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October 21, 2009
Senate Panel Considers Bill to Ease Bankruptcy Requirements for Debtors Overwhelmed by Medical Debt
The Senate Judiciary Subcommittee on Administrative Oversight and the Courts held a hearing yesterday on legislation to carve out an exception for people whose medical bills were the main cause of their financial distress, the Associated Press reported yesterday. Those consumers meeting the classification of medical debtors under legislation sponsored by subcommittee chair Sen. Sheldon Whitehouse (D-R.I.) would be allowed to waive the means test and credit counseling requirements, protect their homes from creditors with an exemption of $250,000 and be given the option of paying attorneys' fees when they are on firmer financial ground after completing the bankruptcy. Whitehouse's approach was backed by Elizabeth Edwards, a cancer patient and wife of former Sen. John Edwards of North Carolina. Sen. Jeff Sessions (R-Ala.) said that he disagreed with the bill's elimination of an income-related test for medical debtors only. Kerry Burns of Coventry, R.I., testified at the hearing yesterday, urging senators to adopt the proposal as she described the pain of losing a child to cystic fibrosis and having to file for bankruptcy due to their son's health care bills. Click here to read the prepared witness testimony.
name='2'>Delaware Catholics Support Wilmington Diocese Bankruptcy Filing
Catholics in Wilmington, Del., agreed with Bishop W. Frances Malooly's decision to put the diocese in chapter 11 protection, Bloomberg News reported yesterday. Malooly said on Monday that the filing was prompted by a breakdown in talks aimed at settling 131 lawsuits alleging sexual abuse by priests. Damage awards to abuse victims would further deplete the resources of the diocese, which has shut parishes and schools in recent years to save money. The case is In re Catholic Diocese of Wilmington, 09BK13560, U.S. Bankruptcy Court, District of Delaware, (Wilmington). Read more.
name='3'>Documents Raise Skepticism on Hill about Bank of America
Congressional investigators think that internal documents turned over by Bank of America last Friday show that its executives were alarmed by mounting losses at Merrill Lynch well before shareholders voted to approve the merger, The Washington Post reported today. Investigators also think that the documents, combined with prior testimony and fresh interviews with a key executive, suggest that BoA chief executive Kenneth D. Lewis used the threat of backing out of the government-backed deal as leverage for billions more in taxpayer bailout money, the sources said. Among the issues being probed are whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, the bank's misgivings about the merger and its negotiations with the government for additional support, as well as billions of dollars in bonuses handed out to Merrill executives just before the deal closed on Jan. 1. Shareholders voted on the deal Dec. 5. The House Oversight and Government Reform Committee has been conducting its own probe for several months and recently received more than 1,000 pages of documents from Bank of America, including e-mails between executives discussing the transaction. The latest e-mails and other documents - about 20 pages - represent a fraction of the thousands of documents in the committee's possession. Bank of America denied Tuesday that it had withheld any meaningful information from investors. It has said that significant losses at Merrill did not come to light until after the shareholder vote. Read more. (Free subscription required.)
Geithner: Core TARP Programs Ending
The Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery, Treasury Secretary Timothy Geithner said Tuesday, Reuters reported today. 'We are now at the point where we can begin to wind down the programs that really defined TARP in its initial stages,' Geithner said, referring to the Troubled Asset Relief Program. Instead, the administration will focus on 'more-targeted programs directed at what are the principal areas where there's still weakness in access to credit,' he said, specifically citing housing and small businesses. Geithner said the administration has not yet made a formal decision on whether to extend the life of the overall bailout program once it passes its scheduled expiry at the end of this year. A Treasury official said that three programs will be shut down by year's end: the Capital Purchase Program that was used to pump funds into banks, a rejigged version called the Capital Assistance Program that was never tapped and the Targeted Investment Program that supplied $40 billion of additional capital to prop up Citigroup and Bank of America. Read more.
