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December 11,
2009
House Rolls Back Proposed
Restrictions on Derivatives Trades
A bipartisan coalition in the House voted late
yesterday to make it easier for corporations to engage in complex
derivatives trades without government restrictions, eroding the reach of
proposed regulations to govern Wall Street, the Associated Press
reported today. The legislation imposes new regulations on derivatives,
aiming to prevent manipulation in and bring transparency to a $600
trillion global market. However, an amendment by Rep. Scott Murphy
(D-N.Y.), adopted 304-124 yesterday, exempted businesses that trade in
derivatives, not as financial speculators, but to hedge against market
fluctuations such as currency rates or gasoline prices. The amendment
also provided an exception for businesses that are not considered too
big to be a risk to the financial system. A Democratic effort to make
more companies subject to derivatives regulation failed by a vote of
279-150. Democrats today hoped to fend off an amendment that would
eliminate the creation of an independent Consumer Finance Protection
Agency. The amendment was offered by Rep. Walt Minnick (D-Idaho) and
seven other centrist Democrats. Democratic leaders also were pushing
changes that would add further restrictions on banks and financial
institutions, including allowing bankruptcy judges rewrite mortgages to
lower homeowners' monthly payments.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/10/AR2009121000492_pf.html'>Read
more.
Report: Mortgages
Foreclosure Relief Still Slow to Help Homeowners
The government's foreclosure relief program is
sputtering, according to government data released yesterday showing that
the pace of help being offered to struggling homeowners slowed last
month and many borrowers are at risk of losing the aid they have already
received, the
size='3'>Washington Post reported today. The
program, known as Making Home Affordable, faces a frustrating set of
challenges. Only about 4 percent, or 31,382, of the 728,000 homeowners
currently in the program have moved from the initial, or 'trial' phase,
to a permanent loan modification. That leaves thousands of borrowers in
limbo and in jeopardy of losing their mortgage help because they have
not turned in enough paperwork to prove they qualify. Already about
30,000 homeowners who entered the program have been dropped because they
did not qualify after all, did not submit required documentation in time
or failed to make all of their payments, according to data released by
the Treasury Department. Under the program, borrowers' mortgage payments
are lowered to 31 percent of their income for an average savings of $550
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/10/AR2009121003834_pf.html'>Read
more.
The House Judiciary Subcommittee on
Commercial and Administrative Law will hold a second hearing today at 11
a.m. ET titled “Foreclosures — Will Voluntary Mortgage
Modification Help Families Save Their Homes?” Among the witnesses
will be ABI Resident Scholar Prof. Adam Levitin of
Georgetown University Law.
href='http://judiciary.house.gov/hearings/hear_091211.html'>Click
here for the prepared witness testimony.
House Moves Measure to Help
GM, Chrysler Dealers
The House of Representatives approved a measure on
yesterday that aims to help auto dealers axed during the restructuring
of General Motors Corp. and Chrysler LLC by compelling arbitrators to
consider a broader range of economic factors in termination
appeals,
size='3'>Bankruptcy Law360 reported yesterday.
The amendment, offered in the House by Majority Leader Steny Hoyer
(D-Md.) and the Senate by Sen. Dick Durbin (D-Ill.), was added to a
massive omnibus appropriations bill that passed the House by a vote of
221-202. Durbin and Hoyer unveiled their proposal on Tuesday in response
to GM's Dec. 3 announcement that it would begin a review process in
mid-January for the 2,600 dealerships it terminated as part of its
government-sponsored trip through bankruptcy this summer. The company
said that it would give all terminated dealers a list of criteria used
in selecting them for the chopping block, a face-to-face review process
for dealers currently winding down who have not yet terminated their GM
sales and service agreements and a binding arbitration option for
dealers who dispute their termination on a purely business basis. The
Hoyer-Durbin amendment calls on arbitrators to consider dealers'
profitability over the last four years and to address concerns that GM
and Chrysler slashed relatively successful franchises for nonbusiness
reasons, as well as the dealer's current economic viability. The
dealership would be evaluated to see how well it was able to meet the
manufacturer's performance criteria, in addition to how it fits into
post-bankruptcy business plans and goals.
href='http://bankruptcy.law360.com/print_article/138538'>Read more.
(Subscription required.)
Citadel Broadcasting Looks
to File for Bankruptcy
Citadel Broadcasting Corp., the third-largest radio
broadcaster in the U.S., is preparing to file for bankruptcy by the end
of the year, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Under the deal presented to lenders this week,
Citadel would file a pre-packaged chapter 11 plan supported by many
creditors. Lenders owed $2 billion would swap a substantial amount of
that debt for around 99.5 percent of the equity in a reorganized
company, these people said. The restructuring would give the group of
some 90 lenders control of Citadel. The lenders have until Tuesday to
sign the deal, which would cut Citadel's debt load to about $760
million.
href='http://online.wsj.com/article/SB10001424052748703514404574588213894996246.html'>Read
more. (Subscription required.)
href='http://www.abiworld.org/webinars/2009/Media_Company_Distress/index.html'>Click
here to listen to an ABI teleconference held on Tuesday on media
company distress.
