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May 6, 2008
name='1'>Business Bankruptcy Filings Increased 49 Percent in
April
w:st='on'>
size='3'>U.S.
bankruptcy filings in April increased 49 percent from a year earlier,
the biggest gain so far this year, according to Jupiter eSources LLC,
Bloomberg News reported today. Jupiter eSources LLC said that business
filings increased to 5,173 during the month as more than 18,000
businesses filed for bankruptcy protection in the first four months of
2008. Through April, about 2,700 companies sought relief from creditors
under chapter 11. Almost 43,000 businesses filed for bankruptcy last
year, including more than 6,200 under chapter 11.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=am8fWybXwu8M&refer=home'>Read
more.
Mortgage
Lending
name='2'>Doubts Raised on Big Backers of
Mortgages
Bush administration
officials, regulators and lawmakers are nervously asking whether Fannie
Mae and Freddie Mac will soon need saving themselves as mortgage
defaults and foreclosures continue to rise, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The companies, which say fears that they might
falter are baseless, have recently received broad new powers and
billions of dollars of investing authority from the federal government.
And as Wall Street all but abandons the mortgage business, Fannie Mae
and Freddie Mac now overwhelmingly dominate it, handling more than 80
percent of all mortgages bought by investors in the first quarter of
this year. That is more than double their market share in 2006. However,
some financial experts worry that the companies are dangerously close to
the edge of financial distress, especially if home prices go through
another steep decline. Their combined cushion of $83 billion — the
capital that their regulator requires them to hold — underpins a
colossal $5 trillion in debt and other financial commitments.
href='http://www.nytimes.com/2008/05/06/business/06fannie.html?_r=1%26oref=slogin%26ref=business%26pagewanted=print'>Read
more.
name='3'>Bank of
w:st='on'>
size='3'>America
size='3'>’s Acquisition of Countrywide Possibly in
Jeopardy
Four months after Bank of
America Corp. CEO Kenneth D. Lewis agreed to buy Countrywide Financial
Corp. for $4.1 billion, Wall Street is buzzing that he may reduce his
offer for the troubled mortgage giant or perhaps even walk away from the
deal, the New York
Times reported today. Countrywide’s
share price sank 10.4 percent on Monday in a torrent of heavy selling.
The rout, one of the biggest one-day declines since Lewis unveiled the
deal in January, was touched off by an analyst report urging Bank of
America to abandon the acquisition because of growing problems at
Countrywide, the nation’s largest home lender. Countrywide’s
losses on mortgages and home equity loans have ballooned, federal and
state agencies have investigated its business practices, and the company
is bracing for a wave of lawsuits from angry customers and investors. A
panel of the Senate Judiciary Committee is scheduled to hold hearings
today to examine the way Countrywide’s loan servicing unit has
treated troubled borrowers who try to hang on to their homes by seeking
chapter 13 protection.
href='http://www.nytimes.com/2008/05/06/business/06place.html?ref=business'>Read
more.
href='http://judiciary.senate.gov/hearing.cfm?id=3327'>Click here to
view the witness list for the Senate Judiciary Subcommittee on
Administrative Oversight and the Courts’ hearing titled
“Policing Lenders and Protecting Homeowners: Is Misconduct in
Bankruptcy Fueling the Foreclosure Crisis?” scheduled for 2 p.m.
ET today.
name='4'>Bernanke Urges Flexibility in Mortgage
Regulation
Federal Reserve Chairman
Ben S. Bernanke yesterday urged Congress to allow federal agencies more
leeway in overseeing the ailing mortgage industry, emphasizing that the
causes of the current foreclosure crisis were more difficult to address
than those in the past, the
size='3'>New York Times reported today.
“Realistic public and private sector policies must take into
account the fact that traditional foreclosure avoidance strategies may
not always work well in the current environment,” Bernanke said.
