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August 1, 2008
House Panel Approves Legislation to
Curb Credit Card
Practices
The House Financial Services Committee put the credit card industry on
the defensive yesterday
after it approved legislation that would curb exorbitant fees and other
practices that have
come under fire from consumer groups, Dow Jones Newswires reported
today. The committee voted
39-27 in favor of legislation that would prohibit or restrict practices
such as universal
default and double-cycle billing. The panel did amend the bill to bring
it more in line with
proposals made earlier this year by federal banking regulators to
address industry practices.
Additionally, lawmakers included a 'sense of the Congress' that the
legislation should not
prevent the Federal Reserve, Office of Thrift Supervision and National
Credit Union Association
from finalizing their new credit card regulations by the end of the
year.
href='http://money.cnn.com/news/newsfeeds/articles/djf500/200807312050DOWJONESDJONLINE001195_FO
RTUNE5.htm'>Read more.
IndyMac Files for Chapter 7
IndyMac Bancorp Inc., the second- largest U.S. independent
mortgage lender before it
was seized by federal bank regulators three weeks ago, filed for chapter
7 protection
yesterday, Bloomberg News reported today. IndyMac's liabilities are
between $100 million and
$500 million, according to the petition filed in the U.S.
Bankruptcy Court in
Los Angeles. The bank holding company said it has less than 50
creditors, which it didn't list.
IndyMac was seized by U.S. regulators on July 11 after a run by
depositors left the mortgage
lender strapped for cash. The Federal Deposit Insurance Corp. is running
a successor
institution, IndyMac Federal Bank, and regulators have said that they
intend to eventually sell
the seized bank. The case is In re IndyMac Bancorp Inc.,
08-21752, U.S. Bankruptcy
Court, Central District of California (Los Angeles).
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHrOKWPiAqXA'>Read
more.
Analysis: Corporate Bankruptcies May
Top 100 Next
Year
Financial consultancy company Bain & Co. reported that corporate
bond defaults are on track
to quadruple this year and company bankruptcies may soar to more than
100 in 2009, Reuters
reported yesterday. Bain said that it expects as many as 75 corporate
bankruptcies this year, a
figure that will rise as high as 105 in 2009 for U.S. public companies
with more than $100
million in assets. Bain & Co, which spun off private equity firm
Bain Capital in 1983, said
that there may be as many as 95 defaults from speculative-grade U.S.
issuers this year, versus
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/07/31/AR2008073101869_pf.html'>
Read more.
Massachusetts Sues Merrill Lynch over
Auction-Rate Securities
Research
Massachusetts regulators accused Merrill Lynch & Co. of co-opting
'supposedly independent'
research analysts to help them dump collapsing auction-rate securities
on unsuspecting
customers, the Wall Street Journal reported today. 'We've seen
a corruption of
research,' said Massachusetts Secretary of the Commonwealth William
Galvin, who oversees the
state securities division. The state wants Merrill to repay customers
who sold auction-rate
securities at a loss and to make whole those who can't sell them at all.
The state is also
seeking a fine and formal censure of the firm.
href='http://online.wsj.com/article/SB121751524178500989.html?mod=us_business_whats_news'>Read
more. (Subscription required.)
Fannie Mae, Freddie Mac's New
Regulator to Tackle Serious
Challenges
James B. Lockhart III, director of the Federal Housing Finance Agency
now charged with
regulating Fannie Mae and Freddie Mac, told employees yesterday that
they face a difficult task
in addressing the challenges that have rocked the two housing finance
giants and that even more
staff may be required to carry out the government's expanded mission,
the Washington
Post reported today. President Bush created FHFA this week when he
signed a sweeping
housing rescue bill into law. The agency merges three existing federal
entities into a new,
tougher regulator for Fannie Mae and Freddie Mac. The agency will also
oversee the nation's 12
Federal Home Loan Banks, which, like Fannie Mae and Freddie Mac, were
chartered by Congress to
improve the nation's housing capacity.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/08/01/AR2008080102927_pf.html'>
Read more.
Creditors Object to Pappas DIP
Proposal
Creditors of bankrupt Pappas Telecasting Inc. (PTI) have objected to the
television station
owner's plan to receive post-petition financing from prepetition secured
lenders,
Bankruptcy Law360 reported yesterday. In an objection filed
Wednesday in the U.S.
