February 27,
2004
Frank Sees Protracted Debate Over OCC Pre-emption Rule For
National Banks
The Office of the Comptroller of the Currency's controversial new rule
exempting national banks from many state consumer protection laws is
likely to be 'one of the biggest issues' debated in the House Financial
Services Committee this year, Financial Services ranking member Barney
Frank (D-Mass.) said on Thursday, CongressDaily reported. 'I
think they're going to have a hard time staving off some legislation on
this, unless they are willing to redefine it,' Frank said.
The new OCC pre-emption rule, which took effect on Feb. 12, exempts
national banks from most of the state laws from which nationally
chartered thrift institutions already are exempt under Office of Thrift
Supervision rules. Those pre-empted state laws pertain to real estate
lending, other types of lending and deposit taking. The rule also would
establish new federal anti-predatory lending standards for national
banks and restrict state agencies' authority to take actions against
those banks.
To date, no legislation has been introduced to roll back the new rule.
But members of the Financial Services Committee sent a symbolic message
Wednesday when they voted, 34-28, to amend the committee's FY05 'Budget
Views and Estimates' to include language raising concerns about the
rule. As amended, the budget document says the new rules 'may represent
an unprecedented expansion of federal pre-emption authority and a
significant expansion of OCC's regulatory responsibilities' to oversee
and enforce national banks' compliance with consumer protection laws,
reported the newswire.
Pension Conference on Hold; Thomas Ponders Combining Bills
A House-Senate conference to resolve differences in the two chambers'
pension bills remains on hold, as House Ways and Means Chairman William
Thomas (R-Calif.) considers combining the already passed pension bill
with stalled corporate tax legislation, CongressDaily reported.
The strategy is intended to give momentum to the tax bill, which repeals
the foreign sales corporation/extraterritorial income tax provision. The
Senate appointed conferees on the pension bill earlier this month after
Republicans and Democrats reached an agreement aimed at assuaging
Democrats' concerns about being shut out of negotiations. But the House
has not yet named conferees to work on the bill.
Senate Finance Chairman Charles Grassley (R-Iowa) said Thursday he
doubted that adding the pension bill to the FSC/ETI legislation would
help ensure passage of the tax package. 'The House ought to agree to
conference [on the pension bill]' instead of adding extraneous
provisions to the tax package, Grassley said. 'We have chastised
Democrats for not allowing us to go to conference. It is wrong for the
House not to go conference now that we have an agreement [with
Democrats],' he said, reported the newswire.
Regulator Puts Pension Plan Trustees in Cross Hair
William Galvin, the Massachusetts secretary of the Commonwealth, told
Reuters on Tuesday that those who make decisions for other employees or
workers could come under scrutiny -- the same as the companies that
manage mutual funds. The oversight of defined benefit plans is typically
greater than that over defined contribution plans, which are made up of
the newer 401(k) retirement accounts. Because of tax and income
considerations, a company often has more at stake in a defined benefit
plan than it would in a defined contribution plan, experts said.
Regardless of the plan, trustees have an obligation to ensure that the
interests of their participants and beneficiaries are protected, said R.
Scott Henderson, a lawyer who specializes in securities litigation and
investment management at Bingham McCutchen in Boston. Henderson said
plan sponsors should be undertaking serious due diligence on the
investment options of 401(k) retirement plans and look into whether
market timing has affected the funds in the investment line-up for their
plan, reported the newswire.
Economy Grows at Healthy 4.1 Percent Rate
America's economy, bolstered by increased business spending, grew at a
healthy 4.1 percent annual rate in the final quarter of 2003, the
Associated Press reported. That was even faster than first thought and
offered new evidence that the nation's economic recovery was firmly
rooted going into the new year. The latest reading on the gross domestic
product (GDP) -- the broadest measure of the economy's health -- was
slightly better than the 4 percent pace estimated a month ago for the
October-to-December quarter, the Commerce Department reported today.
Even though the fourth quarter's growth rate marked a slowdown from the
red-hot 8.2 percent pace of the third quarter -- the best in nearly two
decades -- it nonetheless represented a solid performance. The 4.1
percent pace was better than economists were predicting. They were
forecasting a growth rate of around 3.8 percent, reported the
newswire.
UAL Has $191 Million Jan. Operating Loss
United Airlines parent UAL Corp. on Thursday reported an operating
loss of $191 million for the month of January, Reuters reported. Elk
Grove, Ill.-based United filed the largest bankruptcy in aviation
history in December 2002, and hopes to emerge from court protection
around the middle of this year. UAL said its net loss for January,
including $26 million in reorganization expenses, was $252 million. It
ended the quarter with $2.2 billion in cash, of which $650 million was
restricted for existing obligations.
The cash balance was down $131 million from December, the carrier said,
adding that it met special bankruptcy financing requirements for the
12th consecutive month. The change in the cash balance included a
retroactive, $63 million quarterly wage payment to the International
Association of Machinists. The airline reports the monthly statistics as
a result of its chapter 11 bankruptcy case, reported the newswire.
Jury Is Set for Rigas Trial; Arguments to Start Today
A jury of nine women and three men was selected for the fraud trial of
John Rigas, two of his sons and another former executive of Adelphia
Communications Corp. in Manhattan on Thursday, the online Wall Street
Journal reported. Opening arguments are scheduled to begin today. Rigas
and sons Michael and Timothy, who formerly controlled the cable company,
along with former executive Michael Mulcahey, have been charged with
conspiracy, bank fraud and wire fraud in an alleged scheme to mislead
investors. All four men have pleaded not guilty. Adelphia sought
bankruptcy protection in June 2002 amid the expanding scandal, which
involved the Rigas family's alleged use of company funds for their own
purposes and manipulation of financial data.
