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October 6, 2009
Repaid to TARP on Foreclosure Aid
House Financial Services Committee Chairman Barney
Frank (D-Mass.) said yesterday that he plans to introduce legislation
next week to steer $2 billion in rescue funds repaid by U.S. banks to
foreclosure relief for unemployed workers, Bloomberg News reported
yesterday. He has said the program will be extended beyond its December
expiration for foreclosure relief and to help community banks. Frank,
who is leading debate in Congress on the overhaul of U.S. regulations of
financial institutions, said his panel will begin in January to consider
policies to create jobs after it completes work on the regulatory
legislation.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aj.Q11Pul8WI'>Read
more.
In related news, the House Financial Services
Committee will hold a hearing today at 10 a.m. ET titled, “Capital
Markets Regulatory Reform: Strengthening Investor Protection, Enhancing
Oversight of Private Pools of Capital, and Creating a National Insurance
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_092909.shtml'>Click
here to read the prepared witness testimony.
As Delphi Emerges from
Bankruptcy, Executive Regrets the Bumpy Ride
Though turnaround specialist Robert S. 'Steve' Miller
helped revive Bethlehem Steel Corp. and Federal Mogul Corp. through
chapter 11 protection, he said that until he tackled Delphi Corp., he
never knew a bankruptcy could get so complicated or personal, the
size='3'>Wall Street Journal reported today.
The largest U.S. auto-parts maker sought bankruptcy protection in
October 2005, shortly after Miller joined as chief executive. Miller
slashed Delphi's hourly work force nearly in half, cut 40 percent of the
salaried staff and closed 21 of its 29 U.S. factories. Delphi's first
reorganization plan fell apart last year amid the financial crisis and
plunging auto sales, and the company came perilously close to
liquidation. “It might be a blessing in disguise that we didn't
exit bankruptcy last year,” Miller said. “We might have been
forced into a second bankruptcy because of the serious decline in the
automotive markets.” Now, it's set to emerge from bankruptcy
Tuesday with the sale of its assets to former parent General Motors
Corp. and its lenders.
href='http://online.wsj.com/article/SB125479247608766485.html?mod=WSJ_hps_MIDDLEForthNews'>Read
more. (Subscription required.)
Analysis: As Popularity of
Prepaid Debit Cards Grows, So Do Their Fees
While prepaid debit cards are becoming ubiquitous in
nearly all retail outlets, their convenience comes with a catch: fees,
often hidden in the fine print, the
face='Times
New
Roman' size='3'>New York Times reported today.
The MiCash Prepaid MasterCard charges cardholders a $9.95 activation
fee. Like many competitors, it then charges numerous recurring fees,
including $1.75 for each ATM withdrawal, $1 for each ATM balance
inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for
inactivity after 60 days and $1 for a call to customer service. The
Millennium Advantage Prepaid MasterCard goes further, listing an
application fee of up to $99. The Silver Prepaid MasterCard advertises
that it does not charge for overdrafts as many debit cards do, but it
gives itself the option of charging a $25 shortage fee if customers
exceed their balance. A cottage industry only 10 years ago, reloadable
prepaid cards have tapped into the vast pool of about 80 million
consumers who have little or no access to bank accounts.
href='http://www.nytimes.com/2009/10/06/your-money/06prepay.html?_r=1&ref=business&pagewanted=print'>Read
more.
The Obama administration's pay czar is planning to
clamp down on compensation at firms receiving large sums of government
aid by cutting annual cash salaries for many of the top employees under
his authority, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Instead of awarding large cash salaries,
Kenneth Feinberg is planning to shift a chunk of an employee's annual
salary into stock that cannot be accessed for several years, these
people said. Such a move, the most intrusive yet into corporate
compensation, would mark the government's first effort to curb the
take-home pay of everyone from auto executives to financial traders.
Feinberg is expected to issue by mid-October his determination on
compensation packages for 175 of the most highly-compensated executives
and employees at the seven firms he oversees. The companies are:
American International Group Inc., Bank of America Corp., Citigroup
Inc., General Motors Co., GMAC Financial Services Inc., Chrysler LLC and
href='http://online.wsj.com/article/SB125478783753066235.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Chairman Considers Separate Bill to Regulate Derivatives
Following House Financial Services Chairman Barney
Frank's (D-Mass.) release Friday of a discussion draft to regulate
over-the-counter derivatives, House Agriculture Chairman Collin Peterson
(D-Minn.) is working on his own bill,
face='Times
New
Roman' size='3'>CongressDaily reported
yesterday. The statement is the latest turn in the jurisdictional tussle
between the two powerful house chairmen. The House Agriculture Committee
has primary jurisdiction over the Commodity Futures Trading Commission
and the futures industry, while House Financial Services has
jurisdiction over the SEC and the securities industry. The discussion
draft by Frank does not address some of the speculation issues in the
oil and agricultural markets that Peterson included in a bill his
committee approved earlier this year. It is unclear whether Peterson
will introduce his bill separately or merge it with Frank's measure. If
he chooses the latter route, the Agriculture Committee could mark up
certain portions of the bill, or he could introduce the bill as part of
a manager's amendment on the floor.
In related news, the House Financial Services
Committee will hold a hearing on Wednesday titled “Reform of the
Over-the-Counter Derivative Market: Limiting Risk and Ensuring
Fairness.” Witnesses to be announced.
