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August 22, 2007
name='1'>Consumers Seeing Higher Rates, Harsher Terms on Credit
Cards and Other Loans
As mortgage loans begin
to tighten, some consumers are also finding it harder and more expensive
to get other types of credit, the
size='3'>Wall Street Journal reported today.
Some lenders, such as USAA, are nudging up credit-score requirements
across their auto loans, credit cards and personal loans. Bank of
America Corp. and Capital One Financial Corp. recently raised fees and
interest rates for some of their credit-card customers. And this month,
Citigroup Inc.'s CitiFinancial Auto started charging higher auto-loan
rates for borrowers with less-than-perfect credit. For the most part,
lenders say the changes aren't directly tied to the mortgage mess, but
reflect concerns about an economic slowdown and uncertainty about
interest rates. Still, some lenders are becoming more cautious about
extending credit in weaker housing markets and to people who may have
exposure to certain riskier mortgages.
href='http://online.wsj.com/article/SB118773982869404682.html'>Read
more. (Registration required.)
Mortgage
Lending
name='2'>First Magnus Financial Corp. Files for Bankruptcy
Protection
First Magnus Financial
Corp., the second-largest privately held
w:st='on'>
size='3'>U.S.
size='3'>mortgage company, filed for bankruptcy less than one week after
it shut down its lending operations, Bloomberg News reported yesterday.
First Magnus had $942.1 million in assets and $812.5 million in debt as
of May 31, according to its chapter 11 petition filed today in federal
bankruptcy court in
w:st='on'>
size='3'>Tucson
w:st='on'>
size='3'>Ariz.
said on Aug. 16 that it shut down its lending operation after investors
quit buying the company's loans. Today's court filing makes it the 14th
lender since December to seek bankruptcy protection and one of more than
90 to either shut down or seek a buyer. The case is
face='Times New Roman' size='3'>In re First Magnus Financial
Corp. 07-01578, U.S. Bankruptcy Court, District
of Arizona (
face='Times New Roman'
size='3'>Tucson
href='http://quote.bloomberg.com/apps/news?pid=20601087&sid=a7fS2e25kF9o'>Read
more.
name='3'>Bush Administration Looking to FHA to Help Borrowers Avoid
Foreclosure
As the subprime-mortgage
crisis ripples through the broader housing market, the Bush
administration is looking to the Federal Housing Administration (FHA) to
help low- and middle-income homeowners avoid foreclosure, the
Wall Street Journal
reported today. President Bush has balked at allowing
mortgage giants Fannie Mae and Freddie Mac to buy more mortgages for
their portfolios to ease the credit crunch triggered by rising defaults
on home loans to borrowers with poor credit. But he said earlier this
month that he supports giving the FHA more flexibility to help those
facing foreclosure refinance their homes. Senate Banking Chairman
size='3'>Chris
recently that FHA reform will be among his top priorities, and a bill
passed by committee is set to head to the full House this fall. Treasury
Secretary Henry Paulson, meanwhile, has instructed staff to work with
the Housing and Urban Development department, which oversees FHA, to
find ways to help individuals caught in the fallout of the credit
crunch.
href='http://online.wsj.com/article/SB118774225399404746.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='4'>Troubled Loans Increase 49 Percent at Federally Regulated
Thrifts
The Office of Thrift
Supervision reported yesterday that troubled assets -- loans that were
90 days or more past due or had been repossessed -- at federally
regulated savings-and-loan associations in the second quarter rose 49
percent from a year earlier to the highest level in 14 years, the
Wall Street Journal
reported today. The agency also said that the number of
'problem thrifts,' or companies rated poorly by regulatory standards,
had risen to 10, up from four in the second quarter of 2006. Still,
officials said that while the 836 regulated thrifts continue to feel
stress from housing and liquidity markets, their overall health remains
strong, based on earnings and capital. The thrifts make one of every
four mortgages, specializing in prime or jumbo loans. Stress in their
loan portfolios suggests that more types of loans -- not just subprime
mortgages -- are under pressure. Officials also said that the thrift
industry had $14.2 billion in troubled loans, up from $9.5 billion a
year earlier.
href='http://online.wsj.com/article/SB118774396239104778.html?mod=hpp_us_whats_news'>Read
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name='5'>Ginnie Mae Wants $450 Million Back from
AHM
The Government National
Mortgage Association (Ginnie Mae) has asked a bankruptcy court judge to
force American Home Mortgage Investment Corp. to hand over almost
$450 million worth of
mortgage loans it is servicing,
size='3'>Bankruptcy Law360 reported yesterday.