Bankruptcy Court for the District of Delaware, PTI's unsecured
creditors' committee said that
the proposed debtor-in-possession (DIP) financing was “overly
expensive and overly
aggressive so as to limit the very sale process it is arguably designed
to support.” On
July 2, the debtors filed a financing motion proposing the entry of
interim and final orders
authorizing the proposed DIP financing, provided by PTI's prepetition
lenders. A day later, the
bankruptcy court granted a interim order approving the DIP
financing.
href='http://bankruptcy.law360.com/articles/64542'>Read more.
(Subscription required.)
GMAC Reports Loss on Downturn of
Auto-Financing
Business
Financial giant GMAC LLC reported a $2.48 billion net loss for the
second quarter amid a
dramatic reversal of fortune in its auto-financing business, the
Wall Street Journal
reported today. A year ago, GMAC, which is owned by GM and Cerberus
Capital Management LP,
reported net income of $293 million on the strength of its
auto-financing operations. It has
been relying on auto-financing profits to soften the blow of losses in a
home-mortgage unit
that has lost billions of dollars on subprime home mortgages. However,
GMAC's auto business
this year had a loss of $717 million in the second quarter, mainly
because high gasoline prices
have depressed the value of used trucks and sport-utility vehicles and
turned leases on them
into loss makers. A year ago, GMAC's auto business had net income of
$395 million.
href='http://online.wsj.com/article/SB121750710511300569.html?mod=us_business_whats_news'>Read
more. (Subscription required.)
Autos
GM Loses $15.5 Billion in Second
Quarter
General Motors Corp., weighed down by restructuring charges and
write-downs, posted a $15.5
billion second-quarter loss, the New York Times reported today.
According to the
earnings statement, the loss included $9.1 billion in one-time charges,
$3.3 billion of which
was for employee buyouts. Included in the results was $1.3 billion in
write-offs that reflect
the drop in value of trucks and sport utility vehicles in GMAC Financial
Services' portfolio.
While its overseas operations continued to perform well, GM's U.S. sales
dropped. The company
said that it had sold 2.29 million vehicles worldwide in the second
quarter, down 5 percent
from the period a year ago. North American sales were down 20 percent,
or 236,000 units, while
sales outside of North America grew by 10 percent or 116,000
units.
href='http://www.nytimes.com/2008/08/02/business/02gm.html?_r=1&oref=slogin&ref=busines
s&pagewanted=print'>Read more.
Analysis: GM, Ford Likely Dragged
U.S. Car Sales to
15-Year Low
Analysts found that General Motors Corp. and Ford Motor Co. probably
dragged U.S. vehicle sales
to a 15-year low in July as record gasoline prices caused consumers to
shun big pickup trucks
and automakers didn't make enough fuel-saving small cars, Bloomberg News
reported yesterday.
GM, Ford and Chrysler LLC may have each posted their sixth straight
monthly decline in sales,
according to a Bloomberg survey of four analysts. GM sales probably
dropped 25 percent, Ford's
20 percent, and Chrysler's 27 percent, according to the average
estimates of the four analysts
surveyed. July sales will match June's annual selling rate of 13.6
million vehicles, according
to a Bloomberg survey of 40 analysts and economists. That was the lowest
level since 1993, when
the industry was emerging from a recession.
href='http://www.bloomberg.com/apps/news?pid=20601080&sid=aDxkEVMOHZxU&refer=asia'>Read
more.
International
German Department Store Chain Files
for
Insolvency
The German department store chain Hertie said yesterday that it had
filed for insolvency and
signaled problems with one of its owners, the British financial group
Dawnay Day, Agence France
Presse reported yesterday. All plans to restructure the chain had
failed, Hertie said, while
adding that the chain had been placed under judicial administration and
believed it had 'a
realistic chance of maintaining the largest number of jobs possible.'
Hertie has existed for
more than a century in Germany, where household consumption has been
sluggish for several years
despite falling unemployment. Dawnay Day bought the Hertie stores in
2005 from the
KarstadtQuelle group, which has since renamed itself Arcandor.
href='http://afp.google.com/article/ALeqM5hQt0637QAJEs61T_ZlDTYCRsRl0g'>Read
more.