May 22008

 

name='1'>Fed to Launch Aggressive Effort

to Curb Abusive Credit Card Practices

The Federal Reserve and two
other banking regulators are set to unveil

today one of the most aggressive efforts in decades to crack down on the

credit card industry, prohibiting

practices such as arbitrarily raising interest rates on outstanding
balances, the

size='3'>Washington Post reported. The proposed
regulations, which could be finalized by year's

end, would label as 'unfair or deceptive,' such practices as
charging interest on debt that has been repaid

and assessing late fees when consumers are not given a reasonable amount

of time to make a payment. When

different interest rates apply to different balances on one card,
companies would be prohibited from applying a

payment first to the balance with the lowest rate. Both the Office of
Thrift Supervision, which regulates all

federal and some state thrift institutions, and the National Credit
Union Administration, which oversees credit

unions, announced yesterday that they had approved the proposal, the
full details of which will be

released today. The Fed is expected to vote on the proposal at its
meeting today. Once all three agencies

have approved the proposed rules, they will be published in the Federal
Register and the public will then have 75

days to comment. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/01/AR2008050103218_pf.html'>Read

more.

name='2'>Bush Expected to Sign Student

Loan Legislation

President Bush is expected to
sign legislation to stabilize the $85

billion student loan market following House approval of the measure
yesterday,

size='3'>CongressDaily reported. The bill, which passed
the House by a 388-21 vote, would

temporarily allow the Education Department to pump liquidity into the
secondary market for federally guaranteed

student loan debt. The department could funnel capital for loans to
state guaranty agencies under a 'lender of

last resort' program. Additionally, the bill would let students borrow
more money under the federal loan program,

give parents of students more time to repay college loans and ensure
that parents hit by the mortgage crisis

could still qualify for college loans.

name='3'>Linens 'n Things Files for

Bankruptcy Protection

Linens 'n Things filed for
chapter 11 protection today, the latest major

retailer to succumb to the difficult retail environment, the Associated
Press reported. The bedding- and

home-furnishings retailer's parent, Linens Holding Co., said in March
that its fiscal fourth-quarter loss

widened. It has said it was planning to cut costs and reduce staff to
turn around its ''highly leveraged''

situation. The Clifton, N.J.-based company was acquired by investment
firm Apollo Management in 2006. It is the

latest retailer to be hit by the weakening retail environment as
consumers cut back. Sharper Image Corp. and

Lillian Vernon Corp. filed for bankruptcy protection in
February. 

href='http://www.nytimes.com/aponline/business/AP-Linens-n-Things-Bankruptcy.html?scp=2&sq=bankruptcy&st=

nyt'>Read more.

Mortgage
Lending

name='4'>Homebanc Mortgage Files

Chapter 11 Liquidation Plan

Homebanc Mortgage Corp. on
Wednesday filed a chapter 11 liquidating plan

and disclosure statement, which has the support of Homebanc's unsecured
creditors’ committee,

face='Times New Roman' size='3'>Bankruptcy
Law360 reported yesterday. Under the proposed plan,

holders of $223,500,000 in unsecured claims would be in line for a
recovery of between 1-10 percent, and all

equity interests would be canceled. Most of Homebanc's assets have
already been sold off, and only a handful of

financial assets remain. The debtors serviced approximately 48,300 loans

with an aggregate principal amount of

about $8 billion as of the petition date, according to a motion filed
April 3 by the lender. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=54775'>Read

more. (Registration

required.)

name='5'>Bank of

w:st='on'>

size='3'>America May Not
Guarantee Countrywide's

Debt

Bank of America Corp.,
the second- biggest U.S. bank, said that it

may not guarantee $38.1 billion of Countrywide Financial Corp.'s debt
after taking over the mortgage lender,

fueling speculation that Countrywide's bondholders face renewed risk of
default, Bloomberg News reported.

“There is no assurance that any such debt would be redeemed,
assumed or guaranteed, the Charlotte,

N.C.-based bank said in an April 30 regulatory filing, adding that no
decision has been reached. 

Bank of America agreed to buy Countrywide, the
largest

w:st='on'>

size='3'>U.S.
size='3'>mortgage lender, for about $4 billion amid

speculation that the worst housing market since the Great Depression
would bankrupt Countrywide. Bondholders have

been counting on the merger to put Bank of America's AA credit rating
behind Calabasas, Calif.-

size='3'>based Countrywide's $97.2 billion of debt. 

href='http://www.bloomberg.com/apps/news?pid=20601103&sid=anhQQxll0NJY'>Read

more.

name='6'>Court Approves

w:st='on'>
size='3'>Delphi’s Amended DIP

Facility

Bankruptcy Judge

size='3'>Robert D. Drain has granted Delphi
Corp.'s bid for approval of a $4.1 billion

amended and extended debtor-in-possession (DIP) financing package, a
development

w:st='on'>
size='3'>Delphi says will help ensure

that the company stays liquid through 2008,

size='3'>Bankruptcy Law360 reported yesterday.