Ginnie Mae, a wholly owned corporation in the U.S. Department of
Housing and Urban Development, runs a mortgage-backed securities
program that allows loan issuers to start or buy groups of mortgage
backing securities that it guarantees. American Home Mortgage Servicing,
a subsidiary of American Home Investment Corp., began servicing Ginnie
Mae-backed loans in July 2004, when the lender was known as Columbia
National Inc. American Home Mortgage Servicing had serviced 1,546
groups, or pools, of Ginnie Mae loans and had an outstanding balance of
$449 million that was backed by 5,800 loans by July 31, Ginnie Mae
said.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=33064'>Read
more. (Registration required.)
name='6'>Beazer Homes Seeks to Prevent Declaration of
Default
Beazer Homes USA Inc. is
asking a federal court to prevent its bondholders from declaring
the
size='3'>Atlanta
builder in default of its debt, the Wall Street Journal reported
today. Beazer yesterday filed a complaint in U.S. District Court
in
size='3'>Atlanta against
U.S. Bank National Association, the trustee for bondholders, saying they
are 'seizing upon' the company's delay of its quarterly Securities and
Exchange Commission filing to threaten Beazer with a 'declaration of
default.' Beazer said none of its bondholders have yet made such a
declaration. Beazer believes the bondholders' next step will likely be
to demand 'accelerated full repayment' of the company's $1.3 billion in
debt, according to the federal complaint, which was disclosed in a
filing late yesterday with the SEC. Beazer delayed filing its quarterly
report on Aug. 10 after finding accounting irregularities related to
land development and home completion costs. The accounting problems were
brought to light during an internal investigation into Beazer's mortgage
href='http://online.wsj.com/article/SB118775146956305028.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
name='7'>Central Banks Inject More Cash
Amid persistent fears of
a global credit crisis, central banks worldwide continued pumping cash
into money markets as the Federal Reserve
injected $3.75 billion, following the $3.5 billion it put into markets
Monday, the
size='3'>Wall Street Journal reported today.
The European Central Bank allotted €275 billion ($371 billion) in
one-week funds, which is €46 billion more than it estimated banks
need for routine business. And the Bank of Japan put 800 billion yen
($6.96 billion) into its market, following an infusion of one trillion
yen Monday. Meanwhile,
w:st='on'>
size='3'>Russia
central bank hurried to buoy the weakening ruble and keep money rates
stable. In a rare move,
w:st='on'>
size='3'>Russia's
central bank sold around $4.5 billion on the market yesterday to help
support the ruble, traders said. It also injected 87.8 billion rubles
($3.4 billion) into the market through two one-day securities repurchase
href='http://online.wsj.com/article/SB118769149419503941.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
Autos
name='8'>Dana Works to Tie Up Supplier Claims
Bankrupt auto parts maker Dana
Corp. has continued to work to tie up its suppliers’
face='Times New 

Roman'>
size='3'>claims, reaching an agreement with one supplier and requesting
mediation with a second,
size='3'>Bankruptcy Law360 reported yesterday.
In the settlement with Federal-Mogul, Dana agreed to pay the company
over $805,000 and, in return, Dana was granted a $577,000 reclamation
claim in Federal-Mogul’s bankruptcy case in the U.S. Bankruptcy
Court for the District of Delaware. The agreement puts to rest a payment
dispute between the two companies since Dana entered chapter 11
in
size='3'>March 2006. Dana also had its request to send its claims
dispute with L&W Engineering Co. to mediation over a $250,000 claim.
L&W said in a February 2007 claim request that Dana owed it payment
for tubing supplies sent to the auto parts maker after it filed for
bankruptcy protection.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=33032'>Read
more. (Registration required.)
name='9'>Ford CEO Looks to Return Profitability by
2009
Ford CEO Alan Mulally
said that he would stick with the restructuring program that was in
place when he arrived nearly a year ago, adding that his goal is to
return Ford’s North American operations to profitability by 2009,
the New York
Times reported today. Mulally’s biggest
change, executives at the company say, has been to push Ford’s
leaders to look at competition across the industry, not just across town
at General Motors or Chrysler. With gasoline at $3 a gallon in parts of
the country and a housing slump putting pressure on vehicle sales, auto
companies are predicting the weakest industry sales since 1998. Ford,
which earned a surprise profit of $750 million during the second
quarter, said that it expects the rest of this year to be difficult.
