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April 14, 2010

Bill Would Require Derivatives Trading to
Occur on Exchanges

Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.) said
yesterday that she would propose legislation requiring nearly all users
of derivative contracts to trade on centralized exchanges and possibly
ordering banks to segregate their business in derivatives into separate
subsidiaries, the New York Times reported today. While issues
such as consumer protection and bank bailouts have drawn most of the
attention in the financial overhaul legislation, rules on derivatives
are the focus of fierce lobbying because trading of derivatives is one
of Wall Street?s most profitable businesses. The derivatives that
contributed to the financial and housing crisis ? credit-default swaps
and collateralized debt obligations ? were mostly unregulated, with no
public reporting of prices or volumes of trades. ?Speculators will not
be exempted and all trades will be reported to regulators and the
public,? Lincoln wrote in a letter to her colleagues. In addition, any
agency that is used for the trading of swaps contracts, including those
dealing with energy commodities, will be required to register with the
Commodity Futures Trading Commission.
href='http://www.nytimes.com/2010/04/14/business/14derivs.html?ref=business&pagewanted=print'>Read
more.

Regent Communications Wins Confirmation of
Reorganization Plan

Regent Communications Inc. plans to exit chapter 11 protection within
the next two weeks after receiving confirmtion of its pre-packaged
reorganization plan by Bankruptcy Judge Kevin Gross on Monday,
the Deal Pipeline reported yesterday. Before Regent filed for
bankruptcy on March 1, prepetition lenders holding 76.3 percent of the
outstanding debt on a credit agreement and swap deals agreed to support
the company's plan, which will cut Regent's debt by $87 million. All 33
first-lien lenders that voted on the plan accepted it, court papers
show. No other creditor classes were entitled to vote. Under the
prearranged plan, administrative, priority tax and other priority claims
will be paid in full in cash. First-lien lenders will receive a $95
million senior secured term loan, a $25 million unsecured loan and 100
percent of the debtor's reorganized equity.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005414169'>Read
more. (Subscription required.)

Washington Mutual Creditors Sue to Protect
$356 Million in Claims

Washington Mutual Inc. is being hit with a lawsuit by creditors
aiming to protect their $356 million in claims from being wiped out in
the former banking giant's creditor payment plan, Dow
Jones Daily Bankruptcy Review reported today. Broadbill
Investment Corp. on Monday filed a lawsuit urging the court to
protect the claims, which stand to be extinguished under Washington
Mutual's chapter 11 plan. The $356 million at stake represents a
judgment against the U.S. government that the U.S. Court of Federal
Claims awarded Anchor Savings Bank FSB in 2008. The interest in that
lawsuit had been transferred to Washington Mutual with its acquisition
of Dime Bancorp, which had itself previously acquired Anchor.

St. Vincent's Hospitals Teetering toward
Bankruptcy

St. Vincent?s Hospital has filed a proposed closure plan with the New
York State Department of Health, and if state officials accept the plan,
St. Vincent?s will likely file for bankruptcy, Crain's New York
Business reported today. The chapter 11 filing has been expected for
several weeks, even before it was clear St. Vincent?s had to close and
lay off thousands for workers. The filing will show that the hospital
has liabilities of around $1 billion, nearly 50 percent more than the
$700 million in debt it was thought to have. When St. Vincent's filed
for its first bankruptcy, in July 2005, it had debt of roughly $1.1
billion.
href='http://www.crainsnewyork.com/article/20100413/FREE/100419959'>Read
more.

Court Says Citadel Can Maintain Control of
Its Chapter 11 Case

Bankruptcy Judge Burton R. Lifland on Monday extended Citadel
Broadcasting Corp.'s exclusive control of its chapter 11 case through
July 19, Dow Jones Daily Bankruptcy Review reported today. The
company's exclusive right to file a restructuring plan was set to expire
on April 19. Without the extension, creditors or other parties could
have offered rival plans as Citadel worked to win court approval of its
own. Citadel warned that a lapse in its exclusive plan-filing period
could result in chaos. If that were to happen, the company would be
'assessing competing plans if filed and contending with the
destabilizing effect that such events would have on their businesses,
employees, vendors and customers,' Citadel said in court papers. Citadel
is currently seeking creditor approval for a bankruptcy-exit plan that
would see senior lenders, led by JPMorgan Chase & Co. and owed about
$2.1 billion, receive 90 percent of Citadel's new equity plus a $762
million loan.

