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July 28, 2009
U.S. Effort to Modify
Mortgages Falters
An Obama administration effort to reduce home
foreclosures by lowering the mortgage payments of struggling borrowers
before they fall behind is failing to help as many people as expected,
the
size='3'>Wall Street Journal reported today.
Some homeowners are being told they must be behind on their payments to
receive help, which runs counter to the aim of the program. In other
cases, delays are so long that borrowers who are current on their
payments when they ask for a loan modification are delinquent by the
time they receive one. There is also confusion about who qualifies.
Administration officials have summoned executives of 25
mortgage-servicing companies to Washington, D.C., to discuss efforts to
help borrowers, both delinquent and at risk. So far, more than 200,000
borrowers who are delinquent or at risk of default have received trial
modifications -- the first step. Administration officials said the
modification program could eventually help between 3 and 4 million
people.
href='http://online.wsj.com/article/SB124873920406585271.html#mod=testMod'>Read
more. (Subscription required.)
In related news, the Joint Economic Committee will
convene a hearing today at 10 a.m. ET to investigate the ongoing
foreclosures for non-prime borrowers in the residential housing market,
according to a committee press release. The
hearing, “Current Trends in Foreclosures and What More Can Be Done
to Prevent Them,” will feature a report by the Government
Accountability Office on previously undisclosed loan-level data,
revealing current trends in the non-prime foreclosure
crisis. In addition, the Committee will
review past federal regulatory failures and discuss efforts by the Obama
Administration and Congress to reduce foreclosure rates, direct some of
those borrowers into fixed rate FHA loans and prevent a similar future
crisis.
href='http://jec.senate.gov/index.cfm?FuseAction=Press.PressReleases&ContentRecord_id=addc8b55-5056-8059-76e0-0a0c29fb448f'>Click
here for more information.
on Medical Debt and Executive Compensation
The House Judiciary Subcommittee on Commercial and
Administrative Law will hold a hearing today at 11 a.m. ET titled,
“Medical Debt – Is Our Healthcare System Bankrupting
Americans?” Witnesses to be announced;
href='http://judiciary.house.gov/hearings/hear_090728.html'>click
here for more information.
Additionally, the House Financial Services Committee
will hold a mark-up hearing today on H.R. 3269,
the “Corporate and Financial Institution Compensation Fairness Act
href='http://www.house.gov/apps/list/speech/financialsvcs_dem/fcmrk_072809.shtml'>Click
here for additional details.
Delphi Board Approves Plan
to Exit Bankruptcy
Delphi’s board yesterday approved an offer to
split the company between General Motors, its onetime parent and its
lenders that would lift it out of bankruptcy, the
face='Times New Roman'>New York
Times reported today. The deal would supersede
an earlier agreement engineered by the government between GM and
Platinum Equity, a private equity firm, which was announced nearly two
months ago. Under the terms of the new deal, which was completed over
the last two days, the lenders would forgive about $3.4 billion of what
they are owed in exchange for taking over the bulk of the
supplier’s assets. The lenders would also pay cash to keep Delphi
operating. GM would pay a little more than $3 billion to take back four
North American factories and Delphi’s steering business, including
$1.75 billion to finance Delphi’s operations. The lenders and GM
would share distributions from asset sales or a public offering of
stock, with the lenders expected to reinvest most of the money they
would receive in Delphi. GM will share some of its proceeds with the
Pension Benefit Guaranty Corp., the agency that is taking over
Delphi’s pension plans at a cost of $6.2 billion.
href='http://www.nytimes.com/2009/07/28/business/28delphi.html?_r=1&ref=business&pagewanted=print'>Read
more.
SEC Issues New Rules on
Short-Selling
The Securities and Exchange Commission issued new
rules to govern short-selling, promising investors fresh information
about the volume and velocity of negative bets placed against companies,
the
size='3'>Wall Street Journal reported today.