Ford is still plagued by the slump in sales of profitable big vehicles
like the Explorer sport utility and the F-series pickup. Analysts say it
will be 2011 before Ford completes a top-to-bottom makeover of its
lineup, drawing from the vehicles it builds around the world, like the
C-Max crossover in
European Focus. Ford will introduce yet another crossover, the Flex,
next year.
href='http://www.nytimes.com/2007/08/22/business/22ford.html?ref=business&pagewanted=print'>Read
more.
name='10'>Trusts Seek $2 Billion from Advisers to
Refco
Trusts representing
creditors of the defunct futures and commodities broker Refco sued its
legal, accounting and financial advisers yesterday for more than $2
billion over the company’s collapse, Reuters reported today. The
Refco Litigation Trusts said they sued Banc of America Securities,
Credit Suisse Securities and Deutsche Bank Securities in the circuit
court of
face='Times New Roman' size='3'>Cook County
size='3'>,
size='3'>Ill. The lawsuit
also names the accounting firms Ernst & Young,
PricewaterhouseCoopers and Grant Thornton; the law firm of Mayer, Brown,
Rowe & Maw; certain loan participants; and Refco insiders. The
lawsuit, the latest in a series of suits stemming from the
company’s collapse, contends that Refco’s fraudulent scheme
could have worked only “with the active assistance of
Refco’s cadre of outside auditors, professionals and
advisers.”
href='http://www.nytimes.com/2007/08/22/business/22refco.html?pagewanted=print'>Read
more.
name='11'>Sun-Times Stock Drop-off Worries Hollinger
Bondholders
Hollinger Inc.
bondholders have asked a
w:st='on'>
size='3'>U.S.
size='3'>bankruptcy court for a boost in the collateral that protects
their $93 million investment in Hollinger, which now consists of stock
in Sun-Times Media Group Inc., the Associated Press reported yesterday.
The Sun-Times stock has 'dropped precipitously in value' and it doesn't
look like Hollinger will be able to make a $6 million interest payment
Sept. 4, noteholders said in court papers filed Monday. Those papers
were filed in the bankruptcy court in
face='Times New Roman' size='3'>Wilmington
size='3'>,
size='3'>Del.
for chapter 15 protection on Aug. 1, the same day it began insolvency
proceedings in
w:st='on'>
size='3'>Canada
Hollinger's main asset is its 19.7 percent equity stake and 70 percent
voting control of the Sun-Times newspaper group.
href='http://biz.yahoo.com/ap/070821/hollinger_sun_times.html?.v=1'>Read
more.
name='12'>Bayou Collects $9.5 Million for Alleged Investor
Fraud
Bayou Group LLC will collect
$9.5 million in the latest round of settlements from
face='Times New 

Roman'>
size='3'>investors that allegedly participated in a securities fraud
when they sold investments just before the fund went under two years
ago, Bankruptcy Law360
reported yesterday. If approved by the court, the
settlements will resolve 17 suits the hedge fund filed as part
of its chapter 11 bankruptcy
last year against investors who all were advised by Lydian Wealth
Management Co. in what Bayou called a “fraudulent Ponzi
scheme,” profiting while contributing to the alleged fraud. Among
the largest payouts will come from Insight Multi-Strategy Funds LLC,
Schilit Family Partnership and the Jewish Federation of Greater
Washington, which will pay $1.6 million, $1 million and $914,000
respectively. Objections to the settlements are due Friday, and a
hearing is scheduled for Aug. 30. Meanwhile, said Bayou, one suit
against another Lydian-advised investor is still pending.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=32965'>Read
more. (Registration required.)
name='13'>Delta Names New CEO
Delta named Richard H.
Anderson, the former head of Northwest and a Delta board member, as its
chief executive yesterday, succeeding Gerald Grinstein on Sept. 1,
the New York
Times reported today.
w:st='on'>
size='3'>Anderson
returning to the airline industry, where he spent 20 years, after two
years as an executive vice president at the UnitedHealth
Group.
size='3'>Anderson, a lawyer, spent 14 years at Northwest, where he was
chief executive, before leaving in 2004 for UnitedHealth. Previously, he
worked for three years at Continental Airlines. He said that there were
no plans for his new and old airlines to combine. Instead,
size='3'>Anderson said that
Delta would keep pushing to expand internationally and would remain
vigilant over its costs and balance sheet, now that it has emerged from
bankruptcy protection.
href='http://www.nytimes.com/2007/08/22/business/22air.html?ref=business&pagewanted=print'>Read
more.
