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Financial Services Committee Backs Credit Reporting Bill
The House Financial Services Committee late
yesterday approved legislation that would permanently extend a law
preempting states from regulating credit reporting, rebuffing efforts to
eliminate or sunset the provision, the National Journal reported.
The committee approved the bill (H.R. 2622) on a 61-3 vote after
considering nearly two dozen amendments. The legislation would
permanently extend the federal preemption of state law put in place by
the 1996 amendments to the Fair Credit Reporting Act (FCRA). The
pre-emption provision is set to expire on Jan. 1.
In addition, the bill includes several consumer protection provisions
including those aimed at reducing the growing problem of identity theft.
The committee adopted by voice vote a manager's amendment offered by
committee Chairman Michael Oxley (R-Ohio) that included additional
protections such as a provision setting up a three-tiered standard for
victims of identity theft to place fraud alerts in their credit reports.
The fraud alerts would notify all users that a consumer does not want
credit offered without first seeking special permission.
The panel also approved by voice vote an amendment that would require
credit card companies to disclose to consumers circumstances not related
directly to their accounts that may cause the companies to increase the
interest rates on their credit cards. Another amendment, adopted by
voice vote, would require those who provide information to credit
reporting agencies, such as credit card companies or retailers, to have
'reasonable procedures' to ensure the information they provide to credit
bureaus is accurate, such as investigating claims from consumers that
information about them is false, reported the National
Journal.
Jobless Claims Boost Hopes for Economy
The number of Americans filing new jobless claims plunged unexpectedly
last week to the lowest level since February, bolstering hopes the
economy may be improving, Reuters reported. While the Labor Department
on Thursday cautioned against reading too much into the improvement,
saying July is always a volatile month, economists seized on the
surprising strength in the job market as evidence the economy is
recovering. 'I think this puts a stake in the heart of those that claim
recession is still with us,' said John Lonski, chief economist at
Moody's Investors Service in New York. The level of new claims, which
gives an early reading on the resilience of the job market, dropped
29,000 to 386,000 in the week of July 19, far beneath Wall Street
expectations for 413,000 applications, from a revised 415,000 the week
prior. 'The (economy) is growing but we're not growing fast enough in
order to create enough jobs to absorb an actual growth in the labor
force,' said Anthony Chan, chief economist for Banc One Investment
Advisors, Reuters reported. 'In order to create jobs, you need more than
2.7 percent economic growth.'
David Rockefeller Subpoenaed by SEC in Metromedia Fiber
Probe
Billionaire financier David Rockefeller, a former director of Metromedia
Fiber Networks Inc., said he has been subpoenaed by U.S. securities
regulators to provide documents related to their investigation of the
bankrupt telecommunications company, Bloomberg News reported.
Rockefeller, who was also a member of Metromedia Fiber's audit
committee, disclosed the subpoena in court papers filed in White Plains,
N.Y., with U.S. Bankruptcy Judge Adlai Hardin, who is handling
the company's reorganization. He asked Hardin to order Metromedia Fiber
to reimburse him for 'significant attorneys' fees'' incurred in
responding to the document demand.
Metromedia Fiber, now controlled by billionaire John Kluge, declared
bankruptcy in May 2002 after announcing it would restate its 2001
results. The following month, it said the U.S. Securities and Exchange
Commission (SEC) was investigating that restatement, which projected a
revised loss of $5.36 billion after a change in accounting practices for
revenue and expenses. 'The SEC has to review and analyze the
communications between the audit committee and the auditors,'' said
Houston lawyer Christopher J. Bebel, a former SEC lawyer and federal
prosecutor. 'The SEC has to look at whether the audit committee raised
any issues or concerns with the auditors,'' reported the newswire.
WorldCom Seeks Court Approval to Acquire Digex Shares
WorldCom Inc. is seeking authorization from a bankruptcy court in New
York to buy all outstanding publicly traded shares of Digex Inc. for
about $18 million, Bloomberg News reported. The purchase would enable
the long-distance phone company to broaden its portfolio of managed
services, a key goal of its reorganization plan, Ashburn, Va.-based
WorldCom said in a press release distributed by PR Newswire.