However, the agency dropped a requirement that hedge funds disclose
details of short positions to regulators. The SEC's new rules are a
middle ground as they finalize temporary rules requiring traders to
complete a short sale within four days. They create more disclosure, but
still delay the information by a month. They also aggregate
short-position data for individual stocks but keep individual money
manager positions confidential. The SEC said that self-regulatory
organizations, such as the Financial Industry Regulatory Authority, will
begin posting on their Web sites 'in the next few weeks' more
information about short sales, including something akin to a ' ticker
tape' that will show, on a one-month delay, the exact time at which a
trader places a short-sale and the size of the position. The anonymous
data would enable investors and others to determine, forensically, if
traders were in some way piling on a company in an improper, coordinated
href='http://online.wsj.com/article/SB124871727822084391.html#mod=testMod'>Read
more. (Subscription required.)
Tribune Co. has asked the court in its chapter 11 case
to give management four additional months to file a reorganization plan,
the
size='3'>Chicago Tribune reported today.The
company is scheduled to deliver a plan Aug. 4, but wants to extend that
deadline to Nov. 30.Tribune Co. has worked closely with its creditors
toward a plan to reduce nearly $13 billion in debt. Tribune Co., which
filed its case in early December, has won approval to extend the
deadline once.
href='http://www.chicagotribune.com/business/chi-tue-tribune-extension-jul28,0,268331.story'>Read
href='http://www.chicagotribune.com/business/chi-tue-tribune-extension-jul28,0,268331.story'>
Pipeline in $350 Million Deal
Bankruptcy Judge
face='Times New Roman' size='3'>Mary F. Walrath
size='3'>yesterday approved the sale of Flying J Inc.’s 700-mile
common carrier pipeline system to operator Magellan Midstream Partners
LP in an approximately $350 million deal that brings the oil company one
step closer to emerging from chapter 11,
face='Times












New






Roman'
size='3'>Bankruptcy Law360 reported yesterday.
The Ogden, Utah-based Flying J had been trying to sell the pipeline
leading from the Gulf Coast to near El Paso, Texas, ever since the oil
company and six affiliates filed for chapter 11 protection in December
2008 in an effort to reorganize their balance sheet following a
liquidity crunch prompted by plummeting oil prices and frozen credit
markets. Closing on the deal is set for Wednesday.
href='http://bankruptcy.law360.com/articles/113488'>Read
more. (Subscription required.)
Security Bank Expects
Liquidation after Seizure
Security Bank Corp. said that it plans to file for
chapter 7 liquidation, days after regulators seized its six Georgia
banks, the
size='3'>Wall Street Journal reported today.
The six Georgia banks had assets of about $2.8 billion and deposits of
$2.4 billion. The banks were doomed by their real-estate loan exposure
in metropolitan Atlanta, an area plagued by foreclosures and declining
home values. Since last August, 21 banks have failed in Georgia, more
than in any other U.S. state.
href='http://online.wsj.com/article/SB124870225144183751.html'>Read
more. (Subscription required.)
Tronox Creditors Target
JPMorgan over Spinoff Debt
Tronox Inc.'s unsecured creditors have filed an
adversary suit against a number of banks — including JPMorgan
Chase NA, SocieteGenerale SA and Citibank NA — involved in a
secured debt facility related to the chemical company's 2006 spinoff
from Kerr-McGee Corp., which left Tronox saddled with massive
environmental liabilities,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Tronox's unsecured creditors’
committee filed its adversary complaint on Friday, targeting numerous
prepetition lenders over a November 2005 secured debt facility under
which Tronox borrowed $200 million. While Tronox incurred $200 million
in secured debt, it didn't retain any of the proceeds, which were either
transferred to Kerr-McGee or used to pay the fees and expenses of the
borrowing, according to the complaint. The spinoff — completed on
March 31, 2006 — allowed Kerr-McGee to get rid of massive legacy
liabilities, and strip $785 million out of Tronox 'tax free on the way
out the door,' the committee claims. Less than three months later,
Anadarko Petroleum Corp. offered $18 billion to acquire Kerr-McGee, and
the transaction went through in August 2006.
href='http://bankruptcy.law360.com/print_article/113322'>Read
more. (Subscription required.)
