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September 5, 2003
Business, Consumer Groups Comment on FTC Identity Theft
Report
Business and consumer groups expressed opposing views regarding the
FTC's identity theft report issued on Wednesday, CongressDaily
reported. The American Bankers Association (ABA) said the study, which
found that 9.9 million Americans have been victims of identity theft,
shows that Congress needs to pass a bill pre-empting state regulation of
credit bureaus and seeking to offer new identity theft protections.
'Congress must pass this crucial piece of legislation into law during
the upcoming session,' ABA President Steve Bartlett said. But consumer
groups said the survey shows the need to permit states to pass their own
measures. 'Despite the fact that millions of Americans are victimized by
identity theft each year, Congress is getting ready to pass a bill that
provides only weak protection for consumers and blocks states from
enacting tougher reforms,' said Rob Schneider, director of Consumers
Union's project on financial privacy, according to the newswire.
Pension Agency's Deficit Reached $5.7 Billion in July
The record shortfall at the government's pension-insurance program rose
by another $300 million in the last quarter to hit $5.7 billion as of
July 31, the program's director told Congress on Thursday, the
Associated Press reported. The financially troubled Pension Benefit
Guaranty Corp. (PBGC) was designated a 'high risk' agency by
congressional investigators in July. Executive Director Steven Kandarian
told the House Education and Workforce Committee, which oversees pension
issues, that changes to pension funding rules and to the agency itself
were needed. 'We should not pass off the cost of today's pension
problems to future generations,' Kandarian said. 'If companies do not
fund the pension promises they make, someone else will have to pay.'
The agency's financial troubles stem from an increase in the number
of large, failing plans it has been forced to take over from struggling
private employers. The shortfalls have been concentrated in the airline,
steel and manufacturing industries. The PBGC is funded with premiums
paid by companies that sponsor pension plans and returns on those
investments. The agency receives no tax dollars. Low interest rates, the
sluggish economy, stock-market losses and an increase in retirees all
have hurt the private pension system. The PBGC estimates that almost 80
percent of the 32,000 pension plans offered by single private employers
are underfunded. The projected deficit for all of those plans was more
than $400 billion as of last year -- a record, Kandarian said, reported
the newswire.
Under-funded pension liabilities at financially strained U.S.
companies may double to more than $80 billion this year, increasing the
burden on the PBGC and the risk to taxpayers, said the head of the
federal program, Bloomberg News reported. Unfunded benefits at companies
that meet the agency's criteria for financial difficulty, half of which
are in the airline and steel industries, totaled $35 billion last year,
said Kandarian.
MCI
MCI Creditors Approve Reorganization Plan
MCI won support from the overwhelming majority of its creditors for its
reorganization plan, which will pay most of them about 36 cents for
every dollar owed to them, the Wall Street Journal reported. In a
filing last week with the U.S. Bankruptcy Court for the Southern
District of New York, the Ashburn, Va.-based phone company reported that
voting on the plan concluded with creditors holding 96.5 percent of the
company's $41 billion in debt supporting the company's plan. The court
is scheduled to begin a hearing on Monday on whether to confirm the
plan. MCI filed for chapter 11 bankruptcy-court protection in July 2002
after admitting to the largest accounting fraud in U.S. history.
According to the company's tally, most groups of creditors approved
the plan by margins greater than 90 percent. The overwhelming approval
of the company's creditors was expected since representatives of most
groups of creditors signed off on the plan this spring, reported the
online newspaper.
WorldCom Creditors Agree to Suspend Call-routing
Investigation
WorldCom Inc.'s creditors' committee agreed to a request by the U.S.
Justice Department to suspend attempts to investigate competitors that
accuse the telephone company of illegally routing calls, Bloomberg News
reported. The agreement was announced in a U.S. Bankruptcy Court filing.
In August, the creditors asked the court for permission to seek
documents and interview witnesses from WorldCom's accusers, which
include AT&T Corp. The U.S. Attorney in New York is investigating
allegations that Ashburn, Va.-based WorldCom, which is seeking to emerge
from bankruptcy by October, improperly avoided fees for using
local-phone networks, reported the newswire.
U.S. Judge May Be Asked to Stop Oklahoma MCI Case
A lawyer representing MCI's former chief financial officer said on
Thursday he may ask a federal judge overseeing the securities fraud case
against his client in New York to stay Oklahoma's state prosecution,
Reuters reported. Irv Nathan, who represents former executive Scott
Sullivan, told U.S. District Judge Barbara Jones that such a measure
might be necessary to ensure his client receives a fair trial in the
federal case. He said the Oklahoma charges, which were brought last
week, would 'very substantially interfere' with his ability to defend
his client in the federal indictment filed a year ago. 'Ultimately I
want this court to consider...whether this court in the interest of
preserving a fair trial will stay the Oklahoma proceeding,' he said.
