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March 27, 2009
id='1' name='1'>Democrats Unveil Bill Cracking Down on Predatory
Lending; Senate Banking Committee to Consider Credit Card
Protections
House Democrats yesterday
unveiled legislation that would place strict standards on brokers,
lenders and Wall Street firms to curb predatory mortgage lending, with
tougher consumer-protection language than was included in a version that
passed the chamber in the 110th Congress,
size='3'>CongressDaily reported today.Rep.
Brad Miller (D-N.C.) said that given the upheaval in the home mortgage
market, as well as the foreclosure rate, he decided to impose even
stronger provisions upon the industry than contained in a bill that
passed the House in 2007. Miller’s latest bill would curtail the
use of a practice known as 'yield spread premium' (YSPs) for subprime
loans. The new language would ban YSPs and impose tougher standards on
secondary-market participants to allow borrowers to pursue legal claims
if they have loans with abusive terms.The House Financial Services
Committee will mark up the bill on Tuesday.
In related news, legislation to crack
down on abusive practices by credit card issuers will go before the
Senate Banking Committee on Tuesday, one day before a House Financial
Services subcommittee is scheduled to consider its version of a bill,
Reuters reported Thursday.The bills would strengthen regulations to
protect consumers from unfair practices, building on rules issued in
December by the Federal Reserve that prohibit billing practices using
balances from previous monthly statements, give cardholders more notice
when their interest rates will increase and provide clearer
disclosures.
Report:
Savings Rate Continues to Be High
The Commerce Department reported
today that Americans spent at a slower rate in February as their income
fell and they saved money at a historically elevated level to cushion
against the recession, according to the
size='3'>Wall Street Journal today.Personal
saving as a percentage of disposable personal income was 4.2 percent in
February, the Commerce Department said after registering 4.4 percent in
January. The last time the saving rate exceeded 4.0 percent two straight
months was August and September 1998, up 4.3 and 4.2 percent,
respectively. Personal consumption rose 0.2 percent compared to the
month before, the Commerce Department said. Spending had increased a
revised 1.0 percent in January.
href='http://online.wsj.com/article/SB123815632294556303.html#mod=testMod'>Read
more. (Subscription required.)
GM Unlikely
to Hit Goal of March 31 Restructuring
General Motors Corp. has been
chipping away at the massive restructuring plan it submitted to the U.S.
government last month, but it is unlikely to meet a March 31 deadline
for gaining concessions from its main union and bondholders, the
Wall Street Journal
size='3'>reported today.The company said today that it bought out 7,500
workers on top of an announcement yesterday that 7,600 U.S. factory
workers volunteered to leave the company under a buyout program. The
automaker has negotiated another agreement with the United Auto Workers
union that could allow it to trim as many as 10,000 more positions by
October. However, GM still has ample work to do, including convincing
the UAW to return to the bargaining table to restructure $20 billion in
health care benefits for retirees.
href='http://online.wsj.com/article/SB123807098254747521.html'>Read
more. (Subscription required.)
Analysis:
Economic Crisis Putting All Americans in Financial Peril
The current financial crisis is
all-inclusive as Americans of all ages and backgrounds are seeing their
incomes dwindle, bills pile up and financial options disappear,
USA Today
size='3'>reported today.The number who are suffering has increased by 3
million the past year, according to a recent Gallup-Healthways survey.
Some 37 percent of Americans said last week that they were worried
about money. Last year, 3.2 million consumers contacted the National
Foundation for Credit Counseling, up from 2.2 million in 2007 and 1.4
million in 2006. The personal stories illustrate how unemployment,
health problems, shrinking retirement savings, unaffordable mortgages
and other financial stressors lead to unprecedented challenges, worry
and consequences. Recent history has shown periods when one area of
concern consumed a family — a lost job for six weeks, for example
— but nothing on this level.
href='http://www.usatoday.com/money/perfi/general/2009-03-26-peril-bankruptcy-foreclose-crisis_N.htm'>Read
more
Las Vegas
Development Might File for Bankruptcy
CityCenter, the troubled
residential and casino development in Las Vegas, has hired a law firm,
Dewey &LeBoeuf, to prepare for a potential bankruptcy filing,
the New York Times
reported today.Its developers, MGM Mirage and Dubai
World, will likely fail to make a $220 million debt payment due today.
The sprawling and unfinished $8.6 billion project may file for
bankruptcy within days, though an agreement could be reached before
then. Last week, Dubai World filed suit against the beleaguered casino
operator MGM Mirage, claiming that its finances had imperiled
CityCenter’s fate. The project, which is the biggest privately
financed construction undertaking in United States history, planned to
develop a 67-acre site with hotel-condominiums, a casino and a
500,000-square-foot shopping center.
href='http://www.nytimes.com/2009/03/27/business/27mgm.html?_r=1&ref=business&pagewanted=print'>Read
more.
