name='1'>Investors Hit Bank of
w:st='on'>
size='3'>America
size='3'>for Loan Modifications

Some investors who hold
securities backed by Countrywide mortgages are not pleased with the
manner that Bank of America Corp. has decided to embark on an $8.4
billion home-loan-modification program to settle charges brought by
state attorneys general against Countrywide Financial Corp.,
theWall Street
Journal reported today. More than $2 trillion
in mortgage loans were packaged into mortgage-backed securities and sold

to investors by Wall Street, according to Inside Mortgage
Finance. Bank of America settled charges this fall with attorneys
general from 15 states. The settlement stemmed from charges that
Countrywide engaged in predatory lending practices involving borrowers
who took out subprime loans and option-adjustable-rate mortgages. Under
the settlement, Bank of America, which acquired Countrywide in July,
agreed to modify the mortgages of as many as 400,000 borrowers by
refinancing loans, lowering interest rates and reducing principal
amounts. The bank neither admitted nor denied wrongdoing. However, some
investors believe they should have been contacted first. Other investors

said that Bank of America is moving much of the cost of the settlement
to investors when it should be paying those costs itself. These
investors said that they don't oppose modifying loans when it will
increase investor returns while keeping borrowers in their homes. But
they said that many of these loans violated representations and
warranties made when the mortgages were packaged into
securities. 
href='http://online.wsj.com/article/SB122696804303735525.html'>Read
more. (Subscription required.)

 

size='3'>Autos

name='2'>Senate Democrats Release Details of Auto Rescue
Package

Senate Democrats
yesterday released their plan to give a $25 billion financial boost to
auto companies as part of an economic stimulus package carved from the
$700 billion financial market bailout,

size='3'>CongressDaily reported today. The
auto bailout has been packaged in a larger $100 billion economic
stimulus plan with a House-passed $6 billion extension of unemployment
benefits, as well as funding for infrastructure, food stamps and aid to
states. Democrats are expected to narrow it to at most the auto loans
and unemployment benefits due to opposition from Republicans and even
some Democrats. Democrats attached several conditions on auto companies
that would receive loans, including denying bonuses to company officials

making more than $250,000 annually. Companies also must submit a plan on

how the government funds will be used 'to ensure the long-term financial

posture of the company, and how such funds will stimulate automobile
production in the United States and improve the capacity of the company
to pursue the timely and aggressive production of energy-efficient
advanced technology vehicles,' according to the draft bill. The 10-year
auto loans would carry an annual interest rate of 5 percent in the first

five years and 9 percent thereafter. The Treasury secretary would have
the discretion to extend the loans longer than a
decade.

The Senate Banking
Committee will be holding a hearing today titled “Examining the
State of the Domestic Automobile Industry.” The hearing will
feature the CEOs of General Motors, Ford and Chrysler, along with UAW
President Ron Gettelfinger and Prof. Peter Morici of the

size='3'>University of

size='3'>Maryland
size='3'>’s Robert H. Smith School of Business. 

href='http://banking.senate.gov/public/index.cfm?Fuseaction=Hearings.Detail&HearingID=0b8c3c92-b599-46f4-90b3-7f4e37583268'>Click

here to read the prepared materials and to watch a live Webcast

of the hearing scheduled for 3 p.m. ET.

In related news, the
leaders of the three
w:st='on'>
size='3'>Detroit auto
companies and the United Automobile Workers union will be facing strong
public opinion against the government providing financial support for
the companies when they head to Congress this week to press for a
bailout, the New York
Times reported today. Analysts and longtime
observers of the industry say several strategic missteps have
hurt

size='3'>Detroit’s
standing in the public eye. The carmakers, for example, fought hard in
recent years against two congressional efforts to raise fuel economy
standards, at a time when Americans were struggling with more expensive
gasoline and had become more environmentally conscious. 

href='http://www.nytimes.com/2008/11/18/business/economy/18rescue.html?_r=1&ref=business&pagewanted=print'>Read

more.

 

name='3'>Ford to Shed 20 Percent Stake in Mazda but Ties to
Remain

Ford Motor Co. will end
12 years of control of Mazda Motor Corp. through the sale of a 20
percent stake in the Japanese carmaker, Reuters reported today. Mazda,
in which Ford first took a stake in 1979, said today that it would buy
back 6.87 percent of its own shares from Ford for up to 17.9 billion yen

($185 million), keeping them as treasury stock. More than 20 business
partners will purchase the remaining 13 percent. Ford, whose coffers are

depleted from a relentless sales slide mainly in the

size='3'>United States
size='3'>, will raise more than 52 billion yen ($538 million) from the
sale of the stake, Mazda said. 

href='http://www.nytimes.com/reuters/business/business-ford-mazda.html?ref=business&pagewanted=print'>Read

more.