LSB Corporation Bankruptcy Trustee Proposes Interim Distribution
to Bank Subsidiary
LSB Corporation announced in a press release that the bankruptcy trustee
in a case in which the company's wholly owned subsidiary, Lawrence
Savings Bank, is a secured creditor, filed a motion seeking bankruptcy
court approval to make an interim distribution to the creditors. After
payment to one other creditor and reserves for anticipated taxes and
administrative costs, the trustee has proposed making an interim
distribution to the bank of approximately $2.6 million. The bank has
agreed to return any of the interim distribution as would be necessary
to pay additional taxes imposed on the bankruptcy estate in the event
reserves set aside for taxes are insufficient.
Pilot's Plan for Hawaiian Airlines Cuts Wages 10 Percent
A Hawaiian Airlines pilot has assembled a plan to bring the airline out
of bankruptcy by cutting union wages 10 percent for two years and giving
employees stock in the company, the Honolulu Advertiser reported. Robert
Konop, who has been flying for Hawaiian for 19 years, said he plans to
file his reorganization proposal with the bankruptcy court tomorrow. His
will be the second reorganization plan submitted to the court, and at
least two more parties are expected to file plans.
Hawaiian Airlines filed for bankruptcy in March after John Adams, the
chief executive at the time, could not reach an agreement with Boeing
Capital Corp. to reduce the leases on Hawaiian's fleet. Adams had
intended to bring the airline out of bankruptcy, but the court removed
Adams on Boeing's request and appointed a trustee. Now the court is
accepting proposals to reorganize the carrier, reported the
newspaper.
Rare Local Survivor of Dot-Com Bust Is Sold
A Nashville company that started in the go-go dot-com days of the late
1990s has been sold to Woodstock, Ill.-based online ticket brokerage
TicketsNow.com, NashvillePost.com reported. Four year-old OpenSeats.com,
which connects people aspiring to buy and sell tickets to sports and
entertainment events in 41 markets in the United States and Canada, is
expected to keep its West End office while operating under the wing of
TicketsNow.com, one of the largest U.S. virtual ticket exchanges.
OpenSeats.com was founded in July 1999 by Nashville investors Dan
Maclellan and J.D. Steinhilber.
International Steel Posted Net Of $24.9 Million for 4th
Quarter
International Steel Group Inc., in its first quarter as a public
company, reported higher- than-expected fourth-quarter earnings and
appears poised to make steel cheaper than nearly everyone else in the
United States, showing that its experiment of buying bankrupt
steelmakers, cutting retiree health-care costs and trimming management
ranks is beginning to pay off, the Wall Street Journal reported.
The company reported a fourth-quarter net income of $24.9 million, or 28
cents a share, on sales of $1.42 billion. Analysts were expecting income
of less than 18 cents a share.
Keystone Consolidated Industries Files for Bankruptcy
Protection
Keystone Consolidated Industries Inc. has filed for chapter 11
bankruptcy protection, the Associated Press reported. The parent company
of Bartonville-based Keystone Steel & Wire Co. filed on Thursday in
the U.S. Bankruptcy Court in Milwaukee, Wis., the (Peoria)
Journal-Star reported. The Dallas-based steelmaker asked the court
to approve $60 million in financing to meet expenses during a
reorganization process that could take months, President David Cheek
wrote in a letter to employees. 'This filing is a decisive and positive
action toward rebuilding Keystone and securing its future,' Cheek
wrote.
But the financing depended on Keystone and its union employees
reaching an agreement over health care costs, wages and retirement
benefits, Cheek said.
Keystone and members of the Independent Steelworkers Alliance have been
at odds for months over amending a labor contract that runs until May
2006. Management has said they needed to renegotiate the contract to
prevent the company from being sold, liquidated or closed, reported the
newswire.
Enron Reaches Settlement with Osprey Trust Noteholders
Enron announced in a press release that it has reached a settlement
resolving certain claims and disputes relating to notes issued by the
Osprey Trust, the stakeholders of which are third parties. Proceeds of
the notes had been invested in interests in Whitewing Associates, L.P.
and its general partner, Whitewing Management LLC (Whitewing). Enron
also owns interests in and manages Whitewing, which holds interests
worth an estimated $855 million to $1.25 billion in various domestic and
international assets, plus approximately $3.0 billion in claims against
Enron. As a result of the settlement, Enron indirectly will wholly own
these interests.
Under the settlement, Enron will receive the interests of the Osprey
Trust in Whitewing and certain releases, and holders of approximately
$2.4 billion of notes issued by the Osprey Trust will receive a $3.6
billion allowed claim against Enron in its bankruptcy, a $75 million
cash payment and certain releases. Enron also will dismiss certain
settling parties from its pending litigation against Whitewing to
recover preferential payments.
Upon closing of the settlement, Enron will be Whitewing's sole owner.
The settlement will enable Enron to dispose of interests in assets held
by Whitewing and implement transactions that are part of Enron's
reorganization plan, including the establishment of Prisma Energy
International. Enron has filed a motion with the U.S. Bankruptcy Court
seeking approval of the settlement.
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