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April 17, 2008
Panel to Examine Credit Cardholders’ Bill of Rights
The House Financial
Services Subcommittee on Financial Institutions and Consumer Credit will
hold a hearing today on H.R. 5244, 'The Credit Cardholders’ Bill
of Rights: Providing New Protections for Consumers.' The hearing will
examine the legislation introduced by Subcommittee Chair Carolyn B.
Maloney (D-N.Y.) to reform major credit card industry abuses and improve
consumer protections. The Subcommittee will
hear from consumers, regulators and credit card industry
representatives. The hearing will take place
at 10:00 a.m. ET in room 2128 of the
w:st='on'>
size='3'>Rayburn
face='Times New Roman' size='3'>House
size='3'>Office
face='Times New Roman'
size='3'>Building
size='3'>.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr041708.shtml'>Click
here to view the witness list and watch the hearing via
Webcast.
name='2'>Senate Banking Committee Considers FHA
Legislation
Senate Banking Committee
members wrangled yesterday over the extent of federal intervention
into rescuing homeowners at risk of foreclosure, as Democrats advocated
legislation to allow the Federal Housing Administration (FHA) to
refinance up to $400 billion in troubled mortgages while Republicans
called for more limited actions that could be done
administratively,
size='3'>CongressDaily reported yesterday.
Senate Banking Chairman
face='Times New Roman' size='3'>Chris
size='3'>topher Dodd (D-Conn.) again made a pitch for a bill he is
sponsoring that would allow FHA to offer new loan guarantees for
borrowers who face an interest-rate reset on their mortgage that will
make them unaffordable, or who owe much more than their house is worth.
Dodd argued that the measure would have limited liability to the federal
government because FHA would insure only up to 90 percent of a home's
value, in contrast to the current FHA limit of 97 percent. Under his
bill, another 3 percent of the loan would be held in an insurance pool
to cover losses, and the federal government would share in the profit of
any sale of the property. As Republicans are hesitant to back the
measure, Senate Banking Committee ranking member Richard Shelby (R-Ala.)
said that he expressed concern that borrowers that had no down payment,
received cash from a refinancing, had poor credit scores or took on
exotic mortgage products could be unfairly rewarded for taking such
risks.
name='3'>Freddie Mac to Unveil Lenders' Pact on Jumbo
Loans
Freddie Mac is expected
to announce today that it has reached an agreement with three major
mortgage lenders aimed at making more funds available for large home
loans, the Wall Street
Journal reported today. The agreement is with
Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc.,
Freddie officials said. For the past nine months or so, interest rates
on jumbo loans -- those bigger than the normal $417,000 limit on
mortgages that can be sold to government-sponsored investors Freddie Mac
and Fannie Mae -- have been much higher than those on smaller ones.
That's because other loan investors, spooked by surging defaults and
dropping home prices, are reluctant to buy loans that aren't backed by
Fannie, Freddie or the Federal Housing Administration. In February,
Congress passed legislation raising the ceiling on loans that can be
purchased by Fannie or Freddie or insured by the FHA to as much as
$729,750 in the highest-cost areas. The expanded limits are due to
expire at the end of this year, though they could be extended by
Congress.
href='http://online.wsj.com/article_print/SB120839080312121351.html'>Read
more. (Registration required.)
U.S.
Trustee Opposes Final Fees by Solutia’s Lawyers,
Others
U.S. Trustee
Diana Adams
size='3'>opposed $185 million in final fees sought by the
Solutia
size='3'>Inc.’s lawyers and advisers,
size='3'>Bankruptcy Law360 reported
yesterday.
size='3'>Adams
applicants' boasts of success in achieving confirmation of Solutia's
bankruptcy exit plan, remarking that unsecured creditors and retirees
had been promised only partial return on their claims. Solutia’s
reorganization professionals have applied for fees and expenses totaling
nearly $200 million for the work performed in the chemical company's
four-year chapter 11 case.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=53207'>Read
more. (Registration required.)
Low
Liquidity Plagues More Firms
Moody's Investors Service
Inc. reported that more companies than ever are in the weakest of
liquidity positions and struggling to cover their bills, the
Wall Street Journal
reported today. There are now 47 companies with public
debt that Moody's rates as having the weakest of liquidity levels, a
number that has more than doubled since June. These 47 companies have
combined rated debt of $34.7 billion. Moody's downgraded 10 companies to
its lowest liquidity rating through the end of March, among them
amusement-park chain Six Flags Inc. and home-furnishings retailer Linens
'n Things Inc., which is delaying a bond payment as it tries to stave
off bankruptcy. Historically, about 20 percent of the companies with the
lowest liquidity rating will default on their debts. So far this year,
Buffets Inc. restaurant chain and Leiner Health Products Inc. are among
the larger companies to default. Five companies with debt rated by
Moody's defaulted in the first three months, the same amount that
defaulted in all of 2007.
href='http://online.wsj.com/article_print/SB120838356152420901.html'>Read
more. (Registration required.)