WorldCom filed the largest chapter 11 case in history in July 2002
after disclosing an accounting fraud that now totals about $11 billion.
The company earlier this month won a federal judge's approval to revise
its bankruptcy recovery plan, reported the newswire.
ENRON
Enron Investors Get Preliminary Approval of $40 Million
Agreement
A judge gave Enron Corp. investors preliminary approval of a $40 million
settlement with a network of foreign accounting firms once linked to
Arthur Andersen LLP,
in the first resolution of an Enron-related suit, Bloomberg News
reported. U.S. District Court Judge Melinda Harmon said she found no
problem with Andersen Worldwide Societe Cooperative's agreement to
resolve suits by Enron investors and workers over the accounting firm's
role in helping the energy trader hide more than $1 billion in losses.
The accord doesn't cover Arthur Andersen LLP, Enron's auditor for more
than a decade. Andersen Worldwide is being liquidated in a Swiss
bankruptcy case, reported the newswire.
Enron In Interim Pact To Turn Over Some Furniture To GE
Enron Corp. reached an interim agreement to turn over about half
the office furniture from its corporate headquarters in Houston to
General Electric Co. unit GE Capital Corp., which financed the
furnishings. Under the interim settlement, announced at the U.S.
Bankruptcy Court in Manhattan on Thursday, Enron would retain the
furniture employees still use at its Enron Center North facility located
at 1400 Smith St. in Houston and turn over the surplus equipment to GE.
Enron also agreed to pay GE Capital $60,000 a month in 'adequate
protection payments' for the furniture it will retain -- a reduction
from the current monthly payment of just over $80,000. A hearing to
finalize the accord, during which the adequate protection payments could
be altered, was set for Sept. 25.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
SK Global's Creditors Vote for Receivership
Hana Bank, South Korea's fourth-biggest lender, said the 56 local
creditors of SK Global Co. voted to place the business in receivership
because overseas creditors rejected a buyout proposal, Bloomberg News
reported. 'We can't wait any longer to take action to prevent the
company's value from deteriorating,'' said Hana Bank Chief Executive Kim
Seung Yu, who is leading talks among creditors. Korean creditors say
receivership is the best way to help revive the unit of South Korea's
fourth-largest business group, which distributes products for the
nation's largest oil refiner and mobile phone maker, reported the
newswire.
MergerTalk: Debt-craze Keeps Some Out of Chapter 11
(Reuters)
San Jose, Calif.-based Calpine Corp. hired Goldman Sachs to help it with
a $3.3 billion debt offering, slashing near-term debt that might have
forced it to file for chapter 11 bankruptcy protection, Reuters
reported. According to the newswire, more than ever before, distressed
companies like Calpine are looking to the refinancing market to buy time
in the hope that their business will improve. But some restructuring
experts say many such moves are only short-term fixes. 'It was the coup
of the year, but it doesn't solve the basic problem,' said distressed
company investor Wilbur Ross of the Calpine issue, reported the
newswire. 'Simply pushing out maturities makes it a bigger issue in the
future.'
The refinancing trend seems unlikely to end soon. U.S. junk bond mutual
funds took in a record $23 billion by mid-July this year, higher than a
previous record of nearly $18 billion for 1997, according to AMG Data
Services. 'It's just amazing,' said Barry Ridings, Lazard's co-head of
restructuring, reported Reuters. 'The high-yield bond market is on a
tear,' reported the newswire. To read the full story, point your browser
to
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3154356.
Spiegel to Close Facilities, Cuts Jobs
Spiegel Inc. on Thursday said it would close facilities, leading to
fresh job cuts, as part of its reorganization under chapter 11, Reuters
reported. Spiegel plans to close a customer teleservice center in Rapid
City, S.D., which employs 240 people.