The variety of factors leading to foreclosures makes it more difficult
for mortgage lenders to help ailing homeowners, Bernanke said, noting
that “lenders and services will have to develop new and flexible
strategies to deal with this issue.” He urged Congress to provide
the Federal Housing Administration, which insures mortgage loans, with
“greater latitude” in setting appropriate standards for
owners seeking to refinance their mortgages, and to adjust interest
rates according to the level of risk of the applicants.
href='http://www.nytimes.com/2008/05/06/business/06fed.html?ref=business%26pagewanted=print'>Read
more.
name='5'>Treasury Department Plans to Press Lenders on Mortgage
Modifications
The Treasury Department,
in an effort to make its main program for helping home borrowers hit by
the subprime mess more effective, plans to step up pressure on mortgage
companies, the Wall
Street Journal reported today. Treasury
officials have called a meeting today with banking officials involved in
the Hope Now program to discuss adopting a uniform and voluntary set of
criteria to speed the time it takes qualified borrowers to modify
mortgages they can't afford. About 10 lenders will attend, including
Countrywide Financial Corp., Bank of America Corp., Citigroup Inc. and
J.P. Morgan Chase & Co. Officials from mortgage-finance giants
Fannie Mae and Freddie Mac will attend part of the meeting.
href='http://online.wsj.com/article_print/SB121001844532568435.html'>Read
more. (Registration required.)
name='6'>Court Approves Creditors' Plan for People's Choice Home
Loan Reorganization
The unsecured
creditors’ committee of People's Choice Home Loan Inc. won two
major victories in the company's ongoing chapter 11 proceedings when a
court approved the disclosure statement submitted by the group and named
the unsecured creditors the sole reorganization plan proponent,
Bankruptcy Law360
reported yesterday. The unsecured creditors had filed the
emergency motion on April 21, after People's Choice disclosed that the
company would no longer sponsor the reorganization that it had submitted
to the court. In the motion, the committee asked the court to appoint it
sole proponent in order to expedite the plan approval process, which has
been stalled since People's Choice pulled its support.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=55123'>Read
more. (Registration required.)
name='7'>GMAC Buys Time for ResCap Unit as Threat of Bankruptcy
Looms
GMAC LLC, the car and
home lender struggling to avert bankruptcy for Residential Capital LLC,
may keep the mortgage business afloat long enough to find a buyer or
break it up, Bloomberg News reported today. ResCap, after recording $5.3
billion in losses over the past six quarters, said on May 2 that it is
seeking a $3.5 billion loan from GMAC as part of a bigger financing
agreement. Less than a month ago, GMAC provided a $750 million credit
line. Unable to lend to subprime borrowers or bring in new business
in
size='3'>Europe
$859 million first-quarter loss last week, wiping out GMAC's profit from
its auto-finance business. GMAC is owned by General Motors Corp. and an
investor group led by Cerberus Capital Management LP.
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=aqjKRhKbbFfI'>Read
more.
Las
Vegas Casino Files for Bankruptcy
Casino operator Tropicana
Entertainment LLC filed for chapter 11 protection yesterday, a reversal
of fortune for the new owner of one of the most historic casinos
in
size='3'>Las Vegas,
the Wall Street
Journal reported today. Kentucky-based
Tropicana missed an interest payment Friday
on a $1.32 billion loan with lender Credit Suisse Group. Missing the
payment terminated a forbearance agreement the company had with
bondholders, putting further pressure on the gambling company. Tropicana
has $2.67 billion in rated bank and bond debt, according to Moody's
Investors Service. The casino operator has lined up $67 million in
debtor-in-possession financing with Silver Point Capital LP.
href='http://online.wsj.com/article/SB121001918657068461.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
Trustee Asks Court to Reject Union Contracts
Dane Field, the interim
chapter 7 trustee for Aloha Airlines Inc., has asked a judge to approve
the rejection of six collective bargaining agreements with the bankrupt
airline's unions,
size='3'>Bankruptcy Law360 reported yesterday.