 

name='4'>Getrag
w:st='on'>

size='3'>U.S.
size='3'>Unit Files Bankruptcy after Chrysler
Suit

Getrag Group's

size='3'>U.S.
size='3'>auto-parts unit filed for bankruptcy, citing a lawsuit filed by

Chrysler LLC last month in a dispute over an unfinished transmission
plant, Bloomberg News reported yesterday. Getrag Transmission
Manufacturing LLC, based in Sterling Heights, Mich., sought chapter 11
protection from creditors today in U.S. Bankruptcy Court in Detroit,
claiming it owes more than $500 million on the factory in Tipton, Ind.
Getrag said in court papers that the plant is 80 percent completed.
Chrysler, in the lawsuit filed Oct. 29 in federal court in

size='3'>Detroit, claimed
that Getrag violated a contract by failing to obtain as much as $300
million in debt financing before construction of the jointly developed
plant was under way. Chrysler, the third-largest

size='3'>U.S.
size='3'>automaker, alleged breach of contract and fraudulent
misrepresentation. Getrag, based in
face='Times New Roman' size='3'>Ludwigsburg
size='3'>,

size='3'>Germany, and
the
face='Times New Roman'
size='3'>U.S.
size='3'>unit denied in court documents that they breached any
agreements or committed fraud against Chrysler. The Getrag unit was
formed in January 2007 to design and manufacture dual clutch
transmissions at the plant under an agreement with the
automaker. 

href='http://www.bloomberg.com/apps/news?pid=20601127&sid=akIBVtcDLleI'>Read

more.

 

name='5'>State Lawmakers, Governors Stress Urgent Need for Fiscal
Relief

As the economy continues
to weaken, state legislatures called on Congress yesterday to pass an
economic stimulus package that includes aid to states for Medicaid,
funds for infrastructure projects, an extension of unemployment
insurance benefits and a temporary increase in food stamp
benefits,
size='3'>CongressDaily reported yesterday.
Forty-nine states have constitutional requirements to balance their
budgets each year. NCSL warned that state legislatures and governors are

forced to cut spending and raise taxes and fees during difficult
economic times, which can have the effect of deepening and prolonging
any slump. The National Governors Association and the National
Association of State Budget Officers also said yesterday in their
monthly state economic review that 18 states already have cut budgets by

a total of $5.5 billion already for FY09, which began Oct. 1. 'Most
states are now re-estimating their budgets, but given the recent jump in

unemployment and the substantial erosion in both income and sales tax
revenues, the expectation is that the shortfalls for both fiscal year
2009 and 2010 will grow dramatically over the next several months,' the
review said.

 

name='6'>House Panel to Examine Oversight of Economic
Bailout

The House Financial Services
Committee will be holding a hearing today titled “Oversight of
Implementation of the Emergency Economic Stabilization Act of 2008 and
of Government Lending and Insurance Facilities; Impact on Economy and
Credit Availability.” The hearing will take place at 9:30 a.m. ET
and feature three panels of witnesses. The first panel will feature
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke
and Federal Deposit Insurance Corp. Chair Sheila Bair. 

href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr111808.shtml'>Click

here to view the prepared witness testimony and to watch a live
Webcast of the hearing.
 

name='7'>Mexican Billionaire Increases Stake in
w:st='on'>
size='3'>Bankrupt
face='Times New Roman' size='3'>Circuit

size='3'>City

Mexican billionaire
Ricardo Salinas Pliego raised his stake in Circuit City Stores Inc. to
more than 13 percent to become the biggest shareholder as the

size='3'>U.S.
size='3'>consumer electronics retailer works to emerge from bankruptcy
protection, Bloomberg News reported today. Salinas Pliego bought 25
million shares Nov. 13 and Nov. 14 at 24 cents to 26 cents apiece,
according to a filing today with the U.S. Securities and Exchange
Commission. Pliego also bought 5.3 million shares of
w:st='on'>
size='3'>Circuit
face='Times New Roman' size='3'>City
on Nov. 12, two days after the retailer declared chapter
11 bankruptcy.
w:st='on'>
size='3'>Circuit
face='Times New Roman' size='3'>City
obtained court approval last week to borrow as much as
$1.1 billion to finance operations on an interim basis while it
restructures. The Richmond, Va.-based company said it will save $40
million a year by the bankruptcy court voiding lease agreements on 155
stores while it develops a plan to emerge from bankruptcy. 

href='http://www.bloomberg.com/apps/news?pid=20601127&sid=agczvxXnOdu4'>Read

more.