As part of an effort to consolidate order fulfillment operations,
Spiegel also will close a distribution center, which employs 400 people,
in Newport News, Va. The company plans to relocate a retail distribution
facility currently in Columbus, Ohio, to Groveport, Ohio, resulting in
the elimination of 40 jobs. Spiegel filed for bankruptcy protection in
March in an effort to recover from declining retail sales and problems
in its credit card business, reported the newswire.
Farmland Set to Sell Kansas Plants
Farmland Industries said on Thursday it hopes to sell its Coffeyville,
Kan.-based refinery and fertilizer plant to an investor group in
Connecticut, Reuters reported. The farmers cooperative said Pegasus II
LLP has signed a letter of intent to purchase the 90,000 barrel-per-day
refinery and nearby fertilizer plant -- among the last unsold pieces of
Farmland, which went bankrupt in May 2001. If the letter of intent is
approved by the U.S. Bankruptcy Court, Pegasus will have a 45-day period
to inspect the assets before a final sales agreement is made, she added.
Farmland has been trying to sell its Coffeyville refinery since December
2001, saying it could not meet the cost of looming environmental
upgrades, reported the newswire.
GenTek Seeks Emergency Limits On Trade In Claims, Stock
Gentek Inc. filed an emergency motion asking the court overseeing
its chapter 11 case to restrict trades in the company's claims and
equity securities. Judge Mary F. Walrath of the U.S. Bankruptcy Court in
Wilmington, Del., is scheduled to hear the motion on Wednesday. The
company asked for an interim order establishing a notice and hearing
procedure before trading in claims and equity securities can take place.
Without the order, GenTek argued in court papers, the company's right to
profit from net operating loss tax benefits might be in danger.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
America West Faces Discord With Pilots (Wall Street
Journal)
Pilots at America West Airlines vow to strictly enforce work rules that
could cause operational slowdowns and insist they will petition national
mediators if management doesn't voluntarily restart contract talks after
a scheduled meeting on Monday, the Wall Street Journal reported.
Discord with the group could prove troublesome for the carrier, which
narrowly avoided a bankruptcy filing following the Sept. 11, 2001,
terrorist attacks. Earlier this week, its parent, America West Holdings
Corp., reported its first quarterly profit since the third quarter of
2000, due in large part to cost-containment initiatives and a new
pricing structure that has lowered ticket prices and attracted more
business travelers.
Now, the pilots, represented by the Air Line Pilots Association, are
in a position to upset the company's financial and operational upswing.
The group, which began negotiating with management in February 2000,
already this March overwhelmingly rejected a tentative three-year labor
pact that offered an 11 percent pay raise on the date of signing and 3
percent more in January 2005. Pilot leaders cited shortcomings in job
security and retirement benefits that continue to be of concern. Soon
after, a federal mediator, who had been brought in in May of 2001,
suspended negotiations, which had already been suspended once after the
terrorist attacks in September 2001, reported the Journal. To
read the full article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
UAL Says It Has Options on Pension Shortfall
Bankrupt United Airlines is pressing Congress to let airlines stretch
out their employee pension contributions, but the company's chairman
said on Thursday there were alternatives to a legislative fix, Reuters
reported. 'We are working on a multiple combination of solutions,'
United Chief Executive Glenn Tilton told reporters after delivering a
speech to industry and government officials. Tilton said United's
situation, even with a massive shortfall of more than $6 billion, is far
different from the case US Airways faced in bankruptcy proceedings last
winter, the newswire reported.
US Airways eventually terminated its pilots' retirement plan and
replaced it with a cheaper one after lawmakers refused to let the
carrier amortize contributions to ease the financial burden of a
substantial pension fund liability. 'Our situation is very different
from theirs,' Tilton said when asked if United would have to terminate
pensions if it could not extend payments, reported Reuters. For
instance, Tilton said US Airways had one alternative plan that became a
crucial negotiating point in the final days of bankruptcy. 'We don't
have that,' Tilton said without identifying what options the airline and
its labor groups might pursue if Congress does not give the industry
more help. They could freeze pensions or negotiate other changes with
its unions, reported the newswire.
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