Bankruptcy

Business News Roundup

By J. Michael McBride

Here is a link to an article which summarizes the latest business news. First up, indicted bankers – it is interesting to see prosecutors now deriding CDO’s, when not too long ago, the public was being told that they were the next big thing in banking (which they were, just the next big bad thing in banking).

“The New York Times leads with the news that two former Credit Suisse brokers have been indicted on charges of securities fraud. In what U.S. prosecutors called a $1 billion bait-and-switch, one of the accused, Eric Butler, sold customers "some of the most toxic investments of the subprime age—collateralized debt obligations" —even as he passed the securities off as tied to safe student loans. Butler and his former colleague Julian Tzolov face up to 65 years in jail if convicted, though Butler at least continues to protest his innocence with his lawyer, contending he "believed he was doing the best for his clients." Tzolov seems less convinced. He has fled the country and is believed to be in Bulgaria.”

Next in line is a report on BP having to re-trade a deal with its Russian “oligarch partners” (the oligarchs get more money, no shock there). Following is a note on Boeing’s largest labor union and its vote to strike, but not implement that strike just yet. Finally, a paragraph or two on US car sales, which … drum roll … are reported to be down. “Hit particularly hard were gas-guzzling pickups and SUVs, despite "some of the largest discounts ever offered," the newspaper adds. According to BusinessWeek, Nissan was the lone carmaker to post a monthly sales increase. The traditional Big Three—General Motors, Ford, and Chrysler—saw monthly sales declines of 20.3 percent, 26.5 percent, and 34.5 percent respectively. For GM, this is the longest sales slump—10 consecutive months of declines—since the 2001 recession, Reuters reports.”

And, if there is a giant business with a major debt problem, can the Federal government be far behind? “A key development for the fortunes of Feinberg and the U.S. auto industry is a potential $50 billion federal loan proposal. BusinessWeek reports auto execs have been lobbying at both the Democratic and Republican national conventions over the past two weeks ‘to speed up funding for $25 billion in subsidized loans to help retool their old plants. Given the industry's deteriorating state, they now say they need an extra $25 billion, all to be lent at low rates of 5% or so.’”

Here is a link to the full article: http://www.slate.com/id/2199345/

Michael

Full post as published by Texas Lawyer Blog on September 04, 2008 (boomark / email).