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December
12, 2007
Judiciary Committee to Mark Up Mortgage Modification and Judicial Pay
Raise Legislation
The House Judiciary Committee
will hold a mark-up hearing today on a bill that would allow bankruptcy
judges to modify certain home mortgages and on legislation addressing a
judicial pay raise. The committee yesterday reached an agreement on H.R.
3609, the “Emergency Home Ownership and Mortgage Equity Protection
Act of 2007,” to limit the bill to subprime or nontraditional
loans that are in foreclosure or at least 60 days overdue and would also
give a bankruptcy judge the discretion to determine whether the debtor
has insufficient income to pay the mortgage and if a loan modification
should be made. The committee will also take up H.R. 3753, the
“Federal Judicial Salary Restoration Act of 2007,” which
would calculate what judicial salaries would have been today if judges
had received regular cost-of-living adjustments since 1969
and would guarantee annual cost-of-living adjustments going
forward.
href='http://judiciary.house.gov/markup.aspx?ID=192'>Click
here to view the hearing page.
name='2'>Commentary: Congress Should Pass Judicial Pay Raise
Legislation
Federal judges have not
had a pay increase for almost two decades and Congress should act
quickly to address the lag in judicial salaries, according to a
Washington Post
editorial today. Only 40 percent of sitting federal
judges come from the private sector -- a dramatic change from the 1950s,
when lawyers experienced in the real-world workings of the courts made
up the majority of federal judges. In the future, as Chief Justice John
G. Roberts Jr. argued in January, it will be even more likely that only
those who've already made a fortune or those who are less experienced --
and for whom a federal judicial salary constitutes a raise -- will agree
to serve. A Senate bill, scheduled for debate on Thursday, would
increase by 50 percent the salaries of federal trial judges, to
$247,800; other federal judges, including justices of the Supreme Court,
would get commensurate raises. A House bill that is scheduled to be
taken up today by the Judiciary Committee calculates what judicial
salaries would have been today if judges had received regular
cost-of-living adjustments since 1969. The bill would also guarantee
annual cost-of-living adjustments -- a provision that should be included
even if lawmakers negotiate a different baseline salary.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/12/11/AR2007121102004_pf.html'>Read
more.
name='3'>Commentary: The Roots of the Mortgage Crisis
Low
size='3'>U.S.
rate in response to the dot-com crash, and especially the 1 percent rate
set in mid-2003 to counter potential deflation, lowered interest rates
on adjustable-rate mortgages (ARMs) and may have contributed to the rise
in
face='Times New Roman'
size='3'>U.S.
size='3'>home prices, according to a commentary by former Fed Chairman
Alan Greenspan in today’s
size='3'>Wall Street Journal. Demand in those
days, he said, was driven by the expectation of rising prices --
the dynamic that fuels most asset-price bubbles. If low adjustable-rate
financing had not been available, most of the demand would have been
financed with fixed rate, long-term mortgages. In fact, home prices
continued to rise for two years subsequent to the
w:st='on'>
size='3'>peak
size='3'>ARM
size='3'>originations (seasonally adjusted). The Fed believed that the
potential threat of corrosive deflation in 2003 was real, even though
deflation was not thought to be the most likely projection. In
retrospect, global economic forces, which have been building for
decades, appear to have gained effective control of the pricing of
longer debt maturities. Simple correlations between short- and long-term
interest rates in the United States remain
significant, but have been declining for over a half-century. The
current credit crisis will come to an end when the overhang of
inventories of newly built homes is largely liquidated, and home price
deflation comes to an end.
href='http://online.wsj.com/article/SB119741050259621811.html?mod=opinion_main_commentaries'>Read
more. (Registration required.)
name='4'>Court Gives Nod to
face='Times New Roman' size='3'>Delphi
size='3'>, Appaloosa Deal
Bankruptcy Judge
Robert Drain
size='3'>on Monday granted
size='3'>Delphi's request for approval
of the $2.55 billion funding agreement that will propel the company out
of chapter 11,
size='3'>Bankruptcy Law360 reported yesterday.
In July,
size='3'>Delphi
of investors, led by hedge fund Appaloosa, had agreed to invest up to
$2.55 billion to help fund the auto parts producer's exit from chapter
11.
size='3'>Delphi
win as much as $7 million in additional funding to pay for remaining
pension and labor costs and other obligations. But
w:st='on'>
size='3'>Delphi
severe dislocation of capital markets caused it to be unable to obtain
the financing it required.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=42025'>Read
more. (Registration required.)
name='5'>Involuntary Bankruptcy Petition against Energy Company
Dismissed
Bankruptcy Judge
size='3'>Chris
size='3'>topher S. Sontchi dismissed an
involuntary bankruptcy petition filed against alternative energy company
Earth Biofuels Inc. in a move that ends a volatile chapter in the
company's history,
size='3'>Bankruptcy Law360 reported yesterday.