name='6'>Jeweler Files for Bankruptcy
Hours before
size='3'>Chris
PLC was to have begun a forced auction of rare jewelry, Fred Leighton
Holding Inc., a fine-jewelry retailer, sought chapter 11 protection,
the Wall Street
Journal reported today. The auction of 83
pieces of rare jewelry had been set at the insistence of Merrill Lynch
Mortgage Capital Inc., a lending unit of Merrill Lynch & Co., which
is owed about $181 million by Fred Leighton. The special collection,
pledged along with several other collections to secure Merrill Lynch
loans, has an appraised value of about $75 million. Court papers filed
by Merrill Lynch say that
face='Times New Roman' size='3'>Chris
size='3'>tie's believes the collection would fetch between $23 million
and $35 million at auction. A bankruptcy judge will hold a hearing
Friday on the jeweler's bid for permission to fund its operations by
tapping the cash collateral securing Merrill Lynch's claim.
href='http://online.wsj.com/article_print/SB120839905497621819.html'>Read
more. (Registration required.)
Loss at American Airlines Illustrates Industry’s
Woes
The parent company of
American Airlines, the AMR Corporation, posted a $328 million
first-quarter loss as surging fuel prices sent the industry into a
downturn, the New York
Times reported today. Airlines got some more
unwelcome news from the Transportation Department, which said yesterday
that beginning in May, they will have to pay some bumped passengers as
much as $800, double the current top penalty. The higher penalty also
applies to planes of as few as 30 seats, rather than 60 seats or more
under the old rule, which exempted many regional jets. As airlines seek
ways to remain financially viable, US Airways joined United Airlines and
Continental Airlines on Wednesday in suggesting that it is interested in
combining with another carrier. Airlines are having limited success in
raising fares, but have introduced a series of new fees, including extra
charges for additional checked bags or heavy luggage, in an effort to
raise revenue.
href='http://www.nytimes.com/2008/04/17/business/17amr.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='8'>Market Turmoil Takes a Toll on Big Pension
Funds
w:st='on'>
size='3'>America
size='3'>’s biggest pension funds lost ground in the first quarter
and are likely to require larger contributions from their corporate
sponsors this year, joining the ranks of homeowners, lenders and others
hurt by the recent turmoil in the financial markets, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. At the same time, though, some of
size='3'>America
size='3'>’s biggest companies have begun taking steps to shield
their pension funds from market volatility by moving out of stocks.
Pension funds that made major shifts away from equities last year
included those at mature manufacturing companies like General Motors,
Ford, Boeing and Deere. Their plans have been a source of concern to
policy makers, because the federal government insures the benefits, and
if a plan of that size failed, it could swamp the federal insurance
system.
href='http://www.nytimes.com/2008/04/17/business/17pension.html?ref=business&pagewanted=print'>Read
more.
name='9'>Sallie Mae Suffers First Quarter Loss
SLM Corp., known as
Sallie Mae, swung to a first-quarter loss and warned that it can't
make profitable loans at this time, prompting the nation's largest
student lender to assess its operation and call for a 'system-wide
liquidity solution,' the
size='3'>Wall Street Journal reported today
The Reston, Va.-based company said that tightened credit markets have
'dramatically' increased the cost of funds. The credit crunch and recent
cuts in federal subsidies have led some lenders to stop making federal
student loans and tighten their credit standards on private student
loans. 'Today's environment is the most difficult we have seen in our
35-year history of student lending,' Chief Executive Albert Lord
wrote. In Senate testimony Tuesday, Senate
Banking Committee Chairman
face='Times New Roman' size='3'>Chris
size='3'>Dodd (D-Conn.) said that he would send a letter to Treasury
Secretary Henry Paulson to direct the Federal Financing Bank to purchase
participation interest in pools of new student loans backed by the
government. He also planned to write Federal Reserve Chairman Ben
Bernanke to allow student-loan-backed debt to be used as collateral for
the recently created Term Securities Lending Facility, introduced in
mid-March to boost capital market liquidity.
href='http://online.wsj.com/article_print/SB120839263086521457.html'>Read
more. (Registration required.)
name='10'>Financier Aims to Buy Struggling Small
Banks
Wilbur L. Ross Jr., the
billionaire financier known for buying distressed companies, plans to
buy stakes in a handful of struggling regional banks to combine them
with some mortgage-related companies that his investment firm, W. L.
Ross & Company, has already purchased, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. “I believe there will be 1,000 or more
depository institutions that need money,” Ross said.
“They’re of interest to me and of interest to my fund, and I
believe they will be of interest to investors in general.” Several
Middle Eastern individuals and government funds are already investors
with Ross’s firm, he said, though he would not name them. Next
week, he plans to travel to
w:st='on'>Abu
Dhabi
investors there the 100 to 200 small banks that he deems
promising.
href='http://www.nytimes.com/2008/04/17/business/17Ross.html?ref=business&pagewanted=print'>Read
more.
href='http://www.nytimes.com/2008/04/17/business/17Ross.html?ref=business&pagewanted=print'>