Treasury Proposes New Rules on
Garnishment

The Treasury Department is releasing new rules preventing banks from
seizing Social Security and other federal benefits from customers facing
debt collectors, the Wall Street Journal reported today. Federal
law prohibits creditors from taking Social Security to recover a debt,
but the law doesn't say how money deposited directly into bank accounts
is to be protected. The proposed new rules, to be published today in the
Federal Register, will require banks that receive garnishment
orders to review the accounts to see if they have received any direct
deposits of federal benefits within the past 60 days. If so, they must
establish a protected amount equal to the sum of the benefits deposited.
So, if the person had two deposits of $1,000 each, the protected amount
is $2,000, even if the person had spent the benefits. Under these rules,
the banks and credit unions wouldn't have to worry about whether
benefits money is co-mingled with other deposits, or if there is a
co-owner on the account.
href='http://online.wsj.com/article/SB10001424052702303695604575182610458761930.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more.(Subscription required.)

Smaller Banks Given Federal Extension to
Help Preserve Key Accounts

Federal banking regulators voted yesterday to extend a guarantee
program aimed at helping smaller banks overcome the fallout from the
financial crisis while also moving to explore a proposal that could
result in higher fees on large banks, the Washington Post
reported today. The five-member board of the Federal Deposit Insurance
Corp. unanimously approved a six-month extension of the Transaction
Account Guarantee Program, which offers unlimited deposit insurance for
certain business bank accounts. The program, instituted in October 2008,
was scheduled to expire at the end of June. Board members and FDIC staff
members said the extension was necessary to ensure that smaller banks
could retain critical accounts -- such as payroll accounts from
municipalities and small businesses -- rather than risk losing those to
larger banks that might be perceived as more stable. They said allowing
the program to expire could put additional pressure on community banks
and subsequently place more strain on the FDIC's deposit insurance fund
if they were to falter.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/04/13/AR2010041303759_pf.html'>Read
more.

JPMorgan Reports Income of $3.3
Billion

After almost two and a half years of sobering news, the head of
JPMorgan Chase raised his outlook for the rest of 2010 as first-quarter
income rose 55 percent, the New York Times reported today. Jamie
Dimon, JP Morgan's chairman and chief executive, said that there were
clear signs the economy was stabilizing as fewer borrowers are falling
behind on their loans. Overall, JPMorgan said its first-quarter income
was $3.3 billion, or 74 cents a share. That compared with income of $2.1
billion, or 40 cents a share, a year earlier as profit surged in the
months after following the crisis. The bank set aside several billion
dollars to cover future losses reserves - still a large sum, but a
smaller amount than in prior quarters. It has now stockpiled a total of
$39 billion, or roughly 5.6 percent of loans. The bank also set aside
another $2.3 billion in addition litigation reserves amid fierce legal
battles over faulty mortgages and a pitched battle with Washington
Mutual bondholders over the company's remnants.
href='http://www.nytimes.com/2010/04/15/business/15bank.html?ref=business&pagewanted=print'>Read
more.

Analysis: Big Banks Draw Profits from
Microloans to the Poor

Drawn by the prospect of hefty profits from even the smallest of
loans, a raft of banks and financial institutions now dominate the
'microloan' field, with some charging interest rates of 100 percent or
more, the New York Times reported today. The interest rate fight
has even attracted congressional scrutiny, with the House Financial
Services Committee holding hearings this year focused in part on whether
some microcredit institutions are scamming the poor. Underlying the
issue is a fierce debate over whether microloans actually lift people
out of poverty, as their promoters so often claim. The recent conclusion
of some researchers is that not every poor person is an entrepreneur
waiting to be discovered, but that the loans do help cushion some of the
worst blows of poverty.
href='http://www.nytimes.com/2010/04/14/world/14microfinance.html?ref=business&pagewanted=print'>Read
more.

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