The case against the company began in July, when a number of investors
accused it of generally failing to pay debts when due. The petitioners
were investment companies and senior convertible noteholders, including
Castlerigg Master Investments Ltd., Radcliffe SPC Ltd., Portside Growth
and Opportunity Fund, Cornell Capital Partners LP and Evolution Master
Fund Ltd. SPC. The noteholders were seeking to reclaim $33 million in
unsecured notes, as well as interest fees, costs, expenses and other
amounts. However, a majority of the parties involved in the case filed a
motion last month saying that they had settled the dispute and that the
judge should dismiss the bankruptcy petition.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=42137'>Read
more. (Registration required.)
Denies Appeal in Fidelity Mortgage FLSA Suit
Judge Gary L. Lancaster
of the U.S. District Court for the Western District of Pennsylvania on
Friday refused to allow Delta Financial, which owns Fidelity Mortgage
Inc., to file an interlocutory appeal of his May order granting in part
and denying in part summary judgment motions filed by both Fidelity and
the plaintiff,
size='3'>Bankruptcy Law360 reported yesterday.
Judge Lancaster’s order approved a report and recommendation
from Magistrate
Judge Lisa Pupo Lenihan, who in March recommended that Fidelity’s
summary judgment motion be denied because the Supreme Court, circuit
courts and the Department of Labor have classified financial industry
companies as enterprises outside the scope of the retail or service
enterprise exemption. When the plaintiff, Doug Pontius, filed suit
against Fidelity in November 2004 on behalf of a nationwide class, he
claimed that the company failed to pay overtime compensation to its loan
officers and mortgage analysts, in violation of the Fair Labor Standards
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=42045'>Read
more. (Registration required.)
SEC
Planning to Delay Accounting Rules for Small Companies
The Securities and
Exchange Commission chairman
face='Times New Roman' size='3'>Chris
size='3'>topher Cox is expected to tell lawmakers today that the agency
plans to delay for another year the requirement that small companies
report on the state of their internal financial controls, the New
York Times reported today. In testimony prepared for a hearing of
the House Small Business Committee, Cox said that he would propose
delaying the rules until 2009 and that the decision on whether to
require compliance would then be based in part on a study of costs to be
conducted by the commission’s economists. The exempt companies
generally have market capitalizations less than $75 million and
represent a small percentage of the total market value of American
companies, but they include a majority of all traded companies.
href='http://www.nytimes.com/2007/12/12/business/12audit.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='8'>SEC Fraud Suit Names
w:st='on'>San
Diego
size='3'>Auditor
The Securities and
Exchange Commission filed a civil fraud complaint against the former
auditor of
face='Times New Roman' size='3'>San Diego
on Monday, a rare step that reflects the
agency’s concern about the quality of the information that
governments provide to municipal bond markets, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The commission settled the complaint at the
same time, imposing a $15,000 fine on the auditor, Thomas J. Saiz, and
enjoining him and his firm from violating securities laws in the future.
The SEC accused Saiz of issuing clean audit reports on
w:st='on'>
Diego
2001 and 2002, when in fact the city was shortchanging its pension fund
and covering up the shortfall with fraudulent accounting.
Regulators said that Saiz
had not only approved of
w:st='on'>San
Diego
but helped to draft footnotes that included false claims about the steps
the city was taking to protect its pension.
href='http://www.nytimes.com/2007/12/12/business/12sec.html?ref=business&pagewanted=print'>Read
more.
International
name='9'>Greeks Strike over Pensions, Grounding Planes
and Shutting Schools
Greek lawyers, doctors
and schoolteachers will join bus drivers and construction workers in a
general strike tomorrow against government plans to overhaul the pension
system, Bloomberg News reported today. There will be no commercial
flights into or out of the country as air traffic controllers walk off
the job for 24 hours in a protest organized by the two biggest labor
unions, jointly representing more than 2.5 million workers.
size='3'>Greece
system, ranked as being among the most generous in
w:st='on'>
size='3'>Europe
for Economic Cooperation and Development, faces a crisis within a decade
as the population ages, central bank Governor Nicholas Garganas has
said. State spending to plug the deficits of government-run pension
funds has more than doubled since 2000. The last
attempt by a Greek government to introduce changes to the pension system
in 2001 was greeted with large-scale street protests, forcing then-Prime
Minister Costas Simitis of the socialist Pasok party to dismiss his
labor minister and scrap proposals such as raising the retirement age to
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=arriVCU4aKPo&refer=europe'>Read
more.
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=arriVCU4aKPo&refer=europe'>