International
name='14'>GE Considers Selling Japanese Consumer-Credit
Unit
General Electric Co., the
world's largest provider of private-label credit cards, may sell its
Japanese consumer-credit
w:st='on'>
size='3'>unit
face='Times New Roman' size='3'>Lake
after a government clampdown on fees eroded earnings in
the industry, Bloomberg News reported yesterday. GE's possible exit
follows an increase in bad loans in
w:st='on'>
size='3'>Japan
$170 billion consumer-finance industry, after lawmakers and courts
reduced the maximum interest that can be charged and gave borrowers more
scope for demanding refunds. Promise Co.,
w:st='on'>
size='3'>Japan's
third-largest consumer lender, offered to buy rival Sanyo Shinpan
Finance Co. last month for about $1 billion.
size='3'>Lake ranks sixth among consumer lenders in
w:st='on'>
size='3'>Japan
size='3'>after Citigroup Inc., according to data from the Liaison Group
of Consumer Finance Companies, an industry body. The value of
size='3'>Lake
fallen to about 700 billion yen ($6.1 billion) as of March 31 from 860
billion yen at the end of 2005, Liaison Group estimates.
href='http://quote.bloomberg.com/apps/news?pid=20601087&sid=a7fS2e25kF9o'>Read
more.
TROUBLED COMPANIES IN THE
NEWS
The business news
articles below are taken from the U.S. Business Journal’s Daily
Summary of Troubled & Fast Growing U.S. Companies which is published
by Bastien Financial Publications.
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800-407-9044—use
Code 37
Capital One
Financial Corp. plans to shut down most of its GreenPoint
mortgage business and keep only a small piece of the struggling unit, as
a result of market conditions. Capital One gained GreenPoint, which was
valued at more than $6.3 billion three years ago, when it purchased
North Fork Bancorp of Melville, N.Y. three years ago for $13.2 billion.
Capital One,
w:st='on'>McLean
w:st='on'>Va.
charges of $860 million.
Cognex
Corp., a
w:st='on'>Natick
vision systems for healthcare, consumer goods and automotive
applications, reported its first quarter net declined 47%–to
$4.6 million, on a 14% revenue decline–to $50.9 million.
Countrywide
Financial Corp.’s stock price sank another 7.5% despite
its efforts to reassure its depositors that their funds are safe at its
Countrywide Bank unit. Countrywide, the
w:st='on'>
w:st='on'>U.S.
lender as measured by loan volume, is currently under the watchful eye
of the Office of Thrift Supervision, which has set up a full-time desk
at Countrywide’s headquarters in Calabasas, Ca. Recently,
Countrywide said that it cut 500 jobs at its Full Spectrum and Wholesale
lending units.
Merge
Technologies Inc., a
w:st='on'>West Allis
w:st='on'>Wi
software and services, said it delayed releasing its results for the
period ended 6/30 but it didn’t set a date by which it expects to
release the results.
National Coal
Corp., a
w:st='on'>Knoxville
second quarter net loss of $6.5 million, on a 22% revenue
decline–to $18.9 million.
PainCare
Holdings Inc., an Orlando, Fl. provider of healthcare
services, reported a second quarter net loss of $61.6 million, on a 12%
revenue decline–to $9.6 million. The results include an
impairment charge of $15.2 million.
SunTrust
Banks Inc.,
w:st='on'>Atlanta
w:st='on'>Ga.
jobs from its payroll, more than 7% of its workforce, by the end of next
year. Related costs will result in pretax charges of $45 million, to be
taken in the third quarter. The downsizing is part of an ongoing
restructuring that has so far included selling off about 9% of its stock
in Coca-Cola Co.
Tarpon
Industries Inc., a Marysville, Mi. manufacturer of steel
racks and tubing, reported a second quarter net loss of $2.3 million, on
a 38% revenue decline–to $13.2 million.
Trans-Lux
Corp., an eighty-year-old
w:st='on'>Norwalk
w:st='on'>Ct.
displays, reported a second quarter net loss of $260,000, on a 4%
revenue decline–to $13.2 million