Executive Testifies on
Senators' Mortgages
The Senate Ethics Committee has interviewed a former
Countrywide Financial executive who testified under oath that Sens.
Christopher J. Dodd (D-Conn.) and Kent Conrad (D-N.D.) were aware that
they were accessing a special program to give below-market-rate
mortgages to the powerful and famous when he arranged their loans,
the
size='3'>Washington Post reported today. The
statements from Robert Feinberg, who worked as a loan officer at the
mortgage lender, stand in direct contradiction to statements made by
Dodd and Conrad, who maintain that they did not know they were part of
the Countrywide program created by its chief executive at the time,
Angelo Mozilo. Battered by a swift decline in the market for subprime
mortgages, Countrywide accepted a takeover offer from Bank of America in
early 2008. Mozilo faces civil fraud and insider-trading charges in
connection with Countrywide's lending practices.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072703260_pf.html'>Read
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072703260_pf.html'>
Analysis: Proposed
Government Overhaul Puts a New Spin on GE Capital
General Electric Co.'s finance unit has benefited from
government support, but investors are concerned with the Obama
administration’s regulatory proposal that would put tighter
oversight over GE Capital, the
face='Times












New






Roman'
size='3'>Wall Street Journal reported today.
Among other things, the administration has proposed eliminating GE
primary's financial regulator, the Office of Thrift Supervision. It has
also called for reviewing, with an eye toward strengthening capital
standards, a change that could require GE Capital to put more money
aside and lend less. Before the financial crisis, GE Capital had swelled
to nearly half of the conglomerate's earnings. Fears about potential
losses in the unit drove GE shares to 17-year lows earlier this year. GE
is lobbying hard to amend the proposal or limit its reach; it sought to
defuse one potential flash point last week by saying it is weaning
itself from federal guarantees on its debt issues.
href='http://online.wsj.com/article/SB124873366097484967.html'>Read
more. (Subscription required.)
Bankrupt Quarterback
Reinstated by NFL
NFL commissioner Roger Goodell reinstated Michael Vick
yesterday after the former Atlanta Falcons quarterback served 18 months
in prison for running a dogfighting ring, the Associated Press reported
yesterday. Following his prison sentence and suspension from the NFL,
Vick filed for bankruptcy protection last July listing assets of about
$16 million and debts of more than $20 million. He has a hearing about
his plan to repay his creditors on Friday in Newport News, Va. That plan
is built around his ability to make NFL-type money again. He's unlikely
to command anything close to the 10-year, $130 million contract he once
had with the Atlanta Falcons.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/28/AR2009072800348_pf.html'>Read
more.
NHL to Back Bids to Keep
Franchise in Arizona
Deputy Commissioner William Daly said that the
National Hockey League will support any bidder that wants to keep the
bankrupt Phoenix Coyotes hockey team in Arizona, and it is up to the
court to decide which offer is best, Reuters reported yesterday. The NHL
has resisted efforts by Coyotes owner Jerry Moyes to sell the team to
Canadian billionaire Jim Balsillie, the co-chief executive of BlackBerry
maker Research in Motion Ltd., who has offered $212.5 million for the
team and wants to move it to southern Ontario. NHL officials have said
the bankruptcy filing was made to avoid requirements for league approval
on any franchise relocation. The Coyotes, which filed for bankruptcy in
May, have drawn an offer of up to $148 million from Jerry Reinsdorf,
owner of the Chicago White Sox baseball and Chicago Bulls basketball
teams. An auction is scheduled for Aug. 5 for those who, like Reinsdorf,
want to keep the team in Arizona.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072701898_pf.html'>Read
more.
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