Jones said that while she was not prepared to consider a motion seeking
her intervention at this point, she left the door open for such a filing
at a later date, reported the newswire.
Xcel Sees NRG Out of Bankruptcy by End of November
Power and gas utility Xcel Energy Inc. on Thursday said it expects the
reorganization plan for its bankrupt NRG Energy unit to be approved by
the end of November, Reuters reported. NRG filed for chapter 11
bankruptcy protection last May after amassing $9.2 billion in debt
during a decade of aggressive expansion into unregulated power
generation and trading. Its financial condition deteriorated in late
2001, hurt by falling power prices and the collapse of energy trader
Enron Corp. Richard Kelly, chief financial officer of Minneapolis-based
Xcel, said at an investor conference that the company is now waiting for
the U.S. Securities and Exchange Commission to approve the plan of
reorganization, expected by the middle of this month. The plan will then
be sent to creditors for approval, after which Xcel is hopeful the judge
in NRG's bankruptcy case will confirm it. The plan then needs to survive
a 10-day appeal period, reported the newswire.
Twinlab Corp. Finds Buyer, Files for Bankruptcy Protection
Hauppauge, N.Y.-based Twinlab Corp., a maker of vitamins and nutritional
supplements, filed for bankruptcy after a drop in sales tied to its
decision to stop selling weight-loss products containing ephedra,
Bloomberg News reported. Twinlab listed $91.5 million of assets and
$116.5 million of debts in chapter 11 papers filed in the U.S.
Bankruptcy Court in Manhattan. The company agreed to sell most of its
assets to Grand Rapids, Mich.-based Ideasphere Inc. for $65 million cash
plus the assumption of about $3.7 million in liabilities, the newswire
reported.
Earlier this year, the company stopped selling ephedra, which has been
linked to heart problems and some deaths. Demand for the substance,
which some athletes use to boost energy and enhance performance, fell
after the compound was linked to the February death of 23-year-old
Baltimore Orioles pitcher Steve Bechler. Twinlab has been reducing
staff, shedding some assets and consolidating manufacturing and
distribution facilities to stay in business. Last week, Twinlab said it
was in talks with potential acquirers and would delay filing financial
results for the second quarter, Bloomberg reported.
Enron Says Refund Can't Come from Collateral
Bankrupt Enron Corp. on Thursday challenged a federal order to refund
$32.5 million for violating electricity trading rules during the
California energy crisis of 2000-01, Reuters reported. An administrative
law judge with the Federal Energy Regulatory Commission (FERC) ordered
the refunds in July after finding Enron set up an arrangement to staff
El Paso Electric Co.'s trading desk as a way to increase Enron's market
share and give it access to sensitive market information, the newswire
reported. The July order, issued by Judge Carmen Cintron, is now before
FERC commissioners who can reject, accept or modify it. El Paso Electric
agreed in a settlement several months ago to pay $15.5 million and
forfeit power trading privileges for two years.
In a filing with the FERC, Enron said the agency had no right to
order retroactive refunds. And even if the FERC upholds the judge's
order, no payment could be made unless a petition claim was filed with
the federal bankruptcy court overseeing Enron's case, Enron said,
reported the newswire.
California Energy Regulators Approve Refund
The California Public Utilities Commission (CPUC) on Thursday approved a
$1 billion refund to customers of the state's three investor-owned
utilities, Reuters reported. The refund stems from about $1 billion in
extra bonds issued by the state's Department of Water Resources in 2002
to pay for emergency purchases of power supplies. The purchases were
initiated in 2001 during the energy emergency. The refund, in the form
of a one-time bill credit, will go to customers of PG&E Corp.'s
Pacific Gas & Electric Co. subsidiary, Edison International's
Southern California Edison unit and Sempra Energy's San Diego Gas &
Electric utility unit. CPUC President Michael Peevey said the refund
will show up on utility bills in the next few days. Business customers
could get up to an $80,000 refund, he said.
'We are very pleased. We are putting the energy crisis behind us and
putting money back in the hands of consumers,' Peevey told a telephone
news conference. The crisis, which pushed Pacific Gas & Electric
into bankruptcy and forced the CPUC to rescue Southern California
Edison, was marked by electricity blackouts and manipulation of power
prices by wholesale energy traders, reported the newswire.
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