 

name='8'>Transporter Receives Court Approval for Asset Sales
Plan

Bankruptcy Judge
Peter J. Walsh on Friday approved bankrupt transport
service group GWLS Holdings Inc.'s plan to sell substantially all its
assets, Bankruptcy
Law360 reported yesterday. Judge Walsh ordered

that bids must be received by Dec. 15 as the auction is scheduled for
Dec. 19, and a sale hearing is scheduled for Jan. 15. Greatwide filed
for bankruptcy on Oct. 20, and almost immediately revealed a plan to
sell its assets to its first-lien lenders, including affiliates of
Centerbridge Capital Partners and the D. E. Shaw group. The first-lien
lenders are also providing Greatwide's $73.6 million in
debtor-in-possession financing. Greatwide’s second-lien lenders
and unsecured creditors objected, saying that there was no reason to
rush the liquidation process and that the quick schedule would
discourage competitive bids. 
href='http://bankruptcy.law360.com/articles/77085'>Read
more. (Registration required.)

 

name='9'>Apparel Chain Faces Closure Three Months after
Rescue

Fewer than three months
after a private-equity firm and hedge fund acquired the discount
clothing chain Steve & Barry's LLC out of bankruptcy for $168
million, it stands on the brink of liquidation, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The 275-unit
w:st='on'>Port

Washington,
w:st='on'>
size='3'>N.Y., chain,
which gained national prominence with fashion lines by celebrities such
as actress Sarah Jessica Parker and surfer Laird Hamilton, is set to
announce this week it will go out of business.
w:st='on'>
size='3'>Bay
face='Times New Roman' size='3'>Harbour
size='3'>Management LC, the private-equity firm based in

size='3'>New York that
acquired 175 of the stores, has hired a liquidation firm to handle the
going-out-of-business sale for the chain. Nearly 5,000 employees will be

let go as a result of the 
size='3'>liquidation. 
href='http://online.wsj.com/article/SB122697733672536313.html'>Read
more. (Subscription required.)
 

name='10'>Masonite May Face Bankruptcy Unless Lenders Grant Loan
Reprieve

Masonite International Corp.,
taken over by Kohlberg, Kravis, Roberts & Co. three years ago, may
file for bankruptcy unless the company's lenders agree to ease the terms

of its bank loans, Bloomberg News reported today. The door and
fiberboard maker, which KKR bought for $1.9 billion, is negotiating with

a group led by Scotia Capital for a reprieve of at least 30 days in
exchange for higher interest payment and fees. KKR partner Paul Raether
said on Nov. 3 that the New York-based buyout firm had marked down the
value of its equity investment in Masonite to zero. In 2005, Standard
& Poor's estimated the stake was worth $650 million. In the second
quarter, Masonite breached loan covenants prohibiting the company from
incurring debt seven times greater than its earnings before interest,
tax, depreciation and amortization, according to a filing. In September,

Masonite arranged a bank-loan forbearance agreement that expired Nov.
13. 

href='http://www.bloomberg.com/apps/news?pid=20601103&sid=aI0hIujcQOec&refer=news'>Read

more.

 

name='11'>Paulson Will Keep Bailout Reserve to Stay Flexible for
Future

Treasury Secretary Henry
Paulson is unlikely to use what remains of the $700 billion Wall Street
rescue fund to launch substantial new programs, preferring to keep money

in reserve for unforeseen emergencies and to preserve flexibility for
the Obama administration, the
size='3'>Wall Street Journal reported today.
Paulson said that the financial system is stabilizing, and he is
thinking about how the remaining $410 billion could be best utilized,
but that he doesn't plan to tap it unless a further need arises.
Congress approved a $700 billion bailout in October after Mr. Paulson
and Federal Reserve Chairman Ben Bernanke insisted a broad response was
needed to prevent an economic meltdown. Mr. Paulson was allowed
immediate access to $350 billion, with a second tranche available upon
issuing a written notice to Congress. Lawmakers would have 15 days to
deny such a request. 
href='http://online.wsj.com/article/SB122695439734334685.html'>Read
more. (Subscription required.)

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