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October 20, 2009
Dodd Introduces Legislation to
Regulate Bank Overdraft Fees
Bank customers who overdraw their checking accounts would get
new protections from excessive penalties under legislation introduced
yesterday by Senate Banking Committee Chairman Christopher Dodd
(D-Conn.), the Associated Press reported yesterday. Several major banks,
in anticipation of congressional action, have already said they will
start letting people opt out of overdraft programs, and others have said
that they will lower their fees. Among its provisions, Dodd's bill would
require banks to get customers' consent before enrolling them in an
overdraft protection program for ATM and debit card transactions, limit
the number of overdraft fees banks can charge to one per month and six
per year, require that fees be proportional to the cost of processing
the overdraft and require customers to be notified, by e-mail, text or
traditional mail, when they overdraw their account. Rep. Carolyn Maloney
(D-N.Y.) has introduced similar legislation in the House.
href='http://www.google.com/hostednews/ap/article/ALeqM5gxnKdk6KNylBR8LP_pejAi9T-e1QD9BEA6N83'>Read
more.
Analysis: At Rescued Banks, Executive
Perks Continue
Even as the nation's biggest financial firms were struggling
and the federal government was spending hundreds of billions of dollars
to save many of them, the companies as a group were boosting the perks
and benefits they pay their chief executives, according to an analysis
by the Washington Post. The firms, accounting for more $350
billion in federal bailout funds, increased these perks and benefits 4
percent on average last year, according to an analysis of corporate
disclosures filed in recent months. Some chief executives, such as
Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group,
the major small-business lender now on the brink of bankruptcy, each
received about $100,000 more than a year earlier for personal use of
corporate jets. Others saw an increase in the value of chauffeured
services, parking or personal security. In the meantime, Kenneth R.
Feinberg, the Obama administration official assigned to set pay for top
executives at seven of the companies receiving the most help, plans to
scrutinize all perks worth more than $25,000.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/19/AR2009101903546_pf.html'>Read
more.
Consumer Groups Face Fire on CFPA
Consumer groups could suffer another setback today on
legislation to create a Consumer Financial Protection Agency as Rep.
Gwen Moore (D-Wis.) appears close to getting her amendment adopted to
exclude providers of credit insurance from regulation by the CFPA,
CongressDaily reported today. The Treasury Department in its
proposal had included those industries under the proposed agency's
purview, arguing that their products are different than auto and home
insurance and deserve greater scrutiny. Moore is sponsoring the
amendment to exempt credit-insurance products at the behest of the
credit union industry, specifically CUNA Mutual Group, the nation's
largest credit-life insurance provider, located in Madison, Wis. Moore
contends that all insurance products should be treated the same and no
carriers should be singled out for greater scrutiny, but rather,
regulation should continue at the state level. Consumer activists are
lobbying against the exclusion, arguing that the industry needs to be
under CFPA oversight, noting that since 2004 consumers have been
overcharged $17.5 billion for credit insurance products.
href='http://www.house.gov/apps/list/speech/financialsvcs_dem/markup_100809.shtml'>Click
here to watch today’s mark-up hearing.
Chrysler Dealers Lose Bid to Appeal to
Second Circuit
Several former Chrysler LLC dealers have lost a bid to
immediately appeal to a circuit court a stay of several actions over the
loss of their franchise agreements during the car manufacturer's
restructuring and sale to Fiat SpA, Bankruptcy Law360 reported
yesterday. Bankruptcy Judge Arthur Gonzalez rejected
the dealers' motion for certification to immediately appeal to the U.S.
Court of Appeals for the Second Circuit, saying that the dealers
improperly attempted to appeal a routine enforcement order, rather than
earlier orders that actually decided the matter. Chrysler cut loose
nearly 790 Chrysler, Dodge and Jeep franchisees when Fiat bought it, and
some of them launched state court and administrative actions seeking
various forms of relief, according to Judge Gonzalez's opinion. Chrysler
Group LLC, the new company formed from Chrysler's “good”
assets, successfully won an injunction from the bankruptcy court halting
those actions, and the dealers moved for certification to be heard
directly by the Second Circuit, rather than the U.S. District Court for
the Southern District of New York, according to the account in the
opinion.
href='http://bankruptcy.law360.com/print_article/128927'>Read
more. (Subscription required.)
