of a deal to boost the loan limits for the two
government-sponsored enterprises,

face='Times New Roman' size='3'>CongressDaily
size='3'>reported on Friday. Dodd’s

assurance comes a day after Paulson struck an agreement with House
Democratic and GOP leaders on an economic

stimulus package that would increase GSE loan limits to 125 percent of
an area's median home price up to a

maximum of $730,000. The increase would remain in effect for one year.
The limit now stands at $417,000. Paulson

has been supportive of raising the loan limits only in conjunction with
passing legislation that would tighten

oversight at the two GSEs, which buy and securitize home mortgages on
the secondary market. Dodd said that he

gave Paulson his word that he would mark up GSE legislation soon as the
House has passed its

bill.

name='10'>District Court Rules against Refco Traders'

Claims

Three clients of a
subsidiary of bankrupt commodities broker Refco

have again lost a bid for priority payment of theoretical profits they
reaped trading in their accounts after

Refco filed for chapter 11,

size='3'>Bankruptcy

Law360 reported on Friday. The U.S. District
Court for the Southern District of New

York affirmed a bankruptcy court's ruling that the traders were not
entitled to administrative expense claims in

connection with the bankruptcy of Refco Inc. and affiliated companies
such as FXA. Paul Palley, David Bilodeau

and Mark Resnick held trading accounts with FXA, an online retail
foreign exchange business also known as

RefcoFX.com. Account balances on the system did not represent actual
money or investments held by Refco, but

instead stood for liabilities the company owed the client. Forex Capital

Markets LLC, or FXCM, which serviced

accounts for FXA, approached debtors regarding the potential acquisition

of the retail foreign exchange accounts

and related cash balances held by FXA, as well as a 35 percent in FXCM
that Refco Group Ltd. held. 

The three appellants asserted that the money their
accounts earned while trading post-petition

should be 100 percent satisfied as administrative claims. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=45085'>Read

more. (Registration

required.)

name='11'>Real Estate Woes Fuel Rise in

size='3'>New

Hampshire
size='3'>Filings

Experts say the mortgage
crisis is driving much of the increase in

personal bankruptcy filings in
w:st='on'>

size='3'>New

Hampshire, the Associated
Press reported on Saturday. The number of

chapter 13 filings increased from 516 in 2006 to 853 in 2007 and chapter

7 filings jumped from about 1,300 in

2006 to more than 2,000 last year. Bankruptcy attorney Richard Gaudreau
said the mortgage crisis is driving up

both numbers. He said a typical scenario is a couple who falls behind on

their mortgage when their adjustable

interest rate goes up and they're faced with having a house they can't
afford but can't sell. 

href='http://www.boston.com/news/local/new_hampshire/articles/2008/01/27/real_estates_woes_fuel_rise_in_personal_

bankruptcy_filings/'>Read more. 

name='12'>Sallie Mae Reaches Settlement over Scuttled

Buyout Deal

Student lending giant
Sallie Mae reached a settlement on Sunday

over its scuttled $25 billion buyout, ending months of legal fighting,
the

size='3'>New York

Times reported today. The company, formally
known as the SLM Corporation, agreed to

settle with its onetime buyers, which include the private equity firm J.

C. Flowers & Company, JPMorgan Chase

and Bank of America, in exchange for a deal to refinance about $30
billion in debt that was due next

month.  Both Sallie Mae’s lawsuit and
the buyers’ counterclaims will be

dismissed, and the merger agreement has been terminated. A trial in
Delaware Chancery Court had been scheduled

for December of this year. 

href='http://www.nytimes.com/2008/01/28/business/28deal.html?_r=1&oref=slogin&ref=business&pagewanted

=print'>Read more.

name='13'>Countrywide CEO Forfeits $37.5 Million upon

Stepping Down

Angelo Mozilo, chairman
and chief executive officer of Countrywide

Financial Corp., is giving up $37.5 million of severance pay, fees and
benefits in the face of pressure from

politicians who have berated him for continuing to collect large sums
from the mortgage lender even as millions

of Americans face the threat of foreclosure, the
face='Times New Roman' size='3'>Wall Street

Journal reported today. Countrywide said that
Mozilo will forfeit severance pay, fees

and perks that he was to have received upon his retirement. Mozilo is
expected to step down when Bank of America

Corp. completes its planned $4 billion acquisition of the
Calabasas,

w:st='on'>
size='3'>Calif., mortgage

lender. The sale is due to be completed in the third quarter, though
some investors say it may fall through if

Countrywide's business continues to deteriorate. 

href='http://online.wsj.com/article/SB120149066735721479.html?mod=hpp_us_whats_news'>Read

more. (Registration

required.)

International

name='14'>Details Emerge in French Bank Fraud

Case

French bank Societe
Generale said Sunday that the junior trader

accused of perpetrating one of the largest banking scandals in history
stole computer access codes and created

fraudulent e-mails to bet more than the bank's entire market worth on
risky investments, the

face='Times New Roman' size='3'>Washington Post
size='3'>reported today. The bank said

Jéróme Kerviel was gambling with more than $73 billion in
equities deals -- double the reported market

value of the bank -- when he was caught last week. The losses totaled at

least $7.14 billion, Societe Generale

said after scrambling in secret for five days to unwind Kerviel's
investments, according to the bank's

description of the fraud. Kerviel has been under interrogation by

Paris police since
turning himself in Saturday,

size='3'>Paris prosecutor
Jean-Michel Aldebert said. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/01/28/AR2008012800901_pf.html'>Read

more.

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/01/28/AR2008012800901_pf.html'>