size='3'>October Consumer Bankruptcy Filings Top 100,000 for First Time
Since Law Change in 2005

U.S. consumer bankruptcy
filings increased 40 percent nationwide in October from the same period
a year ago, according to ABI, relying on data from the National
Bankruptcy Research Center (NBKRC). The overall October consumer filing
total of 106,266 also represented a 20 percent increase from September.
Chapter 13 filings constituted 32.6 percent of all consumer cases in
October, a slight decrease from September. The October consumer filing
total also represents the first time that bankruptcies have topped
100,000 since the Bankruptcy Abuse Prevention and Consumer Protection
Act went into effect in October 2005. The 880,076 consumer filings
through the first 10 months of 2008 (Jan. 1 Ð Oct. 31) have already
eclipsed the filing total of 822,590 for all of last year.

href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Template=/MembersOnly.cfm&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click

here to view the charts.

name='2'>Homeowners Wait as Relief Plan Drags

The White House and the
Federal Deposit Insurance Corp. are at odds over how to structure a
federal foreclosure-prevention program, the Wall Street Journal
reported today. The expectation that a new president could immediately
redraw the design and scope of any plan has further delayed matters. The

FDIC has been developing a proposal, which some estimate could help
between two and three million homeowners, designed to encourage banks to

rework troubled loans by providing a partial federal guarantee for
losses on modified mortgages that meet specific criteria, people briefed

on the proposal said. Under the plan, the government would cover roughly

half the loss on reworked loans that went into foreclosure. The plan
would use between $40 billion and $50 billion from the government's $700

billion financial-market rescue fund to create these loss-sharing
agreements between banks and the government. The White House is
reviewing several ideas, including a new one that would further expand
the role of the U.S. Department of Housing and Urban Development.

href='http://online.wsj.com/article/SB122575783560595185.html?mod=testMod#'>Read

more. (Subscription required.)

name='3'>U.S. Treasury Weighs Purchasing Stakes in More
Firms

The Treasury Department
is considering using more of its $700 billion rescue fund to buy stakes
in a broad range of financial companies, not just banks and insurers,
after tentative signs of the program's success, the Wall Street
Journal reported today. In focus are companies that provide
financing to the broad economy, including bond insurers and specialty
finance firms such as General Electric Co.'s GE Capital unit, and CIT
Group Inc. Of the original $700 billion made available to Treasury,
officials set aside $250 billion for equity investments. It has already
invested $163 billion in a range of banks including some of the nation's

largest, such as Goldman Sachs Group Inc. and Bank of America Corp. That

number will likely expand at the expense of the asset-purchase plan, but

by exactly how much is unknown.
href='http://online.wsj.com/article/SB122577147422696357.html'>Read
more. (Subscription required.)

name='4'>Effectiveness of AIG's $143 Billion Rescue
Questioned

A number of financial
experts now fear that the federal government's $143 billion attempt to
rescue troubled insurance giant American International Group may not
work, and some argue that company shareholders and taxpayers would have
been better served by a bankruptcy filing, The Washington Post
reported yesterday. The Treasury Department acted quickly to keep AIG
from going bankrupt on Sept. 16, and in the past seven weeks, AIG has
drawn down $90 billion in federal bailout loans. But some key AIG
players argue that bankruptcy would have offered more structure and
greater protections during a time of intense market volatility. Ann
Rutledge, a credit derivatives expert and founding principal of R&R
Consulting, said she is not sure how badly the financial system would
have been rocked if the government had let AIG file for bankruptcy
protection. But she fears that the government is papering over the
problem with a quick fix that was not well planned. 'What we see now are

a lot of games by the government to keep these institutions going with a

lot of cash,' she said. 'This is to fill holes in companies' balance
sheets, and they're trying to hold at bay the charges that our financial

system is insolvent.' Early this year, investors had begun privately
demanding that AIG pay off its billion-dollar guarantees. But in
mid-September, when the demands for cash reached a public crescendo, AIG

had to admit that it didn't have enough cash on hand to meet the
obligations.

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/02/AR2008110202150.html'>Read

more.