Field's motion states that the move to reject the contracts was brought
about by Aloha's April 29 conversion of its bankruptcy from a chapter 11
reorganization to a chapter 7 liquidation, which ensures that the
airline will permanently cease operations. Allowing the collective
bargaining agreements to remain in effect, Field argues, would only be a
drain on Aloha's finances, particularly since the contracts will all
have to be canceled anyway once the company is completely out of
business.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=55051'>Read
more. (Registration required.)
to Come Under Scrutiny at Senate Hearing
The Securities and
Exchange Commission's oversight of investment banks will come under
scrutiny at a Senate Banking Comittee hearing Wednesday, setting the
stage for a debate about changes to regulation of financial markets and
securities firms, the
size='3'>Wall Street Journal reported today.
The collapse of Bear Stearns & Cos. and subsequent temporary opening
of the Federal Reserve's lending window to securities firms has raised
questions as to whether the Fed should have greater oversight of
investment banks. The Treasury Department has published recommendations
that would give more oversight authority to the Fed while potentially
reducing the SEC's role. “Before you can go ahead and start
proposing new arrangements you have to understand the strengths and
shortcomings of the current arrangement,' said Sen. Jack Reed (D-R.I.).
The SEC has maintained that its oversight was adequate by ensuring that
no investor funds were misused amid the turmoil at Bear Stearns. It is
also investigating potential manipulation of Bear Stearns and Lehman
Brothers Holdings Inc. stock.
href='http://online.wsj.com/article_print/SB121004548182970067.html'>Read
more. (Registration required.)
w:st='on'>
name='11'>Minnesota
face='Times New Roman' size='3'> Newspaper Disputes That It Is on
the 'Brink of Bankruptcy'
The
face='Times New Roman' size='3'>Star Tribune
size='3'>of
face='Times New Roman'
size='3'>Minneapolis
hired a private equity firm to advise it, but disputed a published
report suggesting it is 'on the brink of bankruptcy,' the Associated
Press reported yesterday. “The facts are that the Star
Tribune currently has sufficient liquidity and is current on all
its debt payment obligations,' Publisher and Chairman
size='3'>Chris
evening. Harte was responding to a
size='3'>New York Post story Sunday that said
the newspaper had hired the Blackstone Group of
w:st='on'>
York to restructure its
balance sheet after struggling with burdensome debt. Harte said in his
statement that the Star Tribune, which is owned by Avista
Capital Partners of New York, hired Blackstone 'to help us evaluate
alternatives to our current capital structure, but that hardly merits a
conclusion that we are near bankruptcy.'
href='http://biz.yahoo.com/ap/080505/star_tribune_blackstone.html?.v=1'>Read
more.
International
name='12'>UBS to Sell Mortgage Assets, Cut Jobs as First-Quarter
Losses Total Nearly $11 Billion
UBS AG said today that it
would sell $15 billion in mortgage assets to BlackRock Inc. and slash
5,500 jobs by the middle of next year, moves meant to restructure the
Swiss giant's troubled investment bank, the
size='3'>Wall Street Journal reported. The
Zurich-based bank will sell $15 billion -- with a nominal value of $22
billion -- in Alt-A and subprime assets to Blackrock, which will manage
the holdings in a fund for distressed securities.
face='Times New


Roman'>
size='3'>The Zurich bank said it will cut 2,600 investment banking jobs,
mainly in
size='3'>London and
w:st='on'>
York, after write-downs on
dud mortgage securities totaling more than $37 billion. UBS said that it
swung to a first-quarter net loss of 11.54 billion Swiss francs ($10.99
billion) after a 3.03 billion francs net profit in the year-earlier
period. The bank cautioned that market conditions remain tough, but
indicated that it wouldn't seek to raise more capital after two massive
injections of funds earlier this year.
href='http://online.wsj.com/article/SB121005102870870129.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
href='http://online.wsj.com/article/SB121005102870870129.html?mod=hpp_us_whats_news'>