U.S. Trustee Objects to TMST Employee
Incentive Plan
The U.S. Trustee has objected to an emergency motion filed by
bankrupt real estate investment firm TMST Inc., formerly known as
Thornburg Mortgage Inc., for approval of its wind-down employee
incentive plan, Bankruptcy Law360 reported yesterday. In a
statement of opposition filed with the U.S. Bankruptcy Court for the
District of Maryland yesterday, the U.S. Trustee noted that the court is
still in the midst of a hearing on a motion to appoint a chapter 11
trustee, filed by the U.S. Trustee and joined by the unsecured
creditors’ committee. In the motion opposing TMST's wind-down
employee incentive plan, the U.S. Trustee argued that the court should
not approve an employee incentive plan before deciding whether to
appoint a case trustee, since doing so would usurp the chapter 11
trustee's power to control a “significant
expenditure.”
href='http://bankruptcy.law360.com/print_article/129182'>Read more.
(Subscription required.)
Erickson Retirement Communities files for
Chapter 11
Erickson Retirement Communities LLC filed for chapter 11
protection yesterday and reached an agreement to sell its assets to
Redwood Capital LLC, Reuters reported today. In a filing with the U.S.
Bankruptcy Court for the Northern District of Texas on Monday, Erickson
Retirement Communities listed both estimated assets and liabilities of
more than $1 billion. Maryland-based Erickson Communities, which was
founded in 1983, currently includes 19 campuses and houses more than
22,000 people and has about 12,000 employees.The case is In re
Erickson Retirement Communities LLC, U.S. Bankruptcy Court, District
of Northern Texas, No 09-37010.
href='http://www.reuters.com/article/bankruptcyNews/idUSBNG46699620091020'>Read
more.
Creditors' Language Added to RH
Donnelley Ch. 11 Plan
Print and online telephone directory company R.H. Donnelley
Corp. on Monday filed an amended chapter 11 restructuring plan, complete
with several changes to its proposed plan requested by its unsecured
creditors, Bankruptcy Law360 reported yesterday. The company also
added language urging potential voters to weigh that knowledge when
deciding whether to approve the restructuring plan, which aims to slash
$6.4 billion in debt from the company's bottom line as well as $500
million in annual interest payments. R.H. Donnelley plans to accomplish
this by exchanging all existing note debt to equity as well as some new
notes to certain noteholders. In addition, the company plans to pay down
$655 million in debt. Under the agreement, existing equity would be
canceled and about $6 billion in unsecured bond indebtedness would be
exchanged for all the equity in the restructured company and $300
million in unsecured notes.
href='http://bankruptcy.law360.com/print_article/129191'>Read
more. (Subscription required.)
Groups Press for Extension of Home Tax
Credit
Three major groups representing the housing and real estate
sectors wrote to administration officials today urging them to support
an extension and expansion of the $8,000 first-time homebuyer tax
credit, set to expire Nov. 30, CongressDaily reported yesterday.
'Our fragile economy is just beginning to show signs of recovery. We
should not jeopardize that recovery by letting this tax credit expire,'
states the letter from the Mortgage Bankers Association, National
Association of Realtors and National Association of Home Builders. The
letter is addressed to Treasury Secretary Timothy Geithner, HUD
Secretary Shaun Donovan and National Economic Council Chairman Lawrence
Summers. The groups are pressing the White House and Congress to extend
the credit for another year, while making all homebuyers eligible,
increasing the credit amount and making the funds available for closing
costs. Lawmakers are unlikely to approve the full extent of the proposal
because of cost, but they might extend and perhaps expand the credit.
Senate Banking Chairman Christopher Dodd and Sen. Johnny Isakson (R-Ga.)
have a plan to keep the credit at $8,000 for another seven months while
removing the first-time buyer requirement and doubling the income
threshold to $150,000 per person or $300,000 per household before the
credit phases out.
Grupo Mexico Hits Hurdle in Asarco
Case
Grupo Mexico SAB hit a hurdle in its plans to regain control of
U.S. subsidiary Asarco LLC as U.S. District Court Judge Andrew S. Hanen
indicated he will consider a broad array of issues before ruling in the
case, the Wall Street Journal reported today. Included for his
consideration: the complaints of union miners opposed to working for
their erstwhile Mexican employer, largely for concerns over safety. The
judge also has been asked to consider the Mexican copper miner's past
performance as an owner of Asarco, which is based in Tucson, Ariz. Judge
Hanen last year found Grupo Mexico guilty of defrauding creditors by
diverting rich copper assets Asarco owned in Peru to a different Grupo
Mexico unit. Grupo Mexico has appealed the verdict. The Mexican company
has since presented a plan to pay all Asarco creditors in full and has
argued that it deserves a second chance to run the U.S. company.
href='http://online.wsj.com/article/SB10001424052748703816204574483490034605488.html'>Read
more. (Subscription required.)
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