Autos

name='5'>GM, Ford, Chrysler Shut Out of Auto-Bond Market for Fifth
Month

Ford Motor Co., GMAC LLC
and Chrysler LLC were shut out of the market for bonds backed by auto
loans for the fifth straight month, adding pressure on the automakers to

consider mergers and seek taxpayer funding, Bloomberg News reported
yesterday. Sales of auto bonds slumped to $500 million last month,
compared with $9 billion in October 2007, according to Merrill Lynch &
Co. data. The cost to sell the debt surged to record highs over
benchmark rates as concern that car owners won't be able to make loan
payments amid job losses, higher food and fuel costs and falling
property values. The credit market seizure is forcing automakers to cut
back on loans to dealers and customers, contributing to a slowdown that
may shrink U.S. auto sales this year to the lowest level since 1993.

href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aaBkIuBgIhkw&refer=home'>Read

more. (Subscription required.)

name='6'>Automakers Report Grim October Sales

Vehicle sales in the
United States tumbled to multi-decade lows in October as tightened
credit markets and an economic slowdown kept consumers away from
dealerships, the New York Times reported today. General Motors
yesterday reported a 45 percent decline in its sales, and Chrysler said
its sales were down 35 percent. The Ford Motor Co. said that it sold
30.2 percent fewer cars and trucks. Toyota Motor also said that its
sales were 23 percent lower, despite offering no-interest financing and
large discounts on many models. Sales were down 33 percent at Nissan and

25.2 percent at Honda.

href='http://www.nytimes.com/2008/11/04/business/04auto.html?ref=business&pagewanted=print'>Read

more.

name='7'>Bank Survey Shows Credit Is Growing Even
Tighter

The Federal Reserve said
yesterday that its latest quarterly survey of bank lending practices
found high numbers of banks reporting tighter credit standards across a
broad range of loan products, the Associated Press reported. Nearly 60
percent of banks responding to the survey said they had tightened
lending standards on credit card debt. The latest Fed survey was taken
in the first two weeks of October, too soon to reflect possible effects
of the government's program to inject about $250 billion into banks by
directly buying shares in them as part of a broader financial rescue
effort. The Fed found that 85 percent of the domestic banks responding
to the survey reported that they had tightened their lending standards
for a major type of business loan known as 'commercial and industrial,'
up from 60 percent in the June survey. Nearly all banks, 95 percent,
reported tighter standards for the lines of credit they extend to large
and medium-size businesses.

href='http://www.nytimes.com/2008/11/04/business/economy/04fed.html?ref=business&pagewanted=print'>Read

more.

name='8'>Judge Paves Way For Outsourcing at Frontier
Airlines

Bankrupt Frontier
Airlines has won wage concessions from its mechanics and maintenance
workers union, and will also be allowed to furlough certain employees
during lean times and then recall them when more work is available,
Bankruptcy Law360 reported yesterday. Judge Robert D.
Drain of the U.S. Bankruptcy Court for the Southern District of New
York granted Frontier's relief request on Friday. Though the company
will continue to do heavy maintenance work with its own mechanics for
now, it may eventually outsource 129 positions to Aeroman, a
subcontractor located in El Salvador, according to court documents.
href='http://bankruptcy.law360.com/articles/75306'>Read more.
(Subscription required.)

Judge

Approves VeraSun's Bankruptcy Financing

Bankruptcy Judge
Brendan L. Shannon approved ethanol-maker VeraSun Energy Corp's
use of a rare bankruptcy financing maneuver to obtain $220 million in
funds from two groups of existing lenders so it can operate during its
reorganization, Reuters reported today. In court documents filed Monday,

the company said it could not find financing any other way and asked a
judge to approve the maneuver, known as 'priming,' which offers extra
protections for the existing lenders. The company said it recieved
commitments for up to $215 million in debtor-in-possession financing
from some lenders and senior secured noteholders. The ethanol maker also

said the court approved the borrowing of up to $40 million from those
facilities, which will help it to continue operations.

href='http://www.reuters.com/articlePrint?articleId=USN0342766020081104'>Read

more.

name='10'>Circuit City Plans to Close 155 Stores

Consumer electronics retailer
Circuit City said yesterday that it was closing about 20 percent of its
American stores in an effort to return to profitability, the Associated
Press reported. The Richmond, Va.-based company said that it would close