name='5'>Mets Entity May Be Sued for $48 Million Profit from Madoff Firm
An entity tied to the New York Mets baseball team and its owner Sterling Equities Inc. might be sued for withdrawing $47.8 million more from Bernard Madoff's firm than it deposited with the con man, according to a Bloomberg report today. Mets LP placed a total of $522.7 million in two Madoff accounts and withdrew $570.5 million over an unspecified period, said Irving Picard, the court-appointed liquidator, in a filing Oct. 19 in U.S. Bankruptcy Court in New York. Picard has sued Madoff's biggest investors and longtime beneficiaries, including hedge fund firms, philanthropists and family members, seeking the return of about $15 billion in what he calls fake profit from the fraud. Sterling Equities, led by Mets principal owner Fred Wilpon, hasn't been sued. When Madoff's $65 billion fraud collapsed, Mets LP had $829,230 in the accounts, according to the filing. The entity filed claims for that amount with the bankruptcy court, both of which Picard denied. The denial blocks Mets LP from sharing in money recovered by Picard on behalf of Bernard L. Madoff Investment Securities LLC's estate. Mets LP filed an objection without giving the size of the claims or how much money it invested. Read more.
name='6'>Maryland Racing Commission Voices Concern over Magna Bankruptcy Auction
The Maryland Racing Commission voiced concern Tuesday for the coming bankruptcy auction of Magna Entertainment Corp.'s three racing properties in the state - Pimlico Race Course, Laurel Park and the Bowie Training Center - during its regular monthly meeting at Laurel Park, The Baltimore Sun reported Tuesday. 'The most pressing concern,' said executive director Mike Hopkins, 'is No. 1, that whoever purchases the racetracks certainly abides by the will that the Preakness continues to run and never leaves. And No. 2, they would all feel much more relaxed if whoever purchases the properties purchases all three of them and that they not be sold separately.' Bids for the properties must be received by Nov. 2 and released to the state Dec. 7 for consideration of its Right of 1st Refusal to buy the Maryland tracks. The Commission also approved racing dates for Ocean Downs for 40 days of live racing between Jan. 1 and Dec. 31, 2010. Dates for Maryland's thoroughbred tracks are to be finalized at next month's commission meeting Nov. 10. Read more.
name='7'>Creditors Get Higher Bid for Bankrupt Philadelphia Papers
The group allied with Brian P. Tierney, chief executive of the bankrupt Philadelphia newspapers, on Tuesday raised its bid to keep control of the papers to at least $86.5 million, up from $66.5 million, according to a New York Times report today. Tierney and his backers, who are Philadelphia-area investors, want to prevent The Inquirer and Daily News from becoming the property of the banks and hedge funds that hold their senior debt. Tierney's group hopes a higher offer will win over enough of those creditors to prevent them from forming a consensus about taking over the papers. Some of the financial institutions have said they intend to make a credit bid while putting up little or no cash. The senior creditors are owed about $300 million. The local investors would also cover $25 million in costs associated with emerging from bankruptcy, and provide the papers with a $17 million line of credit. Their offer expires on Oct. 27. Read more.
name='8'>Morgan Stanley Back in Black
Morgan Stanley posted its first quarterly profit in a year, Fortune magazine reported today. The New York-based investment firm said Wednesday that it earned $757 million, or 38 cents a share, for the third quarter, which is down sharply from the year-ago profit of $7.7 billion, or $7.38 a share, but it was much better than the 30 cents per share profit that analysts surveyed by Thomson Reuters were expecting. Revenue fell to $8.7 billion from $18 billion a year earlier. Revenue at the global wealth management unit nearly doubled, to $3 billion, but revenue at the institutional securities business plunged 69% to $5 billion. The firm, which has been focusing on building the global wealth business, said its investment banking business was strong, but two trading businesses reported quarterly losses thanks to accounting charges tied to the increasing value of the firm's debt as credit markets strengthened. 'Morgan Stanley continued to build momentum across our business this quarter, as we made important progress in executing key strategic initiatives,' CEO John Mack said. Since the old Wall Street melted away last fall, Morgan Stanley had posted three straight quarterly losses totaling $13 billion. Read more (subscription required).
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