Sportsman's
Receives Approval to Tap $30 Million of Proposed DIP Loan
Bankruptcy Judge
face='Cambria' size='3'>Christopher S. Sontchi
size='3'>on Tuesday approved Sportsman's Warehouse Inc.'s request to
access up to $30 million of a proposed $85 million debtor-in-possession
credit facility, Bankruptcy
Law360 reported yesterday. The DIP loan will
be provided by General Electric Capital Corp., which already has a
senior lien position and history with the debtors.A hearing on the
debtors' motion for a final order approving access to the entire DIP
facility is scheduled for April 15 with an objection deadline of April
8. Read
more . (Registration required.)
Los Angeles
Property Owner Files for Chapter 11
Meruelo Maddux Properties Inc.,
one of the largest landowners in downtown Los Angeles, said yesterday
that it has filed for chapter 11 protection, Reuters reported. Citing a
cash shortfall and difficult real estate market as reasons for its
filing, the company said that it plans to continue operating normally
and use the bankruptcy process to reorganize and pare down its debt.The
case is In re Meruelo Maddux
Properties Inc., U.S. Bankruptcy Court for the
Central District of California.
href='http://www.reuters.com/article/bondsNews/idUSN2652245520090327'>Read
more.
to Sell Assets in $105 Million Deal
Bankrupt polyurethane and foam
manufacturer Foamex International Inc. has signed an agreement to sell
substantially all of its assets to distressed private equity firm
MatlinPatterson Global Opportunities Partners III LP for $105
million, Bankruptcy
Law360 reported yesterday.Under the deal, an
affiliate of MatlinPatterson will assume ongoing obligations to the
company's customers, vendors and 2,300 employees, Foamex said Wednesday.
The deal will be subject to the consideration of other offers at an
auction to be held on May 19 and also needs approval from the U.S.
Bankruptcy Court for the District of Delaware.
href='http://bankruptcy.law360.com/articles/93863'>Read more.
(Subscription required.)
Lyondell
Execs Avoid Investor Suit over Merger
Directors of bankrupt Lyondell
Chemical Co. have won an appeal to toss a shareholder action alleging
that they breached their fiduciary duties in approving a controversial
$13 billion merger with Dutch company BasellPolyolefins a week after
receiving the offer, Bankruptcy
Law360 reported yesterday. The Delaware
Supreme Court ruled Wednesday that the executives were entitled to
summary judgment in the case because the shareholder plaintiffs had
presented no evidence that the directors knowingly ignored their
responsibilities or breached their duty of loyalty. The trial court
agreed with the shareholder plaintiffs that the speed with which the
2007 Basell transaction was consummated was troubling. It also expressed
concern about the directors' failure to negotiate better terms or seek a
better offer for the company.
href='http://bankruptcy.law360.com/articles/93907'>Read more.
(Subscription required.)
Inquiry
Looks into Why AIG Paid Banks
Members of Congress and New York
State Attorney General Andrew Cuomo demanded detailed information
yesterday on how tens of billions of taxpayer dollars flowed through the
American International Group during its crisis last fall and ended up in
the coffers of several dozen big banks, the
face='Cambria' size='3'>New York Times
size='3'>reported today.The new inquiries shine a spotlight on a
question that is exponentially biggerthan the $165 million in bonuses
that AIG paid out this month, but which has been overshadowed until now
by the uproar over the bonuses.“We would like to know if the AIG
counterparty payments, as made, were in the best interests of the
taxpayers who provided the funding,” said Rep. Elijah E. Cummings
(D-Md.) in a letter to Neil M. Barofsky, the special inspector general
for the Troubled Asset Relief Program. The letter was also signed by 26
other House Democrats. Meanwhile, Cuomo subpoenaed AIG yesterday for
extensive information about its derivatives portfolio and how it is
being managed, including the names of people in charge of the
negotiations and other activity.
href='http://www.nytimes.com/2009/03/27/business/27cuomo.html?ref=business&pagewanted=print'>Read
more .
Fed
Features: Ads at Movies Warn Against Scams
Federal Reserve officials plan to
launch advertisements in movie theaters to warn homeowners about
foreclosure scams, the Wall
Street Journal reported today.Intended to
extend the reach of consumer warnings on the Fed's Web site, the ads
will run in 14 cities with high-foreclosure housing markets and an
outbreak of scam artists charging for guidance that is free from
nonprofits working with the government.The Fed's ads come against a
flurry of infomercials, billboards and door-to-door marketing from firms
trying to attract customers who are confused by their options.
href='http://online.wsj.com/article/SB123810611159052151.html'>Read
more. (Subscription required.)
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