155 of its more than 700 stores in 12 markets, including Phoenix and
Atlanta, by Dec. 31, laying off about 17 percent of its domestic work
force. Circuit City also said it would further reduce store openings and

planned to work with landlords to renegotiate leases, lower rent or
terminate agreements.

href='http://www.nytimes.com/2008/11/04/technology/04circuit.html?ref=business&pagewanted=print'>Read

more.

name='11'>Home Interiors Requests Trustee to Speed Up
Sale

Bankrupt Home Interiors &
Gifts Inc. has asked a judge to appoint a U.S. Trustee to oversee its
chapter 11 case in the hopes of expediting the sale of its business
operations and avoiding delays caused by spats between creditors,
Bankruptcy Law360 reported yesterday. The debtors, which recently

announced plans to sell their operating units as going concerns, said a
trustee could resolve concerns by unsecured creditors over the integrity

of the sales process, which, the creditors allege, is biased toward
company insiders. Home Interiors announced Sept. 19 that it would seek
court approval to sell its operating units, including some that did not
file for bankruptcy. The company's assets in the United States, Canada
and Puerto Rico would be offered for sale as a single unit, according to

the plan. Its Mexican unit Ñ Home Interiors de Mexico Ñ will be offered
for sale separately. Two other subsidiaries, Domistyle Inc. and Laredo
Candle, would also be sold, either separately or together.
href='http://bankruptcy.law360.com/articles/75291'>Read more.
(Subscription required.)

name='12'>GE Provides $250 Million in Exit Financing to Vertis
Communications

Vertis Communications has

received $250 million in exit financing from GE Commercial Finance as
part of the print advertising company's restructuring and merger with
American Color Graphics Inc., Bankruptcy Law360 reported
yesterday. Baltimore-based Vertis and Brentwood, Tenn.-based American
Color, plus several affiliates of both, filed voluntary chapter 11
petitions in mid-July in order to facilitate Vertis' acquisition of
American Color. In July, GE Commercial Finance also provided the company

a $380 million DIP credit facility. Read more.
href='http://bankruptcy.law360.com/articles/75289'>Read more.
(Subscription required.)

International

name='13'>Spain's Housing-Rescue Plan Lets Homeowners Defer Loan
Payments

Faced with an economy
that is slipping into recession and the highest unemployment rate in the

European Union, the Spanish government Monday unveiled what may be a
first-of-its-kind program to allow out-of-work homeowners to defer
mortgage payments, the New York Times reported today. Under the
mortgage-relief program, unemployed homeowners and some retirees could
postpone payment of half their monthly bill for two years starting in
January Ñ as long as the amount deferred each month was no more than 500

euros, or about $635. The offer would apply to mortgages of up to
170,000 euros and could affect about half a million people, Spanish
Prime Minister JosŽ Luis Rodr’guez Zapatero said yesterday. The Spanish
government will underwrite the deferred payments, which may be spread
over 10 years, Zapatero said. He did not provide any estimate of the
ultimate cost to banks, or whether the government would help cover it.

href='http://www.nytimes.com/2008/11/04/business/worldbusiness/04peseta.html?ref=business&pagewanted=print'>Read

more. (Registration required.)

name='14'>Finance Chiefs of Europe Reject Package for
Stimulus

European finance
ministers yesterday ruled out a joint stimulus package to revive the
region's economy and vowed instead to coordinate national policies as
they try to limit the fallout from a recession on consumers and
companies, Bloomberg News reported. 'We do not believe that in the euro
area we need a general revival package, a sort of traditional program
designed to stimulate the economy,' Finance Minister Jean-Claude Juncker

of Luxembourg said. Finance chiefs of countries using the euro met hours

after the European Commission slashed its growth forecasts and predicted

that the economy would stagnate next year. While President Nicolas
Sarkozy of France has called for a joint package to help the region
combat the economic slump, the ministers indicated that they favored a
looser system of 'coordinated' measures. European Union countries have
already begun planning measures to jump-start their own economies, with
Germany preparing a two-year program of investments and incentives to
provide a $64 billion stimulus. The European monetary affairs
commissioner, Joaqu’n Almunia, said such plans were not at odds with the

organization's approach.

href='http://www.nytimes.com/2008/11/04/world/europe/04euro.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

more. (Registration required.)