More than four years after filing the largest
environmental bankruptcy in U.S. history, facing down more tens of
thousands of asbestos claims and coughing up $1.79 billion for cleanup
and restoration, copper miner Asarco LLC has exited chapter 11
protection,
size='3'>Bankruptcy Law360 reported yesterday.
Asarco emerged from bankruptcy on Wednesday, which marked the effective
date of the chapter 11 plan that Bankruptcy Judge Andrew Hanen confirmed
in November. Asarco's plan administrator was given more than $3.6
billion to pay off creditors — $2.2 billion of which came from
Asarco parent Grupo Mexico SAB de CV in the form of $720 million in cash
and $1.5 billion in bank financing. The $1.79 billion cleanup and
restoration sum will go towards past and future costs incurred by state
and federal agencies at more than 80 sites in 19 states that were
contaminated by mining operations, according to the U.S. Environmental
Protection Agency.
href='http://bankruptcy.law360.com/print_article/138675'>Read more .
(Subscription required.)
Lehman Balks at Discovery
Bid by Investors
Lehman Brothers Holdings Inc. has objected to a
request by the lead plaintiffs in a securities class action against the
beleaguered financial giant to modify the automatic bankruptcy stay in
order to obtain discovery,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Lehman filed an objection on Wednesday to
the securities plaintiffs' motion to modify the stay in the U.S.
Bankruptcy Court for the Southern District of New York, saying that the
motion should be denied as premature because the securities litigation
is at an early stage. The plaintiffs argue that a limited modification
of the automatic stay is warranted because numerous government entities
and other parties already have access to evidence that is relevant to
claims in the securities action.
href='http://bankruptcy.law360.com/print_article/138554'>Read more.
(Subscription required.)
Judge Clears Way for Idearc
to Exit Chapter 11
With major creditor groups now supporting its
reorganization plan, phone book publisher Idearc Inc. expects to emerge
from chapter 11 at the end of December, having shed more than $6 billion
in debt,
size='3'>Bankruptcy Law360 reported yesterday.
Idearc said yesterday that it had completed a two-day confirmation
hearing for its reorganization plan, and received word from Bankruptcy
Judge Barbara J.
Houser that it was time to draw up a final
confirmation order. The judge also approved a global settlement
agreement reached in November that puts to rest all adversary
proceedings arising from the chapter 11 process and quells the
creditors’ objections to the massive restructuring, Idearc said.
The case is
face='Times New Roman' size='3'>In re Idearc Inc.
size='3'>, case number 09-31828, in the U.S. Bankruptcy Court for the
Northern District of Texas.
href='http://bankruptcy.law360.com/print_article/138801'>Read more.
(Subscription required.)
Goldman’s Curbs on
Bonuses Aim to Quell Uproar
With France joining Britain in proposing a steep tax
on bank bonuses, Goldman Sachs moved yesterday to quell the uproar over
its resurgent profits and pay, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Bowing to calls for restraint in tough economic
times, Goldman said that its most senior executives would forgo cash
bonuses this year. Instead, the 30 executives will be paid in the form
of long-term stock — an arrangement that means they will not get
big year-end paydays, but one that could turn out to be enormously
lucrative if Goldman’s share price rises over time. The shift at
Goldman locks up the executives’ rewards for five years and
enables Goldman to claw back the bonuses in the event the bank’s
business sours. Goldman did not say how much it would pay the
executives, suggesting the bank would continue a practice — widely
followed in investment banking — of allocating roughly half its
annual revenue for compensation. It is uncertain if the move, which
applies only to a small number of Goldman employees, will be enough to
placate critics of Wall Street, including some policy makers in
Washington, where Kenneth R. Feinberg, the special master of
compensation, will release new pay rulings on
Friday.
href='http://www.nytimes.com/2009/12/11/business/11pay.html?_r=1&ref=business&pagewanted=print'>Read
more.
U.S. Retail Sales Exceed
Forecasts in November
Sales at U.S. retailers rose more than expected in
November as consumers spent more on gasoline and a wide range of other
goods, Reuters reported today. The Commerce Department said that total
retail sales increased 1.3 percent last month, the largest advance since
August, after rising by a downwardly revised 1.1 percent in October.
Compared with November last year, sales were up 1.9 percent, the first
year-on-year gain since August 2008, the Commerce Department said.
Excluding motor vehicles and parts, retail sales increased 1.2 percent
in November, the largest increase since January, after being flat in
October. Economists had expected a 0.4 percent increase. Core retail
sales excluding autos, gasoline and building materials rose 0.6 percent,
advancing for a fifth straight month.
href='http://www.nytimes.com/2009/12/12/business/economy/12econ.html?ref=business&pagewanted=print'>Read
more.
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