Judge Drain’s order also gives the

auto parts maker a green light to enter into an arrangement with General

Motors Corp. or a GM affiliate under

which GM will reimburse the debtors for “certain amounts”
that

face='Times New Roman' size='3'>Delphi
size='3'>had to pay while in bankruptcy. The

extension motion also said that the refinanced DIP facility would
consist of a $1 billion first-priority

revolving credit facility, a first-priority term loan of up to $600
million and a second-priority term loan of

about $2.5 billion. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=54781'>Read

more. (Registration required.)

name='7'>American LaFrance Creditors Support

Reorganization Plan

American LaFrance
LLC’s (ALF) creditors have voted in

support of the company’s reorganization plan, setting the stage
for the bankrupt fire truck manufacturer to

emerge from chapter 11, Bankruptcy
Law360 reported yesterday.

ALF said Wednesday that it had received “overwhelming”
support for its proposed plan from its

creditors and that a confirmation hearing is scheduled for May 22.
According to the company, more than 86 percent

of its general unsecured creditors voted in favor of the
plan.  Unsecured creditors

with balances of $2,500 or less, or those willing to reduce their claims

to $2,500, will be paid in full without

interest under the plan, the company said. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=54744'>Read

more. (Registration

required.)

Fed
Working with European Banks to Expand

Liquidity Efforts

The Federal Reserve in
coordination with European central banks said

today that it will expand a series of efforts to deal with a global
credit crisis, the Associated Press

reported. The Fed
announced that it was boosting the amount of

emergency reserves it supplies to
w:st='on'>U.S.
size='3'>banks to $150 billion in May, from

the $100 billion it supplied in April. The Fed took this action and
several other moves to boost credit in

coordination with the European Central Bank and the Swiss National Bank.

The latest action was part of a series

of moves the Fed has made since a severe credit crisis struck last
August. 

href='http://www.federalreserve.gov/newsevents/press/monetary/20080502a.htm'>Click

here to read the

Fed’s press release.

w:st='on'>

size='3'>New
York

size='3'> Education Firm Files Chapter 11

Educational Services
& Products LLC filed for chapter 11

protection on Wednesday, reporting assets of $31.6 million and
liabilities of $13.6 million, the

face='Times New Roman' size='3'>Albany (N.Y.) Times Union
reported today. The

company’s owner, Joseph A. O'Hara, whose consulting company filed
for bankruptcy last month, said that his

companies were seeking bankruptcy relief from a lawsuit brought by
a

w:st='on'>
size='3'>Michigan

size='3'>competitor. O'Hara said that he is seeking to sell Educational
Services or find new investors, and that

the lawsuit would tie up any such plans. He said he hopes to identify a
buyer during the bankruptcy process

within two weeks. 

href='http://timesunion.com/AspStories/story.asp?storyID=685481&category=BUSINESS&newsdate=5/2/2008'>Read

more.

name='10'>Consumer Spending Drops for Fourth Straight

Month

Consumer spending barely
budged in March, the fourth month in a

row that Americans avoided the shopping mall to conserve cash in an
economic downturn, the

face='Times New Roman' size='3'>New York Times
size='3'>reported today. The Commerce Department

reported that spending grew 0.1 percent in March when adjusted for
inflation, after staying flat in February and

rising slightly in January.  Unadjusted
consumer spending rose 0.4 percent in March,

more than expected, but that figure did not take into account the
immense price run-up in food and gasoline. The

report showed that most of the money that consumers spent went toward
services, rather than big-ticket

purchases. 

href='http://www.nytimes.com/2008/05/02/business/02econ.html?_r=1&oref=slogin&ref=business&pagewanted

=print'>Read more.

International

name='11'>British Insolvency Filings Increase in

First Quarter

The British Insolvency
Service said that 25,264 individuals

in
size='3'>England

and
w:st='on'>
size='3'>Wales

size='3'>became insolvent between January and March, an increase of 1.7
percent on the previous quarter's figure,

the Guardian
reported today. However,

this was 13.2 percent fewer than in the first three months of last year.

The figure was made up of 15,651

bankruptcies - an increase of 0.1 percent on the previous quarter - and
9,614 individual voluntary arrangements

(IVAs) - an increase of 4.3 percent. While the number of people entering

into IVAs with their creditors picked up

after
size='3'>Chris

size='3'>tmas, it was down 22 percent over the same period last year.
However, the increase at the start of the

year, although modest, could be a sign that households are starting to
be squeezed by higher prices for food and

utilities, and higher borrowing costs resulting from the credit
crunch. 

href='http://www.guardian.co.uk/money/2008/may/02/debt/print'>Read
more.

name='12'>Parmalat Settles

size='3'>U.S.
size='3'>Class-Action Suit

Italian dairy group
Parmalat SpA today reached an agreement to

settle the securities class-action case against it in the U.S. Southern
District Court of New York, the

Wall Street Journal
reported. Under the

agreement, Parmalat said it will issue 10.5 million in existing shares
to class members 'in full satisfaction of

any and all claim asserted against it in the class action, worldwide.'
Parmalat will also pay up to €1

million ($1.5 million) of the cost of notifying the class members of the

settlement. Class members were former

company shareholders and other investors, who claimed they had been
damaged by Parmalat's bankruptcy. The dairy

company, which collapsed under €14 billion of debt in 2003 and
relisted in 2005, said the settlement 'is in

the best interest of its shareholders to avoid the distraction and
expense of further litigation, and diminishes

uncertainty in the value of its stock.' 

href='http://online.wsj.com/article/SB120972037643762389.html'>Read
more. (Registration

required.)