Media
Bankrupt Publisher Balks
at Document Requests
Bankruptcy Judge
face='Times
New
Roman' size='3'>Brendan L. Shannon declined to
issue an immediate ruling yesterday in a dispute over documents and
confidentiality in the chapter 11 case of Freedom Communications
Holdings Inc., the Associated Press reported yesterday. The Irvine,
Calif.-based company has been feuding with its unsecured
creditors’ committee, which includes the Pension Benefit Guaranty
Corporation, over their requests for financial information. Following a
hearing Monday afternoon, Judge Shannon said that he needed time to
consider PBGC's argument that signing the confidentiality agreement
demanded by Freedom in return for access to documents could violate the
agency's obligation to provide information to Congress or the executive
branch if requested. The judge encouraged
both sides to work cooperatively in advance of the next hearing,
scheduled for Oct. 14.Freedom, which owns the
face='Times New Roman' size='3'>Orange County Register
size='3'>in California, dozens of other newspapers and eight televisions
stations, sought bankruptcy protection last month, citing a steep drop
in advertising revenue and debts of $1.08 billion, including $770
million in bank debt.
href='http://www.sfexaminer.com/economy/ap/63526672.html'>Read
more.
href='http://www.sfexaminer.com/economy/ap/63526672.html'>
Trade Publisher Questex
Falls into Chapter 11
Trade Publisher Questex Media Group Inc. filed for
chapter 11 protection following a decline in publication and advertising
revenues and looming debt obligations,
face='Times
New
Roman' size='3'>Bankruptcy Law360 reported
yesterday. The Newton, Mass.-based company and eight of its subsidiaries
listed assets of $299 million and liabilities of roughly $321 million.
Questex has $242 million in total funded secured debt, consisting of
$186 million in first-lien debt and $56 million of second-lien debt,
according to the filing. It also has racked up $41 million outstanding
(including accrued interest) on notes issued to the former principals of
previously-acquired companies, it said. Questex will commence a 363
asset sale and intends to obtain debtor-in-possession financing from its
first-lien lenders. The case is
face='Times
New
Roman' size='3'>In re Questex Media Group Inc
size='3'>., case number 09-13423, in the U.S. Bankruptcy Court of
Delaware.
href='http://bankruptcy.law360.com/articles/126493'>Read
more. (Subscription required.)
Creditors Get Little
Recovery in Northeast Biofuels’ Liquidation Plan
Ethanol production startup Northeast Biofuels LP,
which recently sold its assets to Sunoco Inc., has filed a liquidation
plan and accompanying disclosure statement that lays out very little
recovery for creditors,
face='Times New Roman' size='3'>Bankruptcy Law 360
size='3'>reported yesterday. The disclosure statement, filed on Friday
in the U.S. Bankruptcy Court for the Northern District of New York,
estimated that the holders of secured claims would recover only 6 to 10
percent of their investment, while unsecured creditors would recover 3
to 9 percent. Though equity-holders will get nothing, administrative
claims, fee claims and priority tax claims will be paid in full.
Northeast also estimated that it made payments of over $5 million to
creditors in the 90 days prior to the bankruptcy filing. Both the
lenders and the creditors’ committee have indicated their support
for the plan, Northeast said.
href='http://bankruptcy.law360.com/print_article/126385'>Read more.
(Subscription required.)
WCI Asks Court to Block
Drywall Class Action
WCI Communities Inc. has filed a lawsuit asking a
bankruptcy court to stop a class action filed in state court by
homeowners who accuse the associations WCI created for its real estate
developments of hiding problems with defective Chinese drywall from
potential homebuyers,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. In its complaint, filed Friday in the U.S.
Bankruptcy Court for the District of Delaware, WCI said that the class
action indirectly seeks recovery from WCI and its officers, who were
released from liability by WCI's reorganization plan, even though it
doesn't name them as defendants. It asked the bankruptcy court to hold
the plaintiffs in the state court case in contempt for disobeying the
order confirming the plan. The plaintiffs in the state court case
— homeowners Joseph and Fabiola Espinal — sued eight
homeowners associations created by WCI for its planned communities in
July in the 17th Judicial Circuit in and for Broward County, Fla., on
behalf of a proposed class of homeowners who belonged to the
associations.
href='http://bankruptcy.law360.com/print_article/126379'>Read
more. (Subscription required.)
Parent of Olympics Retail
Manager Enters Chapter 11
While the world gears up for the 2010 Olympic Winter
Games in Vancouver, XP Events, which will build and manage the 60-plus
retail kiosks at the Olympics, filed for chapter 11 protection on Sept.
30 after lender Bank of America refused to extend the company’s
line of credit, according to the
face='Times
New
Roman' size='3'>Denver Business Journal. XP
Events said that the filing won’t affect its retail concessions
contract with the Vancouver Olympics organizing committee because that
contract is held by XP Canada, an XP Events affiliate that has its own
lender. XP Events, which also managed the sale of licensed merchandise
at the 2008 Summer Olympics in Beijing and several NBA All-Star games,
is slated to design, build and operate more than 60 retail kiosks at
competition and non-competition venues (15 in all) throughout the
Olympic and Paralympic Winter Games, from Feb